After
deliberating for mere hours, a federal jury Tuesday
returned a $170.7 million verdict on behalf of
former shareholders of an allegedly sham software
company. Included in the unanimous eight-person
jury's verdict is $165 million in punitive damages,
hailed as a signal that post-Enron juries are going
to be tough on allegations of financial fraud.
The
damages are attributable to "the absolute brazenness
of the [defendants'] conduct and their utter and
complete lack of remorse," said Lieff Cabraser
Heimann & Bernstein partner Richard Heimann. "This
was business as usual."
The
case is a successor to a shareholder suit over the
collapse of Scorpion Technologies Inc., which was
raided by the FBI and Securities and Exchange Commission
in 1993. Criminal charges against a number of former
employees ensued. The present case was brought against
British company Edsaco Ltd. in 1998. Using overseas
addresses, Edsaco allegedly provided shareholders
and directors for phony European companies set up
by Scorpion to purchase non-existent software. Such
shareholders and directors can help put a company
in a more favorable tax situation, among other considerations.
Heimann
will now turn his efforts to recovering the $5.7
million in compensatory damages and $165 million
in punitives, which is by no means assured -- Edsaco
says it is now dormant and does no business. "I
think that's all bogus," Heimann said, adding
that he believes the company's assets were shifted
to new companies. "Now that we've got the verdict,
what I'm going to do now is go after the successor
companies." |
