NEW YORK, Aug. 9, 2004 (PRIMEZONE) -- After nine years of litigation, on August 6, 2004, the Delaware Federal District Court entered judgment against defendant Richard Gray ("Gray") for more than $32 million and directed him to turn over the stock of two corporations. The Court found that Gray's purchase of those two companies represented a "corporate opportunity" that belonged to Summit Metals ("Summit"). The Pomerantz firm was lead counsel to Summit in this case.
The Court's ruling represents a giant step towards closing the books on an extremely long and bizarre litigation. In August of 1995, Gray, the majority shareholder of Summit, disclosed that he had caused Summit to pay him over $7 million in bonuses and consulting fees over the previous five years, that he had sold Summit's operating subsidiary to himself and that he had "frozen out" the public shareholders of Summit. Soon afterwards, shareholders sued Gray in New York, and the New York State Supreme Court entered a preliminary injunction barring Gray from making further "extraordinary" payments to himself from corporate assets.
The Court later determined that Gray had taken millions more out of the company, which he used to purchase two other companies in Summit's line of business. The court held Gray in contempt, and directed him to return over $4.35 million to the company. Gray refused to comply, claiming that he did not have the money. After an eight (8) day trial, the New York Court found that Gray did have the ability to repay the money, and ordered him committed to jail until he did so. Gray still refused, and remained in jail for almost two years.
Meanwhile, Gray had put Summit into bankruptcy in Delaware, forcing Pomerantz to file a new case in Delaware, as part of the bankruptcy proceeding. The Delaware court scheduled the trial on the merits for just after Gray's scheduled release from prison, in January of 2004.
The August 6, 2004 judgment represents a belated but complete victory for Summit, Pomerantz and its co-counsel on all its claims. It also demonstrates that persistence can be absolutely essential against an intransigent adversary who is willing to disobey court orders.
The Pomerantz firm, which has offices in New York, Chicago and Washington, D.C., is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz firm pioneered the field of securities class actions. Today, more than 50 years later, the Pomerantz firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.