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SBM, Swanker case settled

Estate receives $39,000, keeps certificates

January 18, 2012
By Fritz Busch - Staff Writer , The Journal

NEW ULM - After nearly two years of legal maneuvering and an even longer time since payments were due, the lawsuit involving the sale of SBM investment certificates was settled Jan. 13 in Brown County District Court.

Judge John R. Rodenberg ordered the case of The Estate of Florence C. Swanker vs. Laurie A. Braulick and Investment & Insurance Services of New Ulm, Ltd. settled for $39,000.

He ordered that the SBM certificates are an asset of the Swanker Estate that initially asked the defendants to pay $62,000 due on the certificates, according to court documents.

The court case dates back to spring 2010 when about 40 people crowded into a small, first-floor courtroom in the Brown County Courthouse. Crowd members shared the same concerns as the case's plaintiff - when would they be able to collect on the SBM certificates they had purchased.

SBM Certificate Company was one of several firms involved in a 2006 Securities & Exchange Commission lawsuit that alleged that SBM Certificate Company, SBM Investment Certificates, 1st Atlantic Guaranty Corp., and Geneva Capital Partners, LLC, all owned or controlled by Eric M. Westbury of Silver Spring, Md., did not maintain minimum cash or qualified investment reserves to cover $33 million in face-amount certificates held by more than 2,000 investors, according to court documents.

In 2007, a New York federal judge froze the accounts. Investors were unable to cash the certificates, like bank certificates of deposit, as they became due.

According to a case background memo filed with the court order, in recent weeks, the parties addressed the amount of a lump sum payment and who would retain the SBM certificates underlying the suit.

The memo added that the Swanker Estate's final motion is for attorney's fees and that the estate had originally sued for attorney's fees.

In settling the matter for $39,000 without any provision for recovery of fee costs, it appears that issue is resolved, unless the plaintiffs can show there is some other agreement to keep that issue open or if there is some other basis in law for awarding fees or costs.

Defendant's attorney Michael Boyle of New Ulm said Braulick and the investment firm deny any wrongdoing.

"This is a compromise settlement of a doubtful and disputed claim," Boyle added. "We avoided going to trial due to costs and Laurie Braulick's health. She was in a serious motor vehicle accident a few months ago, was hospitalized for a month, and is still recovering."

Plaintiff's attorney Patrick Casey of the Farrish Johnson Law Office in Mankato said the SBM certificates are still in limbo with the SEC litigation.

"If any money is reimbursed from the company, the estate would receive the funds," Casey said.

He added that if the case had gone to trial, he would have pursued showing that the investments were misrepresented when they were sold as being guaranteed investments to Swanker, as the estate complaint originally alleged.

(Fritz Busch can be e-mailed at



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