Simon & Co. Investment Firm Guilty of Fraud ... $65 million with $22 million punitive

NBC3.com | 7/31/02

[NormsRevenge]

Just saw this on NBC3 in San Jose. Fraud suit in Los Angeles has resultd in a Guilty verdict against the Simon family owned investment firm that was sued by an investor. 65 million awarded plus 22 million punitive.

I guess they didn't get an OJ jury.

Nothing follows Yet!

[NormsRevenge]

Thanks for the info...

[absalom01]

Here's the AP story, from Yahoo. Also, see my post above. As you suggest, this is being "spun" by the media in the most negative way possible. Per the AP on Yahoo!:

Jury Awards $65M to Coin Company

Wed Jul 31, 9:16 PM ET

By ERICA WERNER, Associated Press Writer

LOS ANGELES (AP) - A jury in a fraud lawsuit on Wednesday awarded a businessman $65 million in punitive damages against gubernatorial candidate Bill Simon's investment firm.

A day earlier, the Superior Court jury found William E. Simon & Sons liable for fraud and assessed $22.2 million in compensatory damages.

Simon, a Republican facing Democratic Gov. Gray Davis ( news - web sites) in the November election, started the investment firm with his brother and his father, a former U.S. Treasury secretary.

The lawsuit was filed by Paul E. Hindelang, who co-founded and owns 95 percent of Pacific Coin Management. The suit alleged that Simon & Sons and other firms that invested heavily in Pacific Coin hatched a secret plan to take Pacific Coin public and in the process destroyed the company.

While offering assurances they would stick to Hindelang's slow-growth plan, the investors were planning aggressive acquisitions with the goal of pulling off a highly profitable public offering, the suit said.

Simon, who was not named in the suit and is on leave from his post as co-chairman of Simon & Sons, said Wednesday in a statement the decision "is fundamentally flawed."

"I expect the judge to set aside this judgment or it will be overturned on appeal," he said.

Simon & Sons and another investor acquired a controlling 60 percent interest in Pacific Coin in a deal consummated in 1998. The plan for an initial public offering failed and debt-ridden Pacific Coin was taken over by a bank in 2000.

In 1981, Hindelang pleaded guilty to federal drug smuggling charges and served about 30 months in prison. The Wall Street Journal reported on Hindelang's past in 1998, and Hindelang claimed investors used that article as a pretext for Pacific Coin to wrongfully remove him as chief executive.

Investors filed a federal lawsuit, later dismissed, that accused Hindelang of fraudulently concealing his past. Hindelang then sued the investors in Superior Court, and the investors filed a countersuit with the concealment allegation. The jury rejected the investors' claims.

[goldstategop]

Yeah expect the GrayDown pressmeisters to make the most of it.

[NormsRevenge]

Here's the Sac Bee's blurb

Multimillion-dollar verdict against Simon firm, others in suit

By ERICA WERNER Associated Press Writer
Published 4:25 p.m. PDT Wednesday, July 31, 2002

LOS ANGELES - The jury in an investment fraud lawsuit on Wednesday awarded a businessman $65 million in punitive damages against William E. Simon & Sons and $10 million against another firm a day after awarding $22.2 million in compensatory damages.

William E. Simon & Sons is the investment firm started by California GOP gubernatorial candidate Bill Simon, his brother and his father, a former U.S. Treasury secretary. Bill Simon will face Democratic Gov. Gray Davis in the November election.

The award went to Pacific Coin Management, which is 95 percent owned by businessman Paul Edward Hindelang, co-founder of Pacific Coin, a coin telephone company that Simon & Sons once invested in.

On Tuesday, the Los Angeles County Superior Court jury found William E. Simon & Sons LLC, B-R Investors Inc. and other entities liable for fraud and awarded the plaintiff $22.2 million in compensatory damages.

Bill Simon, who was not personally named in the suit and is on a leave from his post as co-chairman of Simon & Sons for his gubernatorial run, reacted to the verdict during a campaign stop in Fresno.

"The decision made today is fundamentally flawed and I expect the judge to set aside this judgment or it will be overturned on appeal," he said in a statement.

The lawsuit claimed the investors hatched a secret plan to take Pacific Coin public and in the process destroyed the company.

It claimed they misled Hindelang about their intentions when they invested in the company, while offering him assurances that they would stick to his slow-growth business plan.

Instead they were planning all along an aggressive strategy of acquisitions with an ultimate goal of pulling off a highly profitable public offering, the suit claimed.

"Defendants steered Pacific Coin from one disastrous transaction to another solely for defendants' benefit," the suit said.

The jury found that Coinable Simon, the investment vehicle Simon & Sons used in the transaction and B-R Telephony Partners, the investment vehicle of B-R Partners, breached their fiduciary duty.

Simon & Sons and B-R investors acquired a controlling 60 percent interest in Pacific Coin in a deal that closed in February 1998. The plan for an initial public offering failed and the indebted Pacific Coin was taken over by a bank in December 2000.

In 1981, Hindelang pleaded guilty to federal drug smuggling charges and served about 30 months in prison.

The Wall Street Journal reported on Hindelang's troubled past in December 1998, including that he had just agreed to forfeit $50 million in drug-trafficking proceeds to the federal government.

Hindelang claimed the investors used that article as a pretext to cause Pacific Coin to wrongfully remove him as chief executive officer.

The legal battle began when the investors filed a federal lawsuit accusing Hindelang of fraudulantly concealing his past. That suit was thrown out.

Hindelang then sued the investors in Superior Court, and the investors filed a countersuit with the concealment allegation. Both suits were combined. The jury rejected the investors' claims.

---

[NormsRevenge]

PING

[Ernest_at_the_Beach]

Thanks for the ping!

Really been out of the active loop, trying to change my computing layout!

This headline scared me!

calgov2002:

calgov2002: for old calgov2002 articles. 

calgov2002: for new calgov2002 articles. 

Other Bump Lists at: Free Republic Bump List Register

[NormsRevenge]

LOL. Like my title Huh :-?

I should have ran it as Breaking News :-)

Simon sounded fine on Hugh Hewitt when Hugh mentioned the post on FreeRepublic.

Basically, a lot of hoopla about a suit that would appear flawed, or at least as flawed as the jury's process in arriving at their verdict.

Good luck with your new compouting environment. Messing with that stuff is always fun.

[Ernest_at_the_Beach]

I have been at this quite awhile and my wife and son keep saying, aren't you done yet?

[Ernest_at_the_Beach]

My son says, get a lap top, you can work any where. I say , you got to have a BIG machine to jump on the internet and you can't get SCSI and 138 Gigs in a Laptop!

[Looking for Diogenes]

BP AMOCO, $5000, $25000, $25000, $25000 Didn't Davis rip on the oil people???

This is politics. If you did business in California, wouldn't you want to make sure you'd lined Davis' pocket? That seems to be the way to get favorable treatment.

(They probably gave twice as much to Simon).

[CyberAnt]

Hmmmm? I wonder if the judge(s) were appointed by Davis??

[Brad’s Gramma]

Did you get the email from Simon's campaign just a few minutes ago? I haven't read all the way through this thread, so I'm sorry if it's already posted.

[gubamyster]

Did you get the email from Simon's campaign just a few minutes ago?

No, I'm not on the e-mail list.

[BJungNan]

Is this why Simon has been so quiet on the campaign? Looks like he knew this was coming and was keeping a low profile.

Seems to be a lot of commentary about Simon campaign like this one. If Bill Simon Can't Be Trusted To Run A Campaign

Basically says Simon is being quiet. Seems pretty obvious from this latest development. Why raise your profile when you know this is coming? I don't think he has a chance of being elected now. People are really going to have to see how bad Davis is. Simon does not seem up to throwing the kind of mud or the volume of mud it will take.

[bonesmccoy]

Did you see my list of contributors to the Davis Campaign?

Bill Simon has the best chance of being elected since Ronald Reagan.

With the reality that we can NOT count on Gray, it's far better to bring an experienced attorney into the governorship so he can clean up the mess!

[PGalt]

Thanks for the list of contributors.

Citigroup, New York, $500, $1650, $2398.82, $3114, $10,000, $15,000, $50,000

[bonesmccoy]

You're welcome.

We need to pin Davis on the FACT that HE accepts DONATIONS from thugs!

We need a federal investigator and attorney in our gov's house!

[RightOnTheLeftCoast]

Funny... back in 2000, when Bill Simon first crossed my radar screen, I did a little research and found the Hindelang episode. By then Hindelang had been fired, and the question in my mind was how the heck did he manage to make it past Simon & Sons' due-diligence process? It was obviously a very costly oversight... and now it's gone even more costly!

Well, it turned out that the due-diligence had been performed for Simon & Sons by Deloitte & Touche. Interesting... a friend who is an (exceptional!) business-intelligence researcher found tons on Hindelang in the public record in a few minutes, but D&T had managed to miss it all. IMHO Simon & Sons might have a case against D&T for their failure to find this stuff.

I'm trying to dig up the information again and will post any public-domain stuff as I can.

[NormsRevenge]

Good news .. Thanks. This will be interesting to see how it plays out.

Also, does D&L have a GraYouT connection , possibly? A set-up here, maybe. I would put nothing by Davi$.