Morgan Stanley Says Curry Had 150 False Expense Claims
By LAURIE P. COHEN Staff Reporter of THE WALL STREET JOURNAL
NEW YORK -- Morgan Stanley Dean Witter & Co. said the former employee whose dismissal has sparked the company's current public-relations nightmare made more than 150 fraudulent expense submissions in his nine months at the firm.
In a 28-page filing made Monday in Federal District Court in Manhattan, Morgan Stanley said 25-year-old Christian Curry, a former junior analyst, submitted fraudulent expense claims for everything from $300 for Cole-Hahn shoes to attendance at Flashdancers topless club to electronics equipment and furniture. Mr. Curry typically represented the fraudulent charges as "overtime meals," submitting receipts with the merchants' names cut off, Morgan Stanley said.
The filing was made in response to a discrimination lawsuit that Mr. Curry filed last month alleging that Morgan Stanley fired him shortly after nude photos of him appeared in a gay pornographic magazine. Mr. Curry, who is black, said it was the photos and his race that led to his dismissal. Mr. Curry said he isn't gay and he didn't know the photos would appear in the magazine.
Mr. Curry was arrested last August and charged with paying $200 to an undercover policeman to break into Morgan Stanley's e-mail system and bolster his planned lawsuit by planting racist and homophobic e-mail messages. Citing credibility problems, last month prosecutors at the New York County district attorney's office in Manhattan dropped the charges and instead said they were investigating Morgan Stanley for its role in allegedly failing to disclose a $10,000 payment to an informant for the tip that led to Mr. Curry's arrest.
The informant, Charles Joseph Luethke, told Morgan Stanley last July that he knew about Mr. Curry's e-mail plans. Mr. Luethke participated in a sting operation that led to Mr. Curry's arrest.
Backing Down
Morgan has also retained an outside law firm to do an internal probe of the $10,000 payment and has suspended two senior in-house lawyers who knew about it and dealt with Mr. Luethke. Last month, the company said its chairman, Philip Purcell, and its president, John Mack, believed the payment was a "mistake in judgment that the firm deeply regrets."
But in its filing Monday, Morgan Stanley backed down from its defensive posture about the payment. It said that it believed Mr. Luethke wasn't going to be a witness in Mr. Curry's prosecution because "all pertinent witnesses were police-department officers," and that Morgan received advice from the law firm of Davis Polk & Wardwell that in those circumstances a "reward" payment was "entirely legal." Morgan added that when Mr. Luethke first came to it, his integrity was "vouched for" by lawyers at the firm of Epstein, Becker & Green, a firm it regularly uses.
Far from being willing to settle a case that has caused it headaches in recent weeks, Morgan Stanley Monday upped the ante for Mr. Curry. It filed its response in federal court, where it applied to have the case tried last week. Mr. Curry first filed his lawsuit in state court, which is often viewed as a more sympathetic forum for a lawsuit that alleges discrimination. Benedict Morelli, Mr. Curry's lawyer, didn't return calls seeking comment Monday.
Morgan Stanley indicated in its court filing that Mr. Curry had schemed to plant racist e-mail messages more than a month before he was caught in the sting operation. Morgan Stanley said Mr. Curry approached a part-time firm employee and offered him $100,000 to help plant such e-mail messages, an overture that it said the employee rejected.
Tracing Receipts
Morgan Stanley said dozens of receipts purportedly for "overtime meals" were traced to FAO Schwarz, the "Lots of Linens" furniture store, the "Virgin Mega Store," "Blockbuster Video," a nightclub called "Cheetah's," and other establishments. The firm said that many receipts listed fellow employees who had never eaten with Mr. Curry, and that he had a pad of receipts and fabricated expenses, writing them down on sequentially numbered receipts.
Indeed, it was the Cheetah's receipt for $226 that tipped off Morgan Stanley, the company said. Mr. Curry listed eight other employees on the Cheetah's receipt for a purported "meal," though Cheetah's doesn't even serve food.
Morgan Stanley's filing painted Mr. Curry as a lackluster analyst who got his job through William Lewis, a managing director who heads the firm's real-estate group, where Mr. Curry worked. Mr. Lewis was a friend of Mr. Curry's father, a surgeon. Morgan Stanley said in its court papers that Mr. Curry was "frequently absent from work without any justification" and that half of all of his expenses turned out to be fraudulent. The firm said that when confronted with documentary evidence of his fraud, Mr. Curry offered to resign, pleading with Morgan Stanley officials not to tell his father what happened. Mr. Curry later changed his mind and was fired.
Individuals with knowledge of the dismissal said the firing was badly timed. The firm had meant to dismiss Mr. Curry two weeks earlier, but first wanted to consult with Mr. Lewis, who was on vacation. By the time Mr. Lewis returned, the nude photos that Mr. Curry said were responsible for his firing were published.
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