Michael Sitrick gets paid to deflect a crisis but for his own recent financial predicaments, he has turned to the courts.
The head of public relations firm Sitrick & Co., who represents some of the highest-profile business executives and celebrities, is suing two major financial institutions to recover more than $6.5 million in investments he made on behalf of his family’s trust.
The two separate fraud actions, which were filed in Los Angeles Superior Court, claim that underwriters and placement agents had failed to identify certain risks in prospectuses issued in 1999 and 2000.
In the first suit, Sitrick claims that Prudential Securities Inc., whose retail securities business is now owned by Wachovia Securities LLC, failed to disclose that even a relatively “small percentage” loss in the value of a bond portfolio could cause investors to be wiped out.
Between 2000 and 2002, Wachovia lost $67 million on an investor portfolio that started out at $400 million, according to the lawsuit, yet Sitrick claims a $4 million investment in the portfolio he made in September 1999 was entirely lost.
In the second suit, Sitrick claims Salomon Smith Barney failed to disclose similar risks for another bond portfolio which attracted $243 million from investors. The securities lost $29 million in value during the next two years, causing Sitrick to lose more than $2.5 million of $5 million he invested in October 2000, according to the suits. Both suits have been moved to U.S. District Court in Los Angeles.
Sitrick declined to comment, and his lawyer, Mark Krum, a partner at Christensen Miller Fink Jacobs Glaser Weil & Shapiro LLP, did not return calls.
Calls to Citigroup Inc., which now owns Smith Barney, were not returned. A spokeswoman for Wachovia Corp. referred calls to Prudential, whose spokesman declined to comment. The suits follow another court battle Sitrick brought against Ryan Kavanaugh, chief executive of Relativity Management, a talent agency that also provides venture capital and has struck deals with actor George Clooney and director Steven Soderbergh. Sitrick claimed Kavanaugh invested his money in a startup called PreNet Corp., which operates PreCash, even though Sitrick requested his investments be made only in public companies.
An arbitrator granted Sitrick an award of $7.7 million in the case, but so far he has been unable to collect his judgment and has now sued Kavanaugh’s liability insurers.
