CEO accused of fraud by shareholders. $4.2M. Los Angeles County.

Summary

Employees in private corporation say they were shareholders and that the CEO took excessive compensation and then put the company in a costly deal to cover it up.

The Case

  • Case Name: ABV Group, Inc. v. Alon Ben David et al.
  • Court and Case Number: Los Angeles Superior Court / BC633712
  • Date of Verdict or Judgment: Tuesday, July 23, 2019
  • Date Action was Filed: Wednesday, September 14, 2016
  • Type of Action: Fraud
  • Judge or Arbitrator(s): Hon. Michel L. Stern
  • Plaintiffs:
    ABV Group, Inc.
    Sabrina Schueppl
    Eldar Nissenbaum
  • Defendants:
    Alon Ben David
  • Type of Result: Jury Verdict

The Result

  • Gross Verdict or Award: $4,254,414
  • Net Verdict or Award: $3,192,414 to ABV, and $531,000 each to Schueppl and Nisenbaum.
  • Trial or Arbitration Time: 5 days.

The Attorneys

  • Attorney for the Plaintiff:

    Turner Friedman Morris & Cohan, LLP by Steven Morris and Jonathan M. Deer, Beverly Hills.

    Kaplan Kenegos & Kadin by Jerry Kaplan and David Scott Kadin, Beverly Hills.

  • Attorney for the Defendant:

    Andrade Gonzalez LLP by Damian Martinez and Eric Mason, Los Angeles.

Facts and Background

  • Facts and Background:

    Individual plaintiffs and defendant were shareholders of corporate plaintiff, ABV Group Inc., which operates in the Internet and mail order retail industry. Plaintiffs accused defendant Alon Ben David of fraud, breach of fiduciary duty and other wrongful acts as CEO of the company.

  • Plaintiff's Contentions:

    Plaintiffs contended that defendant took millions in unauthorized compensation as CEO and entered into a costly deal with a primary vendor to assist in covering up the wrongful compensation.

  • Defendant's Contentions:

    Defendant contended he was entitled to the compensation he received and that individual plaintiffs were not shareholders of company because plaintiffs never filed taxes stating they were shareholders of ABV. Further, plaintiff Schueppl testified that the draft tax return she prepared showing Ben David to be the sole shareholder was accurate. 

    Further, defendant contended that because Nisenbaum and Schueppl had violated a court order by refusing to provide tax returns for their companies, they did not satisfy necessary proof that they were entitled to compensation.

    Finally, before the case went to the jury, the Court dismissed plaintiffs’ breach of contract, conversion, and unjust enrichment claims. Defendant contended at closing argument that plaintiffs were not entitled to compensation because their basis for demanding money was that they were contractually entitled to equal pay.

Additional Notes

Prior to trial, there was $700,000 on deposit with the Court, proceeds of which the plaintiffs claimed were company money converted by the defendant to his personal use. Plaintiffs offered to settle for assignment of 100% of defendant’s stock in the plaintiff company and a transfer of his 1/3 interest in the trademark which the company exploited. In addition, plaintiffs would keep $350,000 of the $700,000 on deposit. Defendant offered to transfer his interest in the company and the trademark but wanted all of the $700,000. 

Disclaimer

This is not an official court document. While the publisher believes the information to be accurate, the publisher does not guarantee it and the reader is advised not to rely upon it without consulting the official court documents or the attorneys of record in this matter who are listed above.

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