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Sterne Agee v Mohs

Sterne Agee v Mohs

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Published by Eddie Serrano
Sterne Agee v Mohs
Sterne Agee v Mohs

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Published by: Eddie Serrano on Jun 02, 2014
Copyright:Traditional Copyright: All rights reserved


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{10765-001 CMP A0373117}
In re: Chapter 7 ROBERT W. MOHS, Case No. 13 B 46366 Debtor. Hon. Jack B. Schmetterer STERNE AGEE & LEACH, INC., Plaintiff, v. ROBERT W. MOHS, Defendant. Adv. Pro. No. 13 AP _____
 Sterne Agee & Leach, Inc. (“Sterne Agee”) hereby complains against defendant Robert W. Mohs (“Mohs”) pursuant to 11 U.S.C. §§ 523(a)(2)(A) and (B) and seeks a judgment determining that the debt owed to Sterne Agee is a nondischargeable debt.
Sterne Agee recruited Mohs in 2012 to become an investment broker at the firm. During the recruitment, Mohs intentionally misrepresented his performance at his previous employer to induce Sterne Agee to hire him and obtain more lucrative compensation. In December 2012, Sterne Agee hired Mohs to become a broker and, as part of his compensation, provided Mohs a loan in the amount of $432,000. Sterne Agee relied on the materially false and fraudulently inflated figures provided by Mohs in deciding to make the loan.
Case 14-00288 Doc 1 Filed 04/30/14 Entered 04/30/14 11:56:26 Desc Main Document Page 1 of 26
{10765-001 CMP A0373117 }
 2 2.
One month after he received the loan, Mohs deposited half of the proceeds into a trust. Five months later he resigned from Sterne Agee, and six months later he filed bankruptcy. He has never repaid the loan. The fraud and intentional misrepresentations committed by Mohs render the loan nondischargeable pursuant to 11 U.S.C. §§ 523(a)(2)(A) and (B).
Parties and Jurisdiction
Sterne Agee is a regional, full service, investment banking and brokerage firm headquartered in Birmingham, Alabama. Sterne Agee is a creditor of Mohs by virtue of the Note and Employment Agreement (as those terms are defined herein). 4.
Upon information and belief, Mohs is an individual residing at 3270 North Lake Shore Drive, Unit 14A, Chicago, IL 60657, in Cook County. 5.
On December 2, 2013, Mohs filed a chapter 7 bankruptcy petition commencing the above-captioned bankruptcy case (the “Petition Date”). 6.
The claims in this adversary proceeding arise under the Bankruptcy Code. Accordingly, the Court has jurisdiction pursuant to 28 U.S.C. § 1334. 7.
This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I). 8.
Venue of this adversary proceeding in this district is proper pursuant to 28 U.S.C. §§ 1408 and 1409.
Background A.
Recruitment of Mohs
In 2012, Sterne Agee recruited Mohs to join its firm as an investment broker while he was working as an investment broker at Raymond James & Associates (“Raymond James”).
Case 14-00288 Doc 1 Filed 04/30/14 Entered 04/30/14 11:56:26 Desc Main Document Page 2 of 26
{10765-001 CMP A0373117 }
 3 10.
During the recruitment, Mohs gave Sterne Agee a statement that purported to  provide certain critical financial information about his recent performance as an investment broker at Raymond James (the “Payout Statement”). 11.
Specifically, the Payout Statement stated that Mohs’ production at Raymond James during Raymond James’ 2011 fiscal year, i.e. October 2010 through September 2011, had been over $720,000, and that he had assets under management in excess of $71,000,000 as of September 30, 2011. A true and correct copy of the Payout Statement that Mohs provided to Sterne Agee is attached hereto as Exhibit A. 12.
In reliance on the representations made by Mohs through the Payout Statement, Sterne Agee decided to offer Mohs a position as an investment broker. Sterne Agee prepared an Employment Agreement (as defined below) to memorialize the representations being relied upon  by Sterne Agee and the terms of the parties’ employment agreement. To induce Sterne Agee to hire him, Mohs represented in the Employment Agreement that, as of May 31, 2012, his gross commissions for the “trailing twelve months” at Raymond James were “at least $720,000.” 13.
As Mohs well knew, not only did this level of commissions make Mohs an attractive candidate for hire, this type of “trailing 12” months’ commission would provide Sterne Agee a basis to formulate and negotiate the appropriate level of advance compensation for Mohs, if any. 14.
In fact, Mohs had intentionally falsified the Payout Statement to overstate his “trailing 12” production at Raymond James in 2011 while working at Raymond James. The actual amount of his production was not $722,701.47, but was instead $122,701.47—$600,000 less than what Mohs’ represented to Sterne Agee in the Payout Statement.
Case 14-00288 Doc 1 Filed 04/30/14 Entered 04/30/14 11:56:26 Desc Main Document Page 3 of 26

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