© 2013 The Texas Lawbook.
By Mark Curriden
Senior Writer for The Texas Lawbook
(March 18) – A federal appellate court ruled Monday that oilman T. Boone Pickens and Oklahoma State University athletic supporters do not have the right to a trial over their claims that they were defrauded out of tens-of-millions of dollars in an investment scheme designed to enrich the college’s sports programs through the early deaths of 27 prominent elderly alumni.
In 2006, Pickens and Cowboy Athletics agreed to pay $16 million in annual premiums to cover 27 OSU alumni for $10 million in life insurance each with the idea that the policies would provide between $157 million and $350 million in benefits to the athletic department.
By 2009, Pickens had paid $33 million in premiums and was facing another $16 million payment. Cowboy Athletics, meanwhile, hadn’t received a dime because none of the 27 alumni had died.
Pickens and OSU supporters cancelled the policies and sued Lincoln National Life Insurance Co. and its agents claiming they lied to them about developing a “matrix” that enabled them to identify people who would die sooner than life insurance companies predicted.
But the Fifth Circuit judges rejected arguments by Pickens and Cowboy Athletics that they were duped.
“This was not Cowboy’s first rodeo,” the judges wrote. “The undisputed record establishes that [the defendants’] disclosures and Cowboy’s own due diligence apprised it of the inherent risks and assumptions underlying the investment program.”
“The court’s decision came back much quicker than I anticipated, but there really wasn’t a whole lot for the judges to contemplate or decide,” says Kendal Simpson, a fourth-year associate at Reese Gordon Marketos in Dallas, who argued the case for one of the insurance agent-brokers.
“This result is a resounding victory for our client,” says William A. Brewer III, partner at Bickel & Brewer and counsel for Larry Anders, the general agent in the Gift of a Lifetime Program. “In our view, this opinion vindicates Mr. Anders – and confirms that Cowboy Athletics was fully advised of all aspects of this insurance program.”
Lawyers for Pickens and Cowboy Athletics declined to comment on whether they will file an appeal.
“We sought to expose these investment strategies, to ensure that charities are not harmed by them in the future,” says James Ho, a partner at Gibson, Dunn & Crutcher in Dallas, who represents Pickens and Cowboy Athletics.
“In that spirit, we are gratified that insurers have started to get out of this business—and that other charities like Village Church have received substantial settlements for their losses,” he says. “Cowboy is not the first charity to be hurt by this. But we hope it will be the last.”
Clinton Howie, a partner at Stacy & Conder, said that his client, James Turner, is “obviously very pleased with the Fifth Circuit’s opinion.”
“We maintained from the beginning that Mr. Turner not only did nothing wrong, but repeatedly warned Cowboy Athletics about the very risks that they later complained about in the lawsuit,” says Howie.
The win was especially sweet for Simpson, who returned early from maternity leave to argue the case on March 6. It was her first oral argument before the Fifth Circuit. She has taken off the past week and a half since the argument to care for her now-three-month-old daughter, but will be back in the office tomorrow.
“Not a bad way to come back to work,” she says.
Other Dallas lawyers involved in the case are James Renard of Bickel & Brewer, Joel Reese and Bradley Gordon of Reese Gordon, Andrew Jubinsky of Figari & Davenport, and Clinton Howie of Stacy & Conder.
© 2013 The Texas Lawbook. Content of The Texas Lawbook is controlled and protected by specific licensing agreements with our subscribers and under federal copyright laws. Any distribution of this content without the consent of The Texas Lawbook is prohibited.
If you see any inaccuracy in any article in The Texas Lawbook, please contact us. Our goal is content that is 100% true and accurate. Thank you.