SOUTHERN CALIFORNIA – This week, a Southern California-based law firm received a $56.4 million decision following a trial in a derivative action filed by two investors in a cannabis-related business in Las Vegas, Nevada. Funds invested by the individuals were secretly misappropriated by defendants and used in various other businesses they owned. Defendants then sold those other businesses, reaping a staggering eight-figures in profit.
The decision, issued by Judge Nancy Allf in the Nevada District Court in Clark County, includes over $2.2 million in direct damages and a disgorgement of over $54.2 million in profits.
The plaintiffs were represented at trial by Roger N. Behle, Jr. and Kevin D. Gamarnik of Foley Bezek Behle & Curtis, LLP (“FBBC”), which has offices in Santa Barbara and Costa Mesa. FBBC associate Jordan Liebman and local counsel Robert Massi played pivotal roles in the litigation.
“We are exceptionally pleased with the outcome we achieved for our clients. This was a complex case involving a multi-tiered investment scheme in Las Vegas,” Behle said. “Defendants took money in from investors and then, without telling them, moved it into other businesses defendants’ owned. Defendants then sold those businesses, reaping more than $50MM in profit for themselves.”
The plaintiffs were introduced in the fall of 2015 to defendants Andrew Jolley and Stephen Byrne to invest in a company called Panorama Won, LLC (“Panorama”). Panorama owned 2.5 acres in Pahrump, Nevada and planned to lease the land to a cannabis cultivation business.
According to court documents, plaintiffs were promised substantial returns on their investments in the land and cannabis cultivation facility, but the sale of the facility generated modest returns. However, other related cannabis entities, Nevada Organic Remedies (“NOR”) and Henderson Organic Remedies (“HOR”) – which were owned/controlled by Jolley and Byrne – collectively sold for nearly $100 million, with approximately $54.2 million of that going to Jolley and Byrne.
Plaintiffs argued, and the court agreed, that Jolley and Byrne breached various duties when they used funds intended for the cannabis cultivation facility to prop up their other businesses, including HOR and NOR. The court also agreed that HOR and NOR would not have been as valuable had it not been for money intended solely for the benefit of the facility.
“Litigation is never easy, especially when a case needs to be tried,” Behle said. “This outcome would not have possible without the tireless efforts of many people on the litigation team.”
For more information, call Foley Bezek Behle & Curtis, LLP at 714-556-1700 or visit www.foleybezek.com. The firm has also represented individuals and families impacted by the deadly Montecito mudslides and just filed a class-action lawsuit with two other law firms against Hawaii-based electric companies on behalf of victims and survivors of the Lahaina Fire in Maui.
Jennifer Goddard Combs