A Pitkin County judge has dismissed claims, including defamation, brought by a defendant who is being sued by a former client for allegedly losing tens of thousands of dollars in bad investments.
The lawsuit involves two longtime locals, Dana Knight and Douglas Wilson. In 2016, Knight sued Wilson and his company, Ajax Capital Management, alleging that he gave Wilson investment control of his and his wife’s retirement accounts in 2013. Wilson prepared an investment advisor agreement that had objectives of “speculative growth” and “short-term, ultra-aggressive trading,” says the lawsuit.
But Wilson never explained these terms to Knight, a former co-owner of the Smuggler Mine who was seeking low-risk investments, according to the lawsuit. Instead, Wilson allegedly sold Knight’s mutual funds in three investment retirement accounts and invested the proceeds into high-risk gold stocks and gold options — without Knight’s approval.
In one month alone, $10,000 was lost, prompting Knight to meet with Wilson and demand his money back, wrote Knight’s attorney, Joe Krabacher of Aspen. Wilson allegedly promised that he would return the money but failed to do so.
“Wilson apologized to Knight for the loss, and blamed it on a toothache and a trip that Wilson had to make to the dentist,” the lawsuit says. “[Wilson] told Knight medication made him oversleep and miss the trades.”
All told, nearly $35,000 in Knight’s and his wife’s retirement accounts were lost, Krabacher wrote, including one account that dwindled from over $26,000 to $1,849.
At the same time, Wilson paid himself roughly $7,000 in advisory fees, according to a motion for summary judgment.
The motion, filed to obtain a judgment before trial, regarded counterclaims Wilson filed against Knight in 2017. The defendant, who is representing himself, countersued the plaintiff, arguing the lawsuit was “intentionally fraudulent and frivolous.” Another claim was defamation, with Wilson citing an article about the lawsuit published by the Aspen Daily News.
Krabacher responded with the summary judgment motion that sought to have the counterclaims dismissed. He wrote that Wilson failed to provide a factual basis for the fraud claim, in violation of state court procedures that require “all averments of fraud to state with particularity the circumstances constituting the fraud.” Wilson and his firm “have not provided any witness summaries and have produced no documents whatsoever that would support any claim of fraud by the plaintiff,” the motion says.
“Ironically, defendants are the parties guilty of fraud,” Krabacher wrote, adding that the fees Wilson allegedly collected were roughly 18 percent of the starting value of the two accounts the defendant was handling. The sides’ investment advisor agreement called for Wilson to collect 1 percent based on the account balance, not the starting amount, the motion says.
As for the defamation claim, Krabacher wrote, again, that Wilson had produced neither witness summaries nor documents to support it. The initial Daily News article summed up the lawsuit, and “defamatory statements made in the process of litigation are absolutely privileged, and thus cannot support a claim for defamation,” he wrote.
Judge Chris Seldin of Pitkin County District Court, in a ruling last month dismissing the counterclaims, wrote that Wilson’s response was basically an assertion that the judge has received “all relevant documentation and exhibits relating to the issues … in numerous pleadings during the past two years.
“The Court gathers from the repeated assertion of this sentence in the response that Wilson views the flaws in Knight’s argument as self-evident,” the judge wrote. “While they may be self-evident to Wilson, they are not to the Court. … By simply referring the Court to the entire case file, Wilson essentially asks the Court to litigate his case for him. This the Court cannot do.”
Asked if he wanted to comment on the ruling, Wilson said he would be pleased to speak about the case, but later said he would talk later this week.
A jury trial is set for April 22-24.