Merrill Lynch is being sued for $2.4 million by a Seal Beach-based charity that alleges a woman’s investment adviser steered away money meant for the organization.
The Los Angeles Thoracic and Cardiovascular Foundation filed the lawsuit Tuesday against Merrill Lynch, the wealth management arm of Bank of America, and Banc of America Investment Services Inc. investment adviser James Schaedler. BAIS is a predecessor entity to Merrill Lynch, the suit states.
The complaint alleges financial elder abuse and negligent supervision.
A Merrill Lynch representative said the company’s legal team has not yet reviewed the lawsuit and that he had no comment. He said Schaedler has not been with the Bank of America since 2010.
The suit is related to a trust created by Juanita Earley and her husband, John Earley, a Santa Ana couple who were longtime clients of the Bank of America. Juanita Earley died in January 2012 at age 96.
The Earleys stated in their trust dating back to 1990 that they wished to leave their estate to charities when they died, according to the lawsuit. In 2005, Juanita Earley amended the trust to name the Los Angeles Thoracic and Cardiovascular Foundation as the sole beneficiary, the suit states.
Schaedler began to capitalize on his position as the woman’s money manager in late 2008, the suit alleges.
“Seizing on her vulnerability, Mr. Schaedler systematically insinuated himself into Mrs. Earley’s personal life,” the suit states. “Among other things, he stopped for visits at her home periodically. These visits soon morphed into a routine.”
Schaedler “anointed himself” as Juanita Earley’s part-time chauffeur as he brought her groceries, drove her to church and influenced her to give him a health-care directive that he used to change her doctor against her wishes, the suit alleges.
Schaedler also isolated the woman from her family and friends, put her into a nursing home, claimed to be her conservator and ordered that the facility not allow her to take calls or have visitors, according to the lawsuit.
In July 2009, Juanita Earley “purportedly prepared or executed documents in Mr. Schaedler’s favor around and after that time,” the suit states. “It was here — one month after amending the trust — that Mrs. Earley was declared incompetent by a facility physician after extensive testing.”
Schaedler received about $2.4 million from the woman’s trust after she died, the suit states. He has “attested to a spending spree of hundreds of thousands of dollars” from the funds that he obtained from the trust, according to the complaint.
The suit alleges Schaedler “knew he could get away with his self- serving methods involving Mrs. Earley because BAIS was neither holding him accountable nor otherwise subjecting him to any meaningful oversight about his client relationships.”
The 2009 trust amendment resulted in “practically eliminating Los Angeles Thoracic as the sole trust beneficiary in favor of Mr. Schaedler,” the suit states.
Before she died, Juanita Earley “expressed to at least two disinterested witnesses her fear of Mr. Schaedler and her distress at having been pressured to change key documents,” the suit states.
