Portland couple awarded $5.5 million in fraud case
Arbitrators agreed the Emmetts were defrauded by a New York brokerage firm

August 29, 1998

A Portland couple has been awarded more than $5.5 million in actual and punitive damages after arbitrators agreed they were defrauded by a New York brokerage firm, Duke & Co.

The $5 million in punitive damages is thought to be the third-largest arbitration award ever made by a panel of the National Association of Securities Dealers, said the couple's attorney, Robert S. Banks of Portland.

How much they collect is another matter. Duke is no longer operating. None of its officers could be reached for comment Friday.

The Portlanders, identified by the NASD as Thomas and Rosemarie Emmett, alleged that the company and three of its officers violated securities laws and breached their fiduciary duty in selling them what the Emmetts thought to be low-risk investments.

The Emmetts first invested with Duke in 1996 in blue chip issues, such as McDonald's Corp. and Merck & Co. Inc., and made a bit of money on their investment. Then the Duke brokers recommended that they invest in new issues being promoted by the firm.

They lost $520,760 on those stocks promoted by Duke and when they wanted to sell, the brokers ignored their orders, the couple alleged. Banks said the company had made about $70 million on four initial public stock offerings in just two years.

The NASD panel found that the investment firm "acted with malice and showed a reckless and outrageous indifference" to the risks and harm caused by their actions.

In addition to the punitive damages, the Emmetts were awarded $568,199 in actual damages and attorney's fees of $41,000. The award also includes 9 percent interest on the actual damages until they are paid. The whole package could amount to $6.1 million, Banks said.