27-CV-18-14951

Filed in District Cour

State of Minnesotc
9/5/2018 2:17 PN

STA TE OF MINNESOTA
DISTRICT COURT
COUNTY OF HENNEPIN
FOURTH WDICIAL DISTRICT
Kevin Garnett, Case Type: Professional Malpractice
Negligence
Other Civil
Plaintiff
Court File No.:
V.
COMPLAINT
Welenken CPAs and
Michael A. Wertheim,

Defendants.

Plaintiff Kevin Garnett, for his Complaint against Defendants Welenken CP As and
Michael A. Wertheim, alleges as follows:

THE PARTIES

I. Plaintiff Kevin Garnett ("Garnett") is a retired professional basketball player and

is a domiciliary of the State of Minnesota..

2. Upon information and belief, Defendant Weienken CPAs ("Welenken") is a

partnership engaged in providing accounting and related services maintaining offices at 30 W

Market St, Suite 200, Louisville, Kentucky 40202.

3. Upon information and belief, Defendant Michael A. Wertheim ("Wertheim") is a

certified public accountant and is a partner in Welenken, at all material times acting on behalf
and for the benefit of Welenken.

JURISDICTION AND VENUE

4. This Court has jurisdiction over Defendants pursuant to Minn. Stat. §543.19.

5. Venue is proper in this Court pursuant to Minn. Stat. §542.09.

 27-CV-18-14951

Filed in District Cou

State of Minnesot
9/5/2018 2:17 p~

BACKGROUND FACTS

6. This case involves the Defendants' complicity m enormous financial losses

suffered by Garnett at the hands of his long-term trusted wealth manager, confidant and personal

friend Charles A. Banks, IV ("Banks"). In June of 201 7, Banks was sentenced to federal prison

for admittedly defrauding another client, former basketball great Tim Duncan. In or about

August of 20 I 7, Garnett, through counsel, gained access to the records of Welenken and

Wertheim, who had provided accounting services to Barucs, Garnett, and virtually all the

businesses Garnett shared with Banks. Up until that point, Banks controlled all access to the

Defendants, which in large part was due to Garnett's trust in and loyalty to Banks.

7. What became clear, after gaining access to Welenken's records, is that Banks

intentionally and continuously looted Garnett of his earnings and assets for many years,

including the many years that Welenken and Wertheim provided accounting services to Garnett
and his business interests.

8. One of the primary investment vehicles that Banks used to "manage" Garnett's

assets was a California Limited Liability Company by the name of Hammer Holdings, LLC

("Hammer"). Hammer was formed as a holding company to make investments in various

entities selected by Banks. At the outset, Banks and Garnett each held a 50% interest in

Hammer. Garnett was advised throughout the years by Banks that each was always a 50%

owner and that all contributions made by Garnett were to be matched dollar for dollar by Banks.

9. While he was Hammer's managing member, Banks had sole control over

Hammer's bank accounts. After Banks was incarcerated, Garnett gained access to some of

Hammer's ·financial records and discovered that, over the years, Banks had helped himself to

millions of dollars of Hammer's funds, even though Banks contributed a mere fraction of what
Garnett (at Banks' direction) contributed into Hammer.

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 27-CV-18-14951

Filed in District Cour

State of Minnesot,
9/5/2018 2:17 Prv

I 0. Beginning in or about late 20 I 0, Banks retained Wertheim on-behalf of Banks and

his wife Ali, Garnett and his wife Brandi, and various Garnett entities, including Hammer.

While Wertheim represented Garnett, he took direction from Banks and for some reason chose to
have virtually no direct contact with Garnett.

11. Wertheim's engagement letter with Garnett stated that the scope of his retention

was to file income tax returns. However, in reality, Wertheim undertook a significantly broader
role with respect to Garnett's finances and business interests.

12. Wertheim took direction and interacted with Banks in respect of all matters

involving not only Banks, but also Garnett and all businesses in which Garnett had an interest.

He prepared financial statements at Banks' direction. He became the registered agent for

companies in which Garnett had an interest. He became the addressee for bank accounts which
directly or indirectly were holding Garnett's money.

13. Wertheim also worked in concert with Banks in setting spending limits and

budgets that Garnett was advised to follow. At the same time, Wertheim possessed actual

knowledge that Banks was helping himself to millions of dollars of Garnett's money and did
nothing about it.

14. By way of example, in August of 2013, Garnett asked Banks to wire him

$40,000.00 of Garnett's own money. Banks responded that Wertheim had prepared a budget for

Garnett and that Garnett was exceeding it. Banlcs wrote to Garnett as follows:

Kevin, I have an the info from the accountant on the budget

and suggested (and required) cuts. This email is just meant to
convey the cold, hard facts, no opinion or judgement. Its pretty
ugly and going to be very difficult, but you can do it and it will
change your life forever (financially).

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 27-CV-18-14951

Fifed in District Co1

State of Minneso
9/5/2018 2:17 P

15. At the same time he was fashioning budgets to curtail Garnett's use of his own

money, Wertheim was fully aware that three days before Garnett requested the $40,000.00,

Banks had taken for himself $500,000.00 and eight days later took for himself $1,516,691.85,

plus an additional $60,000.00 in management fees. Indeed, while continuing to work with Banks

to limit Garnett's access to his own contributions, Wertheim was fully aware that Banks

transferred from Garnett's personal accounts into Hammer an additional $14,800,000.00, of

which Banks then "borrowed" $7,870,000.00, placed $2,700,000.00 into his own Hammer

capital account, and collected an annual management fee of at least $300,000.00 for the next
three years.

16. Wertheim's intimate involvement in Garnett's finances expanded his

responsibilities beyond those typically observed in an accountant/client relationship. Essentially,

he served Garnett in a fiduciary capacity as a money manager, not just as an accountant.

Nevertheless, while he possessed actual knowledge of Banks' ongoing pillaging of Garnett's

assets, Wertheim did nothing to protect his client Garnett.

17. Wertheim has conceded that while purporting to serve Garnett, Wertheim

answered only to Banks. Indeed, under a sworn affidavit dated April 3, 2018, Wertheim admits:

4. During the time Hammer has been a client of Welenken

CPAs, we have taken direction either from Charles A. Banks
IV, who was Hammer's managing member, or from his
assistant Penni Wasserman. I have never spoken or
communicated with Kevin Garnett in any way about Hammer.

5. Banks periodically took cash from Hammer which he

advised me were loans from Hammer to himself. I reviewed all
accounting records; relating to loans; taken by Banks from
Hammer including the following: bank statements and wire
transfer documents. Attached as Exhibit 1 is a schedule of
outstanding, unpaid loans which was prepared from the
general ledger. This document reveals that as of June 30, 2017,

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 27-CV-18-14951

Filed in District Co
State of Minnesc
9/5/20182:17 F

Banks owed Hammer $21,924.090.24 in unpaid loans. I have

never been instructed to allocate these loans as income to
Banks, and I believe these loans remain outstanding.

6. Exhibit 2 accurately reflects the status of the capital

accounts, based upon the Members' respective contributions
and distributions as reported in the accounting records. As of
the end of 2016, Mr. Garnett had a positive balance of
$31,208,213.00 and Mr. Banks had a negative balance of
$7,822,784.00. This was the result of the parties' respective
contributions and withdrawals, as directed by Mr. Banks.

7. These documents indicate that Mr. Banks benefitted

disproportionately compared to Mr. Garnett. Mr. Banks stated
to me that "he would make it right" with Mr. Garnett. To my
knowledge, he has not done so.

8. I have never spoken to or communicated with Kevin Garnett

in any way about Hammer. The one time I did speak to him
was at a social event and we did not discuss business.

18. Banks regularly caused Garnett to contribute millions of dollars into Hammer,

either by requesting wires from him or by simply taking funds out of Garnett's bank accounts to

which Banks had access. Upon information and belief, at all relevant times, Wertheim was

aware that Garnett's expectation was that Banks was matching equally Garnett's contributions
into Hammer.

] 9. Wertheim conceded that he was aware of all these transactions but did not advise
Garnett about them.

20. Together, Garnett and · Banks contributed approximately $60 million into

Hammer. Of that sum. Garnett contributed in excess of $57 million, while Banks contributed
approximately $2.5 million.

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 27-CV-18-14951
Filed in District Co
State of Minnes
9/5/2018 2:17 I

21. Despite possessing actual knowledge of the gross disparity in contributions,

Wertheim-as he has conceded under oath-did not alert Garnett of the disparity.

22. Banks invested some of Hammer's funds into entities such as: Terroir Capital

LLC; Matteis Tavern; Our Towne LLC; Terroir Winery Fund; Terroir Hotel Fund; Mayacamas

Vineyards; Coastal Luxury Management; Fine Wine Magazine; Applied One Holdings; IES

Investors; Le Metier Beauty; Oakville Producers; Billy Dean Music; Trade Wind Fund; Tengram

Capital LP; Zico, LLC; Puce Brands LLC; Lippman hocamps holdings; Columbia Care;

Delegate Advisers; and other entities that may be further discovered and identified.

23. While Banks possessed a personal financial interest in some of these entities,
most (if not all) of these investments are currently illiquid and valueless.

24. Wertheim possessed actual knowledge that Banks was investing funds contributed

by Garnett, but not matched by Banks, into failed or failing businesses, yet he did not alert or
advise Garnett.

25. Banks routinely used significant sums of Hammer's funds for his own purposes

including, without limitation: to pay credit cards; to pay his mortgages; to make personal

investments in which Hammer had no interest; to hire private jets; to take his family on lavish
vacations; and to make other personal expenditures.

26. Over the years, Banks transferred millions of dollars of Garnett's money to

himself, to his wife Ali Banks, to Danish fine wine collecto, Kristoffu, Meir Axel, and to various

unidentified parties in Hong Kong and Nmway. None of these transfecs bcnefaed Garnett in any
way.

27. Wertheim possessed actual knowledge of Banks' misappropriation of Hammer's

funds, but failed to alert Garnett or otherwise take any action to protect his client.

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 27-CV-18-14951
Filed in District Co
State ot Minnes,
9/5/2018 2:17

28.
Wertheim not only failed to inform Garnett that millions upon milJions of his

dollars were being looted by Banks, but he actually worked in complicity with Banks to conceal
this activity.

29. Indeed, an example of Wertheim's complicity is discovered in a July 24, 2015,

email to Banks in which he stated:

Charles: I think. Penni needs to start transferring aJI the files

for Kevin/ business entities/your business/persona) to me now
or do you think it's wise that Penni and I meet that way I can
make some decisions seeing what she reaJiy has. Regarding the
banking we need to huddle and figure out a plan especially on
Kevin transfers (not sure you want Sonya [Garnett's sister]
involved especially knowing exactly what Kevin has). For
example, your wine inventory that is important to me as we are
working on trying to figure out what cost goes with what wine
you have in inventory so we won't have a problem in the future
(audit). Remember our office can scan all the files and that way
we have backup on the computer not in paper form.

30. The facts of this case have been rev;ewed by P!aintiifu• attorneys w;th experts

whose quaJ;ficafons pcov;de a ceasonab!e expectatfon that the expert's op;n;ons could be

admiss;b]e at trial and that, in the opinion of this expert, the Defendants dev;aterl from the

appHcablc standru-d of care and by that action caused injury to Garnett. An affidav;t as requ;ced

under Minn, Stat. §544.42, subd, 3(a), ;, secved upon Defendants ,;multaneou.sly with this
pleading.

CODNTONE
PROFESSIONAL MALPR.4-CTICE

31. PJa;nt;ff repeats and ceallege, the allegat;ons set forth in pru-ag,aphs 1-30 ofth;s
Complaint as if fully set forth herein.

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 27-CV-18-14951 Filed in District Cc
State of Minnes
9/5/20~& 2J7

32.
Garnett was a client cf Wertheim and Welenken ("Defendants") and as such,

Defendants owed Garnett a duty to use reasonable care in representing him.

33. Defendants deviated from the applicable standard of care and failed to use that

degree of skill and learning normally possessed and used by public accountants in good standing
in a similar practice and under like circumstances.

34. Garnett suffered damage as a direct result of the Defendants' breach of duty.
35.
Defendants' breach of their duty of care was the proximate cause of pecuniary
harm suffered by Garnett.

36. By reason of the foregoing, Garnett is entitled to judgment in an amount to be

determined by the trfut of fact but bcJ;eved to exceed $77 mHfon, togethe,- with prnjudgmcnt
interest at the statutory rate.

COUNT TWO
BREACH OF FIDUCIARY DUTY

3 7. P Iaint iff rnpeats and <ealieges the allegatfons set forth in patagcaphs 1- 36 of this
Complaint as if fully set forth herein.

38. By virtue of the ttust Garnett placed in them, Defendants owed Garnett fiduciary

duties including, w;thout lintitation, duties of loyalty, of cru-e, and to avok! self-dealing.

Defendants we,e mandated to honor obligations of good fa;th and fafr dealing to Gatnett.

39. Defendants violated the fiduciary duties owed to Garnett.

40. DeJendants' breach of fiduciary duUes was the prnximate cause of enonnous
pecuniary harm suffered by Garnett.

41. By reason of the fmego ing, Garnett ;, ent;tJed to judgment in an amount to be

detennined by the trie, of fact but believed to exceed $77 miWon, togethet with prejudgment
interest at the statutory rate.

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 27-CV-18-14951 Filed in District Cc
State of Minnes
9/512M8 2:~7

COUNT THREE
AIDING AND ABETTING
42.
Plaintiff repeats and realleges the allegations set forth in paragraphs 1- 41 of this
Complaint as if fully set forth herein.

43.
As a result of his professional position of trust with Garnett and his unfettered

access to Garnett's funds, Banks owed Garnett a fiduciary duty to act with the utmost good faith

and loyalty towards Garnett, and to take actions in the honest belief that his actions were in the
best interest of Garnett.

44. Banks breached his fiduciary duties to Garnett.

45. Defendants knew, at all relevant times, that Banks owed Garnett fiduciary duties.

46. Defendants possessed actual knowledge of Banks' wrongful acts toward Garnett.

47. Defendants aided, abetted, parhdpated in, and therefore became a party to the
wrongful acts of Banks.

48. Garnett suflered enormous pecuniary harm as a pmximate result of Defendants'

aiding and abetting Banks in breaching his fiduciary duties to Garnett.

49. By reason of the fmegoing, Garnett is entitled to judgment in an amount to be

detennined by the trier of fact but believed to exceed $77 million, together with prejudgment
interest at the statutory rate.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff Kevin Garnett ,espectfully rnquests that this Court enter
judgment against Defendants as follows:

I. Upon Count One. a money judgment in an amount to be detennined by the trier of

statutory rate.
fact hut believed to exceed $77 million, together With p;ejudgment intere.st at the

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 27-CV-18-14951
Filed in District Co
State of Minnes
9/5/2018 2:17

2. Upon Count Two, a money judgment in an amount to be determined by the trier of

fact but believed to exceed $77 million, together with prejudgment interest at the
statutory rate.

3. Upon Count Three, a money judgment in an amount to be determined by the trier of

fact but believed to exceed $77 million, together with prejudgment interest at the
statutory rate.

4. For attorney's fees and costs incurred in prosecuting this action according to proof

5. In a subsequent pleading, Plaintiff will move the Court for punitive damages m
accordance with Minnesota Statutes sections 549.191 and 549.20; and

6. For such other and further relief as this Court deems just and proper.

ERICKSON, BELL, BECKMA.."1\./ & QUINN, P.A.

Dated: August 14, 20 I 8 By:

41'€/~~ ~
Mark F. Gaughan (320729)
Attorneys for Plaintiffs
1700 West Highway 36, Suite 110
Roseville, MN 55113
(651) 223-4999
[email protected]

LANZA REICH & DANIEL, LLP

Richard C. Ebeling
221 W. 37th StJ:eet-4th Floor
New York. NY 10018
212-602- I 160
Attorneys for Plaintiff
ACKNOWLEDGEMENT

Pursuant to Minnesota Statutes, §549.2 J l, the undersigned acknowledges that costs,

disbursements and reasonable attorney and witness fees may be awarded to the opposing party or
parties under Minnesota St:itutes 549.21 J, Subd, :2.
Dated: August I 4, 20 I 8
By:
41"~~~
Mark F. Gaughan (320729)

I0

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