Billionaire Accused of Fraud

Although Charles B. Johnson has been acclaimed for numerous accomplishments, the 82-year-old man stands accused of helping defraud the heir of the earliest investors in Franklin Resources out of $150 million. 

This accusation is at the center of a lawsuit filed on Wednesday in San Francisco federal court by Anthony P. Miele III of Manhattan, whose father left him Franklin stock worth $16,000 after his death.  Mr. Miele contends he did not know about the existence of the shares, which are now worth $130 million. 

The lawsuit accuses Mr. Johnson of breach of fiduciary duty, negligence, fraudulent concealment and negligent prevention of assistance.  According to the complaint, Mr. Miele first learned of the stock by happenstance. 

Mr. Johnson, who stopped working at Franklin Resources in June 2013 after 56 years, said that he was unaware of the lawsuit but thought that the “Mieles are one a fishing expedition for their own negligence.”  He said the only involvement with the stock described in the complain came years ago when he notified Mieles just before New Jersey was going to take over control of the trust.

See William D. Cohan, Mutual Fund Billionaire Accused of Fraud in Suit, The New York Times, Jan. 14, 2015.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.