First Republic Bank’s headquarters in San Francisco. (Google Maps via Bay City News)
(BCN) — First Republic Bank and a financial advisor are being sued over alleged mismanagement of $7 million intended for low-income, first-generation college students at the University of California, Berkeley. The lawsuit was filed on behalf of a San Francisco-based elderly couple, George Miller and Janet McKinley. For more than 25 years, the couple has donated money to UC Berkeley for the Miller Scholars Program, according to the complaint filed in the suit.
First Republic Bank collapsed in May due to its having too many uninsured deposits and its failure to keep up with federal interest rates, according to the complaint. The Miller Scholars Program provides selected transfer students from low-income and first-generation college student backgrounds with up to $10,000 in scholarship money over two years.
In addition to financial assistance, the program provides students with mentorship, academic research and community service opportunities. If not recovered, the loss of the $7 million will result in 700 students being unable to receive the scholarship, according to Gia Jung, one of the couple’s lawyers.
The lawsuit alleged that First Republic going bankrupt and the individual actions of the couple’s financial advisor Samuel Schoner are at fault. According to the complaint, between 2017 and 2021 Schoner allegedly invested over $7 million of the couple’s money in First Republic preferred shares, most of which was designated for the Miller Scholars Program.
When the bank collapsed in May, the couple’s stake in the preferred stock became worth almost zero. Leading up to the bank’s fall, the couple “repeatedly” asked Schoner to sell their First Republic stock, which he did not do, the complaint alleged.
Schoner had served as the financial advisor to the couple since 2012, according to the complaint. In this role, he managed their entire investment portfolio. The lawsuit alleges that Schoner intentionally misled his elderly clients by making investments that were not in their best interest and shielding the risky nature of said investments.
The couple is suing First Republic and Schoner for a breach of fiduciary duty, negligence, elder abuse and fraud.
“They wanted this to be part of the legacy of giving and support for UC Berkeley and its students,” Jung said. “With the funds that Mr. Miller left, this program could have operated for another 70, 80, 90, 100 years, but unfortunately it will last as long as the remaining funds allow unless we can recover what was lost.”
The couple’s lawyers requested that a jury trial be set faster than a normal case due to the 87-year-old Miller’s old age, according to Tyson Redenbarger, an attorney on the case, which will be heard in San Francisco County Superior Court. Schoner and JPMorgan Chase — which acquired a substantial majority of First Republic after its collapse — declined to comment on the lawsuit.
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Read More: Lawsuit filed against First Republic Bank over $7M lost for UC Berkeley student