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Judge takes SBM case motion under advisement

Defense seeks expert testimony exclusion

August 23, 2011
By Fritz Busch - Staff Writer , The Journal

NEW ULM - Brown County District Court Judge John Rodenberg took a defense motion under advisement Monday during a hearing in a lawsuit involving the sale of SBM investment certificates.

New Ulm attorney Michael Boyle, representing Laurie Braulick of rural Sleepy Eye in the case (The Estate of Florence C. Swanker, Plaintiff, v. Laurie A. Braulick and Investment & Insurance Services of New Ulm LTD), earlier filed a motion to exclude expert testimony in the case seeking $62,000 due on certificates.

"I won't call them (experts) if the plaintiffs don't," Boyle told Rodenberg Monday.

The motion was taken under advisement and Rodenberg said he would decide on it before the case's discovery period runs out on Sept. 15, 2011.

Mankato attorney Patrick Casey represented the Swanker Estate at the hearing.

SBM Certificate Company, SBM Investment Certificates, 1st Atlantic Guaranty Corp., and Geneva Capital Partners, LLC, all of which are owned and controlled by Eric M. Westbury of Silver Spring, Md., were sued by the Securities and Exchange Commission (SEC) in 2006.

The suit alleges that the firms were not maintaining minimum cash reserves or qualified investments to cover $33 million in face amount certificates held by more than 2,000 investors.

A federal judge froze the accounts in 2007, so investors have been unable to cash in certificates as they became due.

A pre-trial date of Oct. 3, has been set. A three-day trial is set for Oct. 19 in Brown County District Court.

Charles Kotten of Sleepy Eye, who identifies himself as the Swanker Estate executor, said the estate, not himself, seeks $62,000 plus interest in the suit.

"It's a long, dragged-out saga they're trying to drag out longer. It seems they don't want the truth to come out, but it will when the case goes to trial Oct. 19," Kotten said.

Attorneys declined comment on the case after the Monday hearing.

In May 2010 in front of about 40 spectators in the Brown County District Courtroom, New Ulm attorney Roger Hippert, representing the Swanker estate, asked the judge for a default judgment because the defendants had not filed an answer to the original complaint that was served Feb. 2, 2010.

Hippert said the original attorney representing the investment firm, Gordon Dihle, responded to him with faxes and letters but did not completely respond to allegations.

Hippert said Dihle asked for an extension that Hippert did not agree to, according to a May 4, 2010 Journal story.

Boyle agreed that no answer was filed but asked the judge to decline the default judgment request because many allegations in the complaint would be contested, and that no one, at this point, has suffered a loss, according to the story.

Boyle added that the fact the SEC action resulted in frozen accounts is beyond the control of Braulick Investment & Insurance Services of New Ulm and that SBM Certificate Co. reaffirmed its accounts are covered, and are drawing interest, according to the story.

Hippert said harm has occurred in the case because due dates passed and nobody knows what is going to happen due to the SEC action, according to the story.

(Fritz Busch can be e-mailed at



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