A Fateful Meeting
Christopher Hightower and Ernest Brendel first met in 1989 when the two men were introduced by a mutual friend that Brendel was visiting at an office located across the hallway from where the lanky commodities broker had set up Hightower Investments, Inc.
Initially, Brendel perceived Hightower to be a struggling financial advisor who was down on his luck and desperately in need of clients. In time, the two men would become friends.
Interested in investments and convinced that Hightower had a winning formula for making a killing in the commodities market, Brendel agreed to invest $2,000 with him.
It wasn't long before a friendship developed. Soon, they were sharing dinners at each others' homes and weekend getaways at a vacation house in New Hampshire owned by Hightower's in-laws. Brendel was so taken by his new friend that he even put Hightower's name down as a contact person at Primrose Hill Elementary School, where his daughter was a student. Other than her parents, Hightower was the only person authorized to pick the child up from school. Brendal did not renew that authorization the following year, however.
By that time, the friendship had already soured.
In the beginning though, it seemed as though Hightower, with few friends of his own, had finally found a kindred spirit in Brendel. Soon, he began talking about Brendel's plans to set him up with new computer equipment so he could develop a financial newsletter. He had won Brendel over by assuring the lawyer that he had developed his own formula for investing in commodities that was sure to reap huge profits.
Within weeks, however, Hightower had lost his new friend's initial $2,000 investment in the highly volatile commodities market. Although Brendel was hesitant to invest further, the smooth-talking broker convinced him to invest an additional $15,000 by assuring him that another investor had reaped a $65,000 profit on a $75,000 investment under Hightower's brilliant financial guidance. Together, they could make a killing in the stock market, Hightower told the wary lawyer.
But what Brendel didn't know was that Hightower had doctored that Investment account. There was no $65,000 profit. In fact, there was no profit at all.
On April 1, 1991, suspicious that his friend was financially inept, Brendel closed his account with Hightower Investments. The down-on-his luck broker had lost his only client.
The next day, Brendel asked for an accounting of his $15,000 investment.
Only $3,139 remained. Hightower had lost almost 80 percent of the money in just a few short months.
Upset that the broker allowed his account to illegally slip under the 50 percent fail-safe point without being notified, Brendel fired off a letter to Hightower severing their relationship and asking that Hightower make restitution by May 1.
When Hightower failed to respond despite repeated phone calls, Brendel soon began contacting the broker's other clients and learned they too had been swindled.
Enraged by that discovery, Brendel wrote a second letter to Hightower demanding to be reimbursed for half of his investment and threatening to complain to the Commodities Futures Trading Commission, which had the power to pull Hightower's brokerage license.
Hightower ignored Brendel's demands. He had no money to reimburse his friend.
In fact, he had no money at all.
When Hightower still had not responded by July 15, Brendel complained to the CFTC, which sent a copy of the complaint to Hightower, setting a September 17, 1991 deadline for him to make restitution. In that letter, the CFTC informed Hightower he could resolve the situation either by paying Brendel $11,851 or by responding to the charges. Failure to respond, the CFTC warned the broker, could result in the loss of his trading license.
Hightower would never answer that letter.