Suit accuses accountant of fraud

A former chairman of the Chicago Board Options Exchange has sued a Twin Cities accountant for fraud, claiming the accountant bilked him out of more than $600,000 in a real estate scheme.

Richard Lurie of Lurie & Associates in St. Louis Park has a history of recommending real estate investments to clients and friends and defrauding them, according to the lawsuit filed Wednesday in U.S. District Court in Minneapolis. Three years ago, Lurie was ordered to pay victims in one case $3.8 million.

The American Institute of Certified Public Accountants pulled Lurie's membership later that year, citing "fraud, breach of fiduciary duty and conversion of his clients' money or property for his own use," according to the group's website.

Lurie, 75, said he didn't know about the new suit. He acknowledged a dispute with his client but said he was "shocked" it was going to court. "It's a piece of commercial rental property in St. Paul that basically had vacancy problems and the partners had to pony up and put in money," Lurie said. "What's so unusual about that?"

The suit was filed by Walter Auch Sr., 88, of Paradise Valley, Ariz., who is dying of cancer, according to the complaint. He met Lurie in the early 1980s when Auch was chairman of the Options Exchange and Lurie was a trader there. Lurie was his "tax advisor and trusted friend," the suit says.

In 2005, Lurie persuaded Auch to invest in a partnership that would own the Westport Office Building on S. Robert Street in St. Paul, the suit says. Lurie is alleged to have misrepresented the deal to Auch and also to either have forged Auch's signature to documents that guaranteed a $1.3 million mortgage to Lurie or induced Auch to sign them without full understanding. He also is alleged to have used Auch's personal financial statement without Auch's knowledge to get a $460,000 mortgage from Edina-based Crown Bank.

Auch made several additional payments into the partnership at Lurie's request for repairs on the building. The money went for Lurie's personal gain, Auch alleges.

The lawsuit details five other instances where Lurie was either sued or clashed with people over real estate investments since the mid-1980s. One case involved an investment in the same St. Paul office building at issue in the dispute with Auch. The courts entered judgments against Lurie in at least two of the cases.

In 2000, Lurie was ordered to pay Israeli residents William and Elizabeth Gross $3.8 million after they sued Lurie for charging hefty management fees to handle money-losing investment properties without disclosing the losses and diverting money from their accounts to his own entities.

Lurie said the Gross case had "nothing to do" with the current dispute with Auch, and that some of the other parties were all part of one partnership that "just blew up."

"You're talking about things that happened years ago," he said.