In Lahoud v. Merrill Lynch, Pierce, Fenner & Smith, Inc., United States District Judge Margaret M. Garnett denied petitioner John Lahoud’s motion to vacate a FINRA arbitration award and granted Merrill Lynch’s cross-motion to confirm it. The court upheld the arbitration panel’s order requiring Lahoud to repay $1,181,594.35 in outstanding principal balances on corporate promissory notes, plus daily interest, costs, and $150,000 in attorney’s fees.
John Lahoud had written three loans to himself from Merrill Lynch’s accounts between 2013-7 when he worked there as a broker and advisor. Instead of repaying these loans, as his contract dictated, after leaving the firm in 2021 to begin working for a competitor, he decided to keep the money. He was unpersuaded by a demand letter, forcing Merrill to commence this FINRA arbitration. To defend his right to keep these funds, Lahoud filed counterclaims on December 12, 2022 with the defense of a constructive discharge. He accused Merrill of breach of contract, interference with his pursuit of economic advantage and unfair competition and unjust enrichment, specifically for permitting other advisors to solicit his clients, and of mercilessly alleging he was guilty of mortgage fraud to force him to resign. FINRA ruled for Merrill.
While this case seems to be a simple corporate dispute, the Epstein Files include several unrepaid loans that have been made by brokers who were involved in financial misconduct, including Jeffrey Epstein himself at Bear Stearns. At Epstein’s companies, his attorney Indyke was also given over $7 million in loans as “retention bonuses” that were expected to be forgiven. Similar though lower-valued retention “loans” were given to around ten other employees. ICIC made $290 million in loans “of which all but perhaps $25 million is apparently lost. About $93.5 million… were used to purchase shares of BCCI itself”. While Merrill Lynch is not directly implicated, Epstein met with a Dr. Merrill in 2016, which might have been code for Merrill Lynch. The fact that Lahoud is insisting on keeping loans he is contractually obligated to return suggests he was promised he could keep these funds in exchange for something nefarious, as in the Epstein Files such non-repayments tend to be for items that cannot be legally credited and made to people who are attempting to dodge taxes.
Back in Lahoud’s case, the court found that Lahoud was not forced to depart, but rather resigned after negotiating a high-paying new position, not only for himself but also for his whole team. Lahoud was also contesting the $150,000 for two years in attorney’s fees as excessive, despite his own salary being in the millions. Since mega corporations defending their millions tend to be charged top-rates by their lawyers, it is certainly logical that forcing Merrill to take him to court generated a high legal fee. It would be illogical to levy such charges due to a loan non-repayment onto the loan-issuer.
And why would anybody making hundreds of thousands need a non-nefarious loan for such enormous sums? The final $1.8 million due was only a portion of the millions Lahoud had repaid before departing. Just one of his promissory notes was for $4.2 million. This case raises a lot of questions and suggests a need for a forensic investigation into the accounts of both Lahoud and his team and Merrill Lynch during the years Lahoud took out these loans. The bits of information available in the public filing are insufficient to reach conclusions, but they suggest many malevolent theories.
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