Touche ross11/12/2023 ![]() ![]() In particular, for both the 10b-5 violations and the breach of fiduciary duty violations, different amounts of damages were assessed to defendants who were jointly and severally liable. When the special verdicts were examined it became apparent that the jury had improperly calculated damages. The jury awarded punitive damages against Peterson, Barlow, Brent Rice and Bond. In addition, Bond and Runyan were found liable for breach of fiduciary duty and conspiracy to breach a fiduciary duty arising out of the formation and operation of Colorado Development Company Bond and Leonard Rice were held liable for breach of fiduciary duty with respect to Health Equipment and Bond, Leonard Rice and Runyan were held liable for conspiracy to breach a fiduciary duty with respect to Health Equipment. With one exception, these finance companies purchased paper only from spas owned by HI.Īrising out of the 1973 sale of FEK to HI, the jury found: (1) that Bond and Leonard were liable for violations of Rule 10b-5, conspiracy to violate Rule 10b-5, aiding and abetting a conspiracy to violate Rule 10b-5, common law fraud, breach of fiduciary duty, and conspiracy to breach a fiduciary duty (2) that Four Seasons was the alter-ego of Bond, and was guilty of common law fraud, conspiracy to violate Rule 10b-5 and aiding and abetting a conspiracy to violate Rule 10b-5 and (3) that Brent Rice, Barlow and Peterson were liable for conspiracy to violate Rule 10b-5 and conspiracy to breach a fiduciary duty. In addition, FEA acquired two corporations-Preferred Discount Corporation, in New York and National Discount Corporation, in Pennsylvania-from HI for the price of one dollar each. FEA was in turn divided into numerous subsidiaries-Financial Enterprises of Florida, Financial Enterprises of Minnesota, Financial Enterprises of Delaware, and the like 4-whose purpose was to purchase contracts from HI's spas for their individual states. ![]() In September 1971, these discussions culminated in the creation of Financial Enterprises of America, Inc. When USI rejected the proposal Bond and Lee Schoonmaker, an accountant for Continental Alliance Company, began discussing the possibility of establishing a finance company that would purchase paper from HI. In 1971, several officers of HI submitted a plan to USI's management to create a subsidiary finance company that would purchase membership contracts from HI. 3 Finally, the sale was expressly conditioned on an unqualified favorable opinion by Touche on the financial condition of Kennibec. It also contained a number of warranties and representations including (1) that the financial condition of Kennibec was accurately reported in the company's financial statements according to generally accepted accounting principles consistently applied (2) that Kennibec had good title and the right to use or lease Kennibec properties as set out in the schedules attached to the Exchange Agreement (3) that all conflicts of interest, related-party transactions and acts of self-dealing had been fully and fairly disclosed and (4) that the proceeds from the four million dollar loan from USI to Kennibec would not be used by any of the selling shareholders to satisfy personal obligations. The Exchange Agreement provided that Kennibec's executive officers-Rice, Melby and Bond-would remain as the president, vice-president and secretary-treasurer of Kennibec respectively. On October 20, 1969, USI and Kennibec entered into an Exchange Agreement under which USI would acquire eighty percent of Kennibec's stock in exchange for shares of USI preferred and common stock. One of the companies that had indicated an interest in acquiring Kennibec was USI. Peterson, Jr.īefore HOLLOWAY, Chief Judge, BARRETT and BALDOCK, Circuit Judges. Brahm, Lucas, Prendergast, Albright, Gibson & Newman, Columbus, Ohio, for defendant-appellant George S. Weggeland, Yano, Murphy, Weggeland and Freidland, P.C., Salt Lake City, Utah, for defendant-appellants Joseph A. ![]() Later, Rooker, Larsen, Kimball & Parr, were also on the brief), for plaintiff-appellee U.S. Barlow.Ĭlark Waddoups, Rooker, Larsen, Kimball & Parr, Salt Lake City, Utah (C. Nemelka, Nemelka, Blakesley & Blakesley, Salt Lake City, Utah, for defendant-appellant James O. General Counsel, Touche Ross & Co., New York City, were also on the brief), for defendant-appellant Touche Ross & Co. ![]() Freeman, Cooley, Godward, Castro, Huddleson & Tatum, San Francisco, Cal., and Robert Bartels, Asst. Renne, Cooley, Godward, Castro, Huddleson & Tatum, San Francisco, Cal. ![]()
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