Lawsuit alleges that the Morgan Stanley failed to protect the client assets, failed to investigate obvious red flags, failed to take steps to prevent the looting of account and failed to cooperate with the Henderson Police Department which was investigating the theft of client’s money.

In or around March 2005 Paul Padda’s client Susan was diagnosed with ovarian cancer and given this grim prognosis, her physicians advised her to take the steps necessary to get her affairs in order.

Susan, a single-mother at the time, contacted Las Vegas attorney Carl Lovell in or around June 2005 for guidance and potential legal representation. Lovell advised Susan he could set up a trust with Susan as the named beneficiary and that, upon her death, the money would go to her son per the terms of a will. During her initial meeting with Lovell, Susan was introduced to Spaulding. Lovell introduced Spaulding as the attorney that handles all the trust work in the firm. Notwithstanding this introduction, Spaulding was in fact merely a clerical employee of Lovell’s firm and not an attorney licensed to practice in Nevada. Susan hired Lovell to set up the trust and, per Lovell’s recommendation and advice, agreed to appoint Spaulding as trustee.

On or about August 12, 2005, Susan went to Morgan Stanley’s Las Vegas office and opened a personal account into which she deposited approximately $150,000; her entire life savings at the time. Her account representative at Morgan Stanley was McElroy.

Morgan Stanley employee McElroy carried out Susan’s instructions and transferred her life savings to The Sunrise Trust account. Susan further told McElroy that even though Spaulding was the trustee of The Sunrise Trust, she was to be the only one allowed to manage the account.

In subsequent months, McElroy stopped communication with Susan. Since no one from Morgan Stanley would return her calls and McElroy had threatened to have her arrested if she returned to his office, her only source of information was Spaulding. Susan subsequently learned that there was only $538.00 left (down from $150,000) in The Sunrise Trust account which Morgan Stanley provided to Spaulding in the form of a check.

On January 31, 2012, as a result of the efforts of the Henderson Police Department and Clark County District Attorney David Roger, Spaulding was convicted of felony theft. Clark County District Court Judge Michelle Leavitt sentenced Spaulding to between four to ten years.

Indeed, since March 2008, Morgan Stanley was on notice that Susan was uncomfortable with the way the trust account was being handled but failed to take any action. To the contrary, Morgan Stanley threatened to have Susan arrested if she raised concerns.   As a result of Morgan Stanley and McElroy’s actions, Susan has lost her life savings while Morgan Stanley received substantial commissions and fees.

Lawsuit accuses Morgan Stanley of – Intentional Infliction of Emotional Distress by Defendants Morgan Stanley, McElroy, Spaulding and and Aiding and Abetting by Morgan Stanley and McElroy Constructive Fraud by Morgan Stanley, McElroy, Spaulding Aiding and Abetting by Morgan Stanley and McElroy

Civil Conspiracy by Morgan Stanley, McElroy, and Spaulding.  Breach of Fiduciary Duty by Morgan Stanley, McElroy, Spaulding and Aiding and Abetting by Morgan Stanley and McElroy. Negligence by Morgan Stanley, McElroy, and Spaulding and Aiding and Abetting by Morgan Stanley and McElroy.

Negligent Supervision by Morgan Stanley.

In light of the foregoing, Plaintiff Susan, through her attorney Paul Padda, requests that the Court have a trial by jury on a date certain; enter declaratory judgment in favor of Plaintiff on the basis that Defendant’s conduct violated her common law rights; award Plaintiff compensatory, hedonic, punitive and special damages in an amount exceeding $10,000; award Plaintiff her costs and reasonable attorneys fee; and award all other just and proper relief.

In Nevada state court, the rules of civil procedure only require a party to ask for more than “$10,000.”  In this case, if the jury is offended enough, it could award substantial punitive damages as well as compensatory damages for emotional distress.