More than half of Lerma's fortune was invested in gold stocks by late 1997.
PaineWebber says that it is cooperating with Lerma in his quest to find out what happened.
By mid-1997, account records show, Lerma had become a heavy trader in Canadian gold stocks.
Lerma's lawyer, Thomas Ajamie, says he has yet to find out where that money went.
With Lerma's knowledge, Perusquia set up offshore trusts through PaineWebber's Channel Islands subsidiary, with Perusquia in charge.
Lerma first met Perusquia through Lerma's brother, Benito, in 1989, when Perusquia was working for Lehman Brothers.
By mid-1997, account records show, Lerma had become a heavy hitter in the shadowy world of Canadian gold stocks.
Francisco Lerma started investing with Perusquia, who put him into American Resource Corp.
Lerma did this without visiting PaineWebber's San Francisco office to discuss the investing of his money with the office manager there.
When he opened his account at PaineWebber, Lerma had most of his money in bonds and in stocks like Schlumberger and Guinness Plc.
Men like Cardinal Richelieu in France, the Earls of Essex and Leicester in England, and the Duke of Lerma in Spain were both private advice-givers and public administrators.
What Lerma didn't know, according to the complaint, was that Perusquia forged Lerma's signature on documents giving him the power to borrow against investments and to move money into other accounts.
The evidently fake statements, which bear the number of a PaineWebber fax machine in the firm's San Francisco office, listed some of the gold stocks Lerma owned, but with false share prices.
Standing in the construction magnate's Mexico City home on Mar. 2, 1998, Lerma says, Perusquia admitted he had gambled Lerma's fortune away on shaky Canadian gold stocks and used false account statements to cover it up.
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