College football practice is apparently not a great reason for a continuance. Alabama U.S. District Court Judge Myron H. Tompson has ruled that a civil securities fraud suit against former Texas Tech (and current Cincinnati) head football coach Tommy Tuberville will start in early August, as previously scheduled.
According to Scheef & Stone Partner J. Mitchell Little, Coach Tommy Tuberville faces a variety of very serious obstacles. “When your business partner faces criminal charges and gets sued by the CFTC for fraud, he has problems. When your business partner pleads the 5th Amendment in your civil case and refuses to show up for his deposition, you have problems,” Little said. In civil cases, when a witness pleads the 5th Amendment, an adverse inference
arises. “In a civil lawsuit, pleading the 5th Amendment forces the Court to view your response in the most negative light possible toward your case. When a defendant’s business partner does so, it tends to spread the blame.”
There are also a variety of evidentiary issues that are likely to impinge upon Tuberville’s ability to defend himself in the $1.7 million investor lawsuit arising from the collapse of TS Capital Partners. “Tuberville was the ‘T’ and Stroud was the ‘S” in TS Capital. How will Tuberville’s counsel avoid being painted with the same brush as his partner Stroud, especially if he is convicted next month of crimes related to these sales? Will the Court allow the jury to hear about Stroud’s potential conviction, the CFTC lawsuit, and his refusal to testify? It’s extremely problematic for Coach Tuberville,” explained Little.
And what of the fact that the investors really had no direct contact with Tuberville? “That’s the great thing about the state and federal securities laws, from a Plaintiff’s standpoint,” Little added. “Securities liability under the federal and state laws can arise by virtue of Coach Tuberville’s control of TS Capital Partners alone. If he had the ability to control or stop the transactions between the Plaintiff investors and the company, he may be held personally liable unless he can prove to that jury that he, one, didn’t know of the fraud, or two, could not have reasonably known of the fraud through the exercise reasonable diligence. Did he review the company’s books? What did he do to ensure that investors were being protected, aside from attach his name to the business? That’s a very high standard.”
All may not be lost, however, for Coach Tuberville. The lack of regulatory activity against him and his overall reputation may be of substantial benefit, Little says. “Coach Tuberville has an impressive, experienced collection of attorneys, and I think they have a couple of advantages here. First, Coach Tuberville was not sued by any of the Securities and Exchange Commission, the Commodities and Futures Trading Commission, or the Alabama Securities Commission; Stroud was. The lack of regulatory action tends to demonstrate the regulators’ collective disbelief that Coach Tuberville actively or knowingly participated in any fraud. On top of that, I think Coach Tuberville generally has a very positive reputation among potential members of the jury pool in the State of Alabama, so I would expect him to have a natural advantage in the venire.”
J. Mitchell Little is a securities and commercial litigation attorney who loves football, Texas, and his family. He has been with Scheef & Stone for 9 years.
Follow him on Twitter @jmitchelllittle or friend him on Facebook.