New suit filed in Ponzi case: This time it's uncle vs. nephew
The collapse of KMO and the resulting losses, primarily among Olson's family and friends, became public when the owners of Park Construction of Fitzwilliam filed suit in Merrimack County Superior Court, naming Eric Olson and claiming that he was in a conspiracy with his nephew, Aaron.
Based on evidence and testimony presented in preliminary hearings in July, Merrimack County Superior Court Judge Richard B. McNamara awarded Park Construction a $15.2 million attachment against Eric Olson and his son, Ted, after ruling that Eric was engaged in a partnership with Aaron, and that Park has a reasonable chance of winning its claim to the millions at stake.
Eric Olson has maintained that he was just another investor and had little knowledge of how his nephew, Aaron Olson, ran KMO. The judge disagreed, and ruled that the Eric and Aaron were engaged in a joint venture.
Attorneys for Eric Olson asked the judge to reconsider the ruling. A hearing on that motion was scheduled for Nov. 19, but was turned into a structuring conference for a possible trial instead, after Eric Olson's attorneys withdrew their motion for reconsideration and asked that their lawsuit against Aaron Olson, filed on Sept. 26, be consolidated with the Park Construction lawsuit "to foster negotiations and reduce the resources expended on resolving the matter."
In suing his nephew, Eric Olson brings to light many of the dynamics of the alleged fraud that has divided a once-silent and close-knit community of families with shared ethnic and religious ties in the Rindge and New Ipswich area.
Eric Olson in his lawsuit maintains that Aaron represented to his family, fellow parishioners and friends that he was a highly successful investment manager, when he was actually "preying on the love and affection of family members and the esteem and friendship of his other victims."
The lawsuit claims that Aaron induced investors with "elaborate representations" that included tax forms, periodic account statements and printouts from investment management websites designed to make them believe that their money had been used to make highly successful trades in blue chip equities like Bank of America, Dell, Cisco, GE and Microsoft.
"Eric is one, but certainly not the only, defrauded investor who got out before Aaron's edifice of lies and deceptions crashed," the suit claims. "In order to purchase real estate and fund his real estate development business, Eric withdrew more than he originally invested and acknowledges that he is a net winner."
That doesn't mean Eric was part of the conspiracy, his lawyers wrote. "Although it appears that Aaron deceived (the owners of Park Construction) with the same lies he used with Eric . . . incredibly, they have not sued Aaron, who according to their own lawsuit was the mastermind and implementer of the scam. Believing that Aaron and his companies are necessary parties and in order to recover his damages and losses, Eric brings this lawsuit with the plan of consolidating it with the Park Construction litigation."
The lawsuit goes on to say that Eric Olson has paid taxes on false investment gains; has incurred and will continue to incur attorney fees to defend the Park Construction case; may be potentially liable in that case; and has suffered emotional pain and other losses.
He charges Aaron Olson with fraud, negligent misrepresentation, breach of fiduciary duty and breach of contract. "Justice and law require that Aaron be held liable for all acts and omissions of KMO," the suit concludes.
Eric Olson is proceeding reluctantly to protect his interests, his lawyer wrote. "As Aaron's uncle, Eric has always had love and affection for Aaron. They are part of a close-knit family, church and community . . . Eric has never sued anyone in his life, is emotionally and spiritually conflicted about taking this step, and does so with a heavy heart."