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Woman sues stepson, firm over stocks

November 15, 1999|By BRENDAN KIRBY

A Hagerstown woman is suing her stepson and the investment company he worked for, alleging she was defrauded out of hundreds of thousands of dollars over more than a decade.

The $500,000 suit, filed Friday in Washington County Circuit Court, alleges that William S. Hatcher sold securities that Christine M. Hatcher owned and converted them into his own use. The suit also alleges that Ferris Baker Watts, for whom William Hatcher worked for 15 years, should have discovered the fraud.

Michael McGettigan, an attorney for Christine Hatcher, declined to comment other than to say, "The suit was filed. It's quite detailed."

William Hatcher, 40, of 135 Broadway in Hagerstown, could not be reached for comment.

Theodore Urban, the general counsel for Ferris Baker Watts, said the company did nothing wrong.

"Ferris Baker Watts has cooperated fully with the U.S. Attorney's Office in its investigation," he said. "The obvious focus of that is Mr. Hatcher's actions It was never condoned. Ferris Baker Watts never knew of the action."

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William Hatcher pleaded guilty in September to one count of mail fraud stemming from the case.

Hatcher admitted that he misappropriated funds of three of his clients - including his father and his stepmother.

He is scheduled to be sentenced Friday morning in U.S. District Court.

Christine Hatcher, 69, inherited securities from family members in the 1970s. She owned more than $800,000 in shares of IBM, Texaco Corp., Sears and other companies, according to the suit.

The suit alleges that William Hatcher sold those shares from 1985 to 1987, and from 1988 and 1990 in his own account that he set up in the name William Singer Hatcher.

Hatcher cashed nine checks ranging from $15,000 to $39,000 from the account between 1991 to 1994, according to allegations in the suit.

To hide his actions, Hatcher diverted account information and mutual fund statements to a post office box he set up in 1991, the suit alleges.

During the same period, he made deposits in Christine Hatcher's bank account, telling her they were dividends and forged documents used in her tax returns, the suit alleges.

The suit alleges that Ferris Baker Watts shares in the responsibility because the company "either failed to follow or ignored many of its own procedures."

The allegations include that the company:

- Failed to keep written records showing that it supervised William Hatcher.

- Failed to review customer transaction records that showed William Hatcher was selling securities in his own account that he never bought.

- Failed to maintain check disbursement logs reflecting its checks to William Hatcher.

- Failed to have its branch manager approve securities purchases in amounts exceeding $50,000.

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