CHICAGO - A jury found in favor of Ameritech Corp. last week in a lawsuit in which Summit Properties, Baltimore, sought more than $4 million over a failed real estate deal in Virginia involving Ameritech's pension fund.
Ameritech's pension trust backed out of equity financing for $25 million of the $55 million deal, called Stuart Park, in 1990 after learning that an agent in the transaction was sharing fees with a former Ameritech pension executive, Lloyd B. "Tom" Thompson III. The deal never was completed.
David F. Tufaro, managing partner for Summit, said the jury's decision was unfair in leaving Ameritech off the hook.
"I have trouble understanding how Ameritech gets off scot-free" when senior people on the pension staff were aware of the deal, Mr. Tufaro said. He asked why Summit had to continue to spend money on the deal for two months after Ameritech found out about the fee-splitting arrangement. "Why didn't somebody at Ameritech call us and say we have found a problem?"
He said the $4 million-plus represented all of the expenses Summit incurred in relation to the deal and the fees it would have received had the project been built. "Ameritech owed us a duty under the contract," Mr. Tufaro said.
"It was a problem of their own making," he said in reference to published accounts of management problems at Ameritech's pension fund in the time before Judith Mares took over as chief investment officer.
In 1991, Ameritech sued Mr. Thompson for an alleged breach of fiduciary duty in recommending investments, including Stuart Park, to Ameritech that were arranged with the assistance of Donald K. Bennett, a real estate consultant. At the time of the filing of the suit against Mr. Thompson, he said he was paid $40,000 for an independent consulting project. Mr. Thompson eventually settled the suit.
In the trial involving Summit, Howard Pearl, a lawyer for Winston & Strawn, Chicago, who investigated Ameritech's real estate transactions, said Mr. Thompson paid Ameritech $151,584.20. Of the settlement, about $39,000 represented fees Ameritech's legal counsel could prove Mr. Thompson received from Mr. Bennett, $2,500 represented wages paid Mr. Thompson while working at Ameritech on other things, and the balance was for the cost of investigating the deals, Mr. Pearl said.
Ameritech officials could not be reached by press time. But testifying in U.S. District Court in Chicago, Ms. Mares said Ameritech's executives withdrew from the deal because of concerns about violating the Employee Retirement Income Security Act. Testifying to support that claim was David Walker, a former assistant Secretary of Labor who now is worldwide managing director of the company benefits practice with Arthur Andersen & Co., Chicago.