First Republic Bank and a financial advisor are facing a lawsuit over the alleged mismanagement of $7 million, intended for scholarships for low-income, first-generation college students at the University of California, Berkeley. The suit was filed by San Francisco-based couple George Miller and Janet McKinley, long-time benefactors of the university’s Miller Scholars Program.
According to the complaint, the couple’s financial advisor, Samuel Schoner, allegedly invested over $7 million of their funds in First Republic preferred shares between 2017 and 2021, most of which was earmarked for the scholarship program. When First Republic Bank collapsed in May, the couple’s stake in the preferred stock plummeted to nearly zero. Despite the couple’s repeated requests to sell their First Republic stock leading up to the bank’s collapse, Schoner allegedly failed to act.
The lawsuit accuses Schoner of intentionally misleading his elderly clients by making investments not in their best interest and concealing the risky nature of those investments.
If the $7 million is not recovered, the loss will prevent 700 students from receiving scholarships from the Miller Scholars Program. The couple is suing First Republic and Schoner for breach of fiduciary duty, negligence, elder abuse, and fraud.
The lawsuit highlights the importance of trust and transparency in financial advising, particularly in relation to charitable contributions for educational purposes. It serves as a sobering reminder of the potential risks associated with investment and the devastating impact that mismanagement can have on well-intentioned philanthropy.