Man wins $60,328 in lawsuit against investment adviser

September 19, 2001|By Dennis O'Brien | Dennis O'Brien,SUN STAFF

A Baltimore County judge awarded $60,328 yesterday to a Catonsville stagehand who sued his investment adviser for ignoring his requests and investing his money in high-risk securities that turned out to be worthless.

James E. Clagg, 52, told a Baltimore County circuit judge yesterday that Michael P. Keating ignored his instructions to invest conservatively and instead purchased securities designed only for well-heeled investors.

Keating invested Clagg's money in unregistered securities that are so risky that state and federal regulators permit them to be sold only to investors who either have more than $1 million in assets or earn more than $200,000 a year, said Clagg's lawyer, Thomas C. Costello.

A licensed investment adviser since 1991, Keating had his license revoked by state regulators in 1998 and by the Securities and Exchange Commission after a separate investigation a year later.

Yesterday, Circuit Judge J. William Hinkel awarded Clagg a default judgment after Keating failed to appear for trial and Clagg offered brief testimony about their dealings in the 1990s.

Keating was unavailable yesterday, and relatives said they do not know his whereabouts.

But those familiar with the case say that Clagg will have a hard time collecting the award because Keating is broke.

Andrew Graham, who represented Keating in a separate suit in Howard County Circuit Court, said that Keating also owes large amounts to other investors.

Keating is a defendant in 14 other lawsuits filed in Baltimore County Circuit Court and has been ordered by a Howard County judge to pay back $538,000 to 11 investors there.

Howard County Circuit Judge Lenore R. Gelfman found Keating in contempt Aug. 9 and ordered him to repay the 11 investors whose money he accepted after he agreed in 1999 to stop doing business as part of a settlement with state regulators.

But Gelfman also gave Keating a chance to avoid being jailed if he is able to show at a hearing Oct. 4 that he is unable to pay back the money.

Costello acknowledged yesterday that Keating, who sold securities out of an office in Columbia, is in debt and that collecting damages might be difficult.

"We'll have to see what happens," he said.

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