WALL STREET JOURNAL

By: Jacob M. Schlesinger and Bryan Gruley Staff Reporters of The Wall Street Journal
Updated Dec. 27, 2002 11:59 p.m. ET

DALLAS -- When her husband died of a brain tumor in May 1999, Maria Walker, then 33 years old,
was left with a two-year-old daughter, no job and few marketable skills.

But there was hope. The bull market of the 1990s was in full stampede. And Ms. Walker's money was
in the hands of her late husband's friend, a Merrill Lynch & Co. broker named Brion Randall. Mr. Randall
had promised his pal that he would take care of the widow.
The broker invited her to his office on the top floor of a glass tower in Dallas. He told her that the stock market would take care of her, just as it was taking care of his other clients. Through the magic of high-tech stocks Ms. Walker had never heard of -- Ciena Corp. , XilinxInc. and ADC Telecommunications Inc. -- her inheritance soared by 50% in less than a year, exceeding half a million dollars. While the market roared, she racked up monthly Visa bills that averaged more than $4,000. "You rock!" she told Mr. Randall again and again.

Then stock prices imploded and so did their friendship.

In the search for what went wrong in the stock boom-gone-bust, debates have focused on greedy executives, corrupt accountants and lax regulators. But the bubble never would have inflated without ordinary Americans -- like Mr. Randall and some of his clients: Ms. Walker, divorce lawyer Robert E. Holmes Jr., and contractor James Lundy Jr. and his son, J.R.

In the 1990s, the number of Americans owning stock swelled by 30 million to more than 80 million, a mania unseen since the 1920s. The new national passion suffused the circle of investors who revolved around Mr. Randall, 40. The native Texan was a bored banker who joined Merrill Lynch in 1995, just as the boom in tech and telecom stocks was gathering force. He persuaded friends and family to join him on the ride to riches.

His clients cheered as their accounts ballooned. They went on shopping sprees and planned for early retirements. But the bull market's end brought recriminations. Many investors aren't much worse off today than before the bubble. Yet everything has changed. They're bitter and vindictive about losing the future they thought was in their grasp. And they're grappling with where to lay the blame."

He kept selling us more. And the more he gave us, the more we wanted. Then boom, crash," says Mr. Holmes of his former broker.

At least 10 former clients -- including Mr. Holmes and Ms. Walker -- have filed formal complaints against Merrill, alleging that Mr. Randall broke various rules in handling their accounts. He denies these charges. Merrill has so far settled four of the cases, paying about $1.5 million to the investors.

The firm fired Mr. Randall earlier this year, and Mr. Randall plans to file an arbitration claim against Merrill. A Merrill spokesman declines to comment on Mr. Randall's case, except to say, "We take all client complaints very seriously and, consistent with our policy, review each complaint thoroughly and take what we believe to be the appropriate action."

THE STORY begins in 1995. The Dow Jones Industrial Average was surging past 5000 and the Nasdaq was breaking 1000. The initial public offering of Netscape Communications Corp. shot from $28 to a close of $58.25 on its first day. Americans who had considered Wall Street a spectator sport decided to join the action.

Rob Holmes wasn't one of them, at first. Eight years earlier, he'd given a few thousand dollars to a stockbroker who insisted that the lawyer couldn't lose. Then came the Crash of '87.

Mr. Holmes, 50, cashed out his shrunken account and spent it. At the time he was a bachelor with a taste for "nice cars and a nice time," and few worries about the future. But by 1995, he was starting his own law firm in Dallas and shopping for a retirement plan when Mr. Randall called.

"He was pushy in his way, really aggressive, saying, 'I can do this, I can do that,' " Mr. Holmes recalls. Mr. Randall got the law firm's business, including Mr. Holmes's own $70,000 retirement account.

The Merrill broker was new to the stock market himself. He had grown up in Richardson, a thriving Dallas suburb where his father, an executive at a real-estate development company, had helped build Telecom Corridor, a stretch of office buildings occupied by Cisco, MCI, Nortel and other tech giants.

Mr. Randall had been a bank vice president when he decided he wanted bigger challenges and a chance to make a better life for his wife, Amy, and their young son. He joined Merrill in April 1995, completed a two-year training program in 13 months, and established himself as a whiz at assembling comprehensive financial plans. The selection of individual stocks played only a small part in these plans, he says.

Mr. Randall worked in a tidy cubicle surrounded by other Merrill brokers. Customers met an athletic man, unfailingly upbeat, who compared his philosophy of diversified investing to a highway. "I'm going to put you in five lanes," he would say. "If one lane is stopped, the others are moving."

A few of Mr. Randall's investors had Alcoholics Anonymous in common. He had been a recovering alcoholic since 1989. His wife, Ms. Walker and her husband were all recovering alcoholics. After AA meetings, Mr. Randall would occasionally pick up the tab for dinner. "Everybody would be howling" at his stories and jokes, Ms. Walker says.

ONE DAY IN 1996, Mr. Randall parked his black Nissan Maxima at an office building on Black Gold Drive in Dallas.

He'd come to pick up a $1,000 check from his friend and newest client, 25-year-old construction-company employee J.R. Lundy. "I told him, 'Dude, I'm not worth your time,' " Mr. Lundy recalls. Mr. Randall not only took the check and the account, he took Mr. Lundy to lunch.

Mr. Randall wanted help landing a more promising client -- Mr. Lundy's father, James Lundy Jr. The elder Mr. Lundy owned a drywall and millwork firm that was flourishing thanks to a tech-driven construction surge.

James Lundy wasn't an easy sell, though. He had left high school after 11th grade and followed his father and grandfather into construction work. To the extent he discussed investing with his family, it was about how Wall Street was rigged against the little guy. The elder Mr. Lundy declined to be interviewed for this story.

His son had no such fear of the market. He was comfortable with the Internet and had come to see it as an equalizer, a powerful tool to put detailed financial information in the hands of regular people. When he received a bonus at work, he called Mr. Randall and said he was ready to start investing. Soon after that, he introduced the broker to his father. At 45, the elder Mr. Lundy opened his first brokerage account.

Some experts, meanwhile, were growing uneasy. At the end of 1996, Federal Reserve Chairman Alan Greenspan famously questioned whether "irrational exuberance" was inflating share values. Stocks briefly swooned, but rebounded almost immediately. In 1997 and in 1998, the bull market stumbled under pressure from the Asia crisis, the Russian debt default, and the collapse of a big hedge fund. Each time, the bull roared back. At the end of 1998, the Dow Jones Industrial Average was near 9200 and the Nasdaq was near 2200.

MR. RANDALL HAD BEEN with Merrill three years when he took a call from an assistant to Dwight Emanuelson Jr., a senior Merrill broker in Dallas.

Mr. Randall knew of him from the daily "goalpost" listings on his office bulletin board. They listed individual brokers' "production," or how much they generated in commissions and fees. Mr. Emanuelson always seemed to be at the top of the list.

Mr. Emanuelson had noticed Mr. Randall, too. The younger broker was winning new clients and awards, including a statue of a cowboy riding a bull; it had been given him by then-Merrill brokerage chief John "Launny" Steffens. He earned the award for his skill at developing financial plans.

Over breakfast, Mr. Emanuelson invited Mr. Randall to be his partner and pool their clients and fees. Mr. Randall couldn't believe his luck. Mr. Emanuelson's annual production was in the millions of dollars, while Mr. Randall's was in the hundreds of thousands.

Mr. Randall moved from his first-floor cubicle to a 20th-floor office with two assistants, a bank of computers and a view of the Dallas skyline. "I've arrived," he thought. Mr. Emanuelson would handle most of their biggest clients and receive a larger share of the income. Still, in his first two years with Mr. Emanuelson, Mr. Randall's annual income climbed to more than $400,000.

At the end of 1999, Mr. Randall and his wife moved with their son, Travis, and two-year-old daughter, Riley, into a $580,000 brick-and-stucco house in suburban Plano. He leased a silver Jaguar, and put his cowboy statue in his new home office. So many referrals poured in that he had to turn some away.

HE COULDN'T SAY no to Maria Walker.

Her late husband, Tuck, had been a fellow AA member. They barbecued and watched football together. The Walkers' little girl, Emily, played with the Randalls' girl, Riley.

After Mr. Walker died in 1999, Ms. Walker holed up for two days to drink wine and beer, her first alcohol in more than a decade. When she stopped, Ms. Walker says, Amy Randall sponsored her at the AA group she and Mr. Randall attended. When Ms. Walker fell into a depression, the Randalls had her and Emily stay with them for a week. Ms. Randall helped Ms. Walker learn to make beaded jewelry.

Mr. Randall followed through on his vow to care for Ms. Walker's finances. Her husband had no life insurance, but he left a retirement account. Mr. Walker's family paid Ms. Walker for her late husband's share of the family's medical-equipment business, and gave her more to set up Emily's college fund. After buying a $156,900 house, she had about $350,000.

THE FIRST STOCKS Mr. Randall bought Ms. Walker were blue chips including Wal-Mart Stores Inc. and International Business Machines Corp. Over time, though, he advised her to dump those in favor of hotter issues. The account she used for household expenses remained invested in conservative bonds, but by August 2000 her retirement account was composed entirely of tech stocks.

Ms. Walker delighted in hearing from Mr. Randall how much money she was making. When she heard that another AA member had profited from IPO shares, she called the broker and asked, "What's an IPO? If that's making a lot of money, I want one, too.

"Rob Holmes, the lawyer, understood that envy. He had watched the dot-commers divvy up lucrative stock options in divorces. And he'd seen new wealth blossom in the Preston Hollow neighborhood where he lived. One day, Mark Cuban moved in. Mr. Cuban now owns the National Basketball Association's Dallas Mavericks and co-founded Broadcast.com, which he sold to Yahoo in 1999 for $5.7 billion. "His fountain makes mine look like a water faucet," Mr. Holmes says.

By 2000, Mr. Holmes's $70,000 investment with Mr. Randall had more than doubled. The income from his law practice began to seem inadequate. "All of these young guys were coming along going crazy making money," Mr. Holmes says, "making us little service-industry people look like fools."

That was enough to wipe away the reticence caused by his earlier misadventure in the markets. He turned the bulk of his savings, about $100,000, over to Mr. Randall for another account. Mr. Randall put nearly all of it in tech stocks.

Mr. Holmes, himself a certified financial planner, says he joked with co-workers that he was going to become "an AOL millionaire." He bookmarked his stocks on his computer. "If I needed a little boost," he says, "I'd check and go 'Woo-hoo!'

"On Black Gold Drive, stock gossip joined fishing and hunting in coffee-break conversations at Lundy Services Inc., James Lundy's firm. His son, J.R., stayed up late scrolling Web sites such as Motley Fool and watching stock shows. "I loved Lou Dobbs," says the community-college dropout of the host of CNN's "Moneyline" program. "It was the first time I started thinking I wished I'd gone to school so I could understand better." James Lundy was pleased enough with Mr. Randall's handling of his money that he referred two construction clients to the broker.

Mr. Randall says most of his clients maintained conservative, well-balanced portfolios. But for some, he set aside the "five-lane highway" and concentrated almost entirely in the fast lane of high-tech stocks.

The broker says clients pressured him to do so. "I'd get calls from people saying, 'My buddy's making more money and I'm going to move this account -- my 8% mutual fund is a dog,' " he says. He steered others in that direction himself, he says, because tech stocks "were where the growth was."

Network Peripherals Inc. -- a Fremont, Calif., maker of ethernet switches so obscure that Merrill analysts didn't follow it -- became a favorite pick. Mr. Randall once told a friend he might put the company's stock symbol, NPIX, on his Jaguar's license plate.

By March 1999, the Dow had cracked 10000, the Nasdaq was threatening 2500, and online brokerage firm Ameritrade was running ads starring Stuart, a red-headed slacker who goaded his boss into trading stocks online.

Mr. Randall's clients didn't think of themselves as quite so wacky. "Merrill Lynch seemed safe," Mr. Holmes says.

But rather than counseling against high-tech hysteria, Merrill got caught up, too. The brokerage firm had lagged behind rivals in peddling stocks and winning investment banking in the fast-growing sector. As the Nasdaq neared its peak in the first months of 2000, Merrill launched an Internet Strategies fund with more than $1 billion in investor money. New York Attorney General Eliot Spitzer later alleged that Merrill's rosy research on tech stocks had been intended to boost its banking business. Merrill has denied wrongdoing, but it paid $100 million this past May to settle the charges and issued an apology to investors. Last week Merrill agreed to pay an additional $100 million for investor education and research as part of a separate settlement between regulators and 10 securities firms.

Mr. Randall says Merrill also encouraged brokers to raise as much money as possible in fees charged to investors by making more trades and opening more accounts. He says that didn't necessarily conflict with the interest of investors -- as long as the market was rising.

"There's no question that my investment philosophy changed, or was changed for me, when I entered the inner sanctum," Mr. Randall says. "The more production you do, the more accolades you receive."

Not all Merrill accounts are charged commissions. Some of Mr. Randall's clients -- Ms. Walker, for example -- paid only a flat fee equivalent to 1% of the accounts' assets.

But one lucrative account was James Lundy's. Trading was so heavy that the account was turned over, on average, every 12 days, according to a complaint Mr. Lundy has filed with the National Association of Securities Dealers, the self-regulatory organization that hears most investor complaints. Mr. Lundy's tab on trading commissions alone ran to $369,050 from December 1998 through July 2001.

Merrill, which regularly monitors accounts, noticed the activity. The firm says it called and wrote Mr. Lundy on several occasions, and he repeatedly characterized himself as an aggressive trader who was pleased with Mr. Randall's service.

In February 2000, through a combination of successful trades and cash infusions, Mr. Lundy's account -- worth $65,000 in the summer of 1998 -- hit $791,879. That was as high as it would get. The Dow had hit its high and the Nasdaq was soon to peak. The bull market was at an end.

STOCK PRICES HAD CLIMBED for years on assumptions that the economy would keep thriving and, indeed, that stock prices would keep climbing. In the spring of 2000, small tremors began to disturb those assumptions.

In late March, Goldman Sachs's influential bull, Abby Joseph Cohen, urged investors to trim holdings a bit. One week in April, the Nasdaq dropped 1125 points, or 25%, due in part to disappointing tech-company earnings and inflation news. The market looked vulnerable.

In May, the Federal Reserve, worried that the stock market was overheating the economy, cranked up its primary rate target by half a point. Over the summer, the economy's overall growth slowed, hurting traditional stocks as well. The dead-heat presidential election created more uncertainty. A week after the Supreme Court finally threw the contest to George W. Bush, the Nasdaq closed below 2500 for the first time in more than a year.

That's when the exuberance surrounding Mr. Randall began to subside. In late 2000, one investor, a nurse, filed a formal complaint against the broker and Merrill, accusing them, among other things, of churning her account, or trading heavily to generate commissions, according to NASD records. Mr. Randall says the complaint took him by surprise. Only that summer, the investor had given him high grades in a chat with a Merrill official in Dallas, according to Merrill documents.

In the spring of 2001, Merrill paid $410,000 to settle the claim. Then a second Randall client filed an arbitration claim for $522,000 in damages. Nervous, Mr. Randall told his wife, "The sharks are circling and there's chum in the water."

"IT MUST BE TOUGH being you right now," Mr. Holmes told Mr. Randall one day as the market continued its fall.

"Yeah," Mr. Randall joked. "I've got a bungee chord and I jump off the side of the building periodically to see what it feels like."

Stocks that once made clients thousands of dollars in a matter of days or hours were now in free fall. Some clients cashed out. Others refused, even when Mr. Randall advised them to sell, he says. But there were some in the middle, anxious but unsure. When they sought Mr. Randall's expert advice, he often counseled: Hang in there.

Mr. Randall says he, in turn, relied on Merrill strategists, economists and analysts, many of whom remained bullish well into the bear market. Amid 2001's summer swoon, Christine Callies, Merrill's chief U.S. investment strategist, appeared on CNNfn, CNN's financial channel. "It's days like this that we like to encourage investors to step up and buy the dip," she said.

As the market fell, Mr. Holmes says he frequently suggested selling, and Mr. Randall talked him out of it. "I kept hanging on until I was hung," Mr. Holmes says.

On Sept. 11, 2001, terrorists slammed jets into the World Trade Center and the Pentagon. Stock trading was halted. When markets reopened, the Dow fell nearly 700 points, beginning its worst week since the Great Depression. Shudders rippled through an economy that, it turns out, was already in recession. The public's mood further darkened as the U.S. government launched war in Afghanistan and searched for an anthrax killer at home. By the end of 2001, $4.7 trillion of stock-market value had disappeared since the peak.

When Maria Walker opened her year-end Merrill statement, she saw that her accounts, once worth more than $500,000, were now valued at $75,813. Some of the loss was the result of her shopping. Her cash account, which had been invested conservatively, was down by $66,460 since the summer of 2000. But she also had big losses resulting from investment decisions. Her retirement account, now invested almost entirely in BEA Systems , had fallen by $400,000. BEA, a San Jose maker of e-commerce software, was trading at $15.40 a share, or less than one-fourth the $64.88 she had paid in January, according to the statement.

Mr. Randall invited her to meet in his office. He told her, as he says he had several times before, to cut her monthly spending. He said she would be OK until the market bounced back.

"OK, Brion, I totally trust you," she recalls saying.

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But Americans' trust in financial markets was dwindling. Enron Corp. had tumbled into bankruptcy amid revelations that its earnings had flowed from dicey accounting. That touched off allegations of bookkeeping shenanigans at other corporate leaders, from Global Crossing Ltd. to WorldCom Inc. With investors losing faith in earnings reports, a brief market rally sputtered and died in the spring of 2002.

AS HER PORTFOLIO dropped, Ms. Walker began to feel resentful. "I was losing all my money and Amy was still shopping," she says of the broker's wife. She also thought Ms. Randall was growing distant. "I'd ask "What's wrong?'" Ms. Walker says. "She'd never say."

Ms. Randall was fretting about her husband.

Merrill officials had been calling Mr. Randall's clients -- including his father -- and asking if they were happy with him. He'd heard that other clients might file complaints and had begun to doubt that Merrill was sincere about defending him. He wondered if the firm was using him to shield his senior partner, Mr. Emanuelson.

He finally went to see the manager of his office, Cecil "Cap" Chesser. He says he told Mr. Chesser that he had hired Roger Evans, a Dallas attorney who specializes in employment law, because he didn't trust Merrill to defend his reputation.

A few weeks later, Merrill moved Mr. Randall from the 20th floor to the first floor. On March 11, Merrill fired him because of "several customer complaints alleging unsuitability, discretion and churning," Merrill says.

The NASD "currently has an investigation under way" into the conduct of both Mr. Randall and Mr. Emanuelson, an NASD official says. Mr. Randall's attorney, Mr. Evans, says that his client "is voluntarily assisting the NASD in its investigation," adding that "Mr. Randall unequivocally and categorically denies any part whatsoever ... in any inappropriate or illegal activity by his former employer." A Merrill spokesman declined to comment or make Mr. Emanuelson or Mr. Chesser available for interviews.

THE NIGHT HER HUSBAND was fired, Ms. Randall, Ms. Walker and two other friends gathered in Ms. Walker's living room. As they sipped coffee, Ms. Randall talked about her husband's travails.

She said it looked liked any investors could allege most anything, and Merrill would pay without a fight. "Oh my God," Ms. Walker said at the time, according to Ms. Randall. "Maybe I could get back some of the money I lost."

After her friends left, Ms. Walker says she grew angry and depressed. She had trusted Mr. Randall, she says, but now she was hearing second-hand that he might have mishandled her money. She spent hours searching the Internet for information on investor rights, she says, "just printing, printing, printing."

Mr. Randall called her the next day. They discussed the possibility that she would sue. Mr. Randall told her he had done nothing wrong.

Then Ms. Randall called Ms. Walker and accused her of abusing their friendship. "I can't believe you would do this," Ms. Randall said. They haven't spoken since.

TWO DAYS LATER, Ms. Walker dialed an attorney whose name she had seen on a Web site called "investorfraud.com."

Ms. Stoneman took the call at her sprawling home near Colorado Springs, Colo. Friends jokingly call it "Prudential Palace" because Ms. Stoneman and her husband, an expert witness for investors, had won millions of dollars suing Prudential Securities Inc. in the early 1990s for peddling risky limited partnerships.

Today's bear market has been a bull for Ms. Stoneman. She's handling 38 cases, triple her caseload three years ago. "Many brokers led clients to believe that it's the market's fault," her voiceover said in a TV commercial during a recent Dallas broadcast of "Divorce Court." "The good news is, you don't need to remain a victim."

When Rob Holmes first started losing money, "I was blaming the market," he says. "I thought I should take my losses." Then he heard Mr. Randall had been fired over customer complaints. He saw one of Ms. Stoneman's ads in the Dallas Morning News, calling on investors who lost money on tech stocks with Merrill Lynch. That described Mr. Holmes. His two accounts, once valued at about $300,000, were now, combined, worth less than $20,000.

The news had been filled with reports of insider trading, sweetheart loans for executives, and stock recommendations made to win investment banking. It got Mr. Holmes to thinking: "Maybe there's something going on out there I didn't know about."

He called Ms. Stoneman on May 2. "Another Brion Randall client?" Ms. Stoneman said. She filed a claim against Merrill with the New York Stock Exchange on behalf of Mr. Holmes, Ms. Walker and two other clients of Mr. Randall.

DESPITE THE LITIGATION, these investors have wrestled over what or whom they should blame: Mr. Randall? Merrill Lynch? Big companies? Themselves?

"Did I let it happen? Absolutely," says Mr. Holmes. He says he lost sight of his values and came to believe he could make money without "grinding it out." When his stocks were soaring, he boasted to colleagues about his plans for early retirement. "I'm so out of here," he would say.

Now, he says, he walks down the halls with his empty pockets turned out, pleading mock poverty. He complains about the lost dreams as much as the money.

In choosing to lodge a complaint, Mr. Holmes concluded: "Somebody should have hosed us down and said, 'OK, let's have a point at which you stop.' That's what we were paying Brion Randall for."

James Lundy confronted the question of blame as well. Last year, the two construction-industry associates he'd sent to Mr. Randall in 1997 decided to file complaints, and asked Mr. Lundy to join them.

He didn't at first. Mr. Randall says Mr. Lundy even warned him about the pending complaints one day over a Tex-Mex lunch. As Mr. Randall recalls it, Mr. Lundy said he had discouraged the men, telling them, "'Brion might've made some different calls, but at the end of the day you're the one making the final decisions.' "

But Mr. Lundy eventually chose to file a complaint with the NASD. The market plunge had wiped out his account. He came to realize his losses were much steeper than in the market overall, says his son. Robert Crotty, one of James Lundy's lawyers, says "there are substantial inaccuracies" in statements made by Mr. Randall and Merrill about his client. He declined to cite specific examples.

J.R. Lundy also was wiped out, but decided against filing a complaint. He says his account, which never reached $100,000, was too small. He owns no stocks now, but periodically checks his old ones -- at least those that survived. "I tap a few symbols into my computer and snicker."

The vast majority of Mr. Randall's clients haven't taken any action against him. Scott Jessen, 45, is one. The Telecom Corridor real-estate executive says he lost a lot of money, but filing a complaint never crossed his mind.

"If you're going to trust somebody with your money and you don't take their advice, what are you paying them for?" Of those who did take action, Mr. Jessen has this to say: "These people need to look in the mirror. If they didn't like where it was going, why didn't they just fire him?"

WHEN MR. RANDALL LOOKS in the mirror, he sees a victim, betrayed by his employer, his former clients and his dead friend's widow. Once relentlessly optimistic, Mr. Randall now shows flashes of anger

He didn't lose his own money trading stocks because he didn't trade stocks for himself. Merrill restrictions designed to prevent insider trading make it complicated for brokers to do so. But he says he has suffered nonetheless. He lost his job, and says his family has been through emotional hell.

Mr. Randall refuses to accept blame for his clients' shrunken fortunes, except to say he was naive to trust Merrill's research. He now works at a two-man firm linking clients with providers of estate planning and other financial services. He charges flat fees -- no commissions.

He's preparing his own arbitration claim against Merrill, charging slander, libel, shoddy representation and wrongful firing. But he still displays his Merrill cowboy statue in his new office.

Ms. Walker, meanwhile, recently had her Merrill Lynch debit card refused by a grocery store. She and her daughter are living off of $2,668 in monthly Social Security checks, and what she can earn selling the beaded jewelry that Ms. Randall encouraged her to make.

AA friends have upbraided Ms. Walker for violating a crucial tenet of the group, anonymity, by exposing the Randalls as members in her complaint. She says it pained her, but she needed to show why she had trusted Mr. Randall so much.

The boom brought Ms. Walker closer to Mr. Randall. They made money. Then they lost it. She faced a choice: Eat her losses and take the rap for believing in the bubble. Or challenge her friend to try to get her money back.

She chose the latter because, she says, "I have to take care of my family. I'm all my daughter has." And she stews over the Randalls' contention that her actions destroyed their friendship. "Is that supposed to cost me $250,000?" Ms. Walker says. "That kind of friendship? Is that how expensive it is?" Write to Jacob M. Schlesinger at jacob.schlesinger@wsj.com and Bryan Gruley at bryan.gruley@wsj.com

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