Following a five-week jury trial, the global law firms Withers and Hayes Boone secured a complete victory on behalf of a limited partnership and its limited partners for the years-long fraud by the partnership’s general partner. During the two-phase trial, the Withers team first secured a jury verdict on December 16, awarding the limited partners $9.7m in damages, comprised of $1.7 million in compensatory damages and $8 million in punitive damages. Then, on May 6, Santa Clara County Superior Court Judge Daniel Nishigaya issued an order granting an additional $7.36 million in damages to the partnership itself for the derivative claims.
The lawsuit, filed in December of 2019, was initially brought by five limited partners of Central Investments LP alleging misconduct by the managing partner of the partnership, Richard Gregersen, and entities under Gregersen’s control. The defendant carried out a self-dealing scheme over the past decade in which he loaned himself millions of dollars of partnership money without notifying the limited partners. The defendant maintained that as the general partner, he had wide-discretion to loan Central Investments’ funds without notifying the limited partners.
However, the Withers team presented evidence to the jury and the court that the defendant enriched himself through those loans, using the funds to buy himself season tickets to the San Francisco 49ers, purchase homes, and renovate a hotel he personally owns. At the same time, he neglected the partnership’s sole asset—a 173-unit apartment complex in Silicon Valley.
On December 16, after a five-week trial, a jury returned a complete verdict in favor of the limited partners, finding the defendant breached his fiduciary duties and committed fraudulent concealment and financial elder abuse. The jury awarded the limited partners $9.7m in damages. On May 6, Judge Daniel Nishigaya, who was tasked with ruling on the harm to the partnership itself, ordered that the partnership receive an additional award of $7.36 million in derivative damages and disgorgement, resulting in a total damage award of over $17 million. Judge Nishgaya’s order also precludes the defendant from benefitting from the derivative damages award and strips Gregersen of control of the partnership. In addition, the judge ruled that plaintiffs are entitled to recover their attorneys’ fees.
“We are thrilled to bring this positive resolution to our clients after years of financial losses as a result of the defendant’s fraudulent conduct,” said Withers partner Kimberly Pallen. “They are finally able to unwind the complex structure of fiduciary fraud and financial abuse that they had unknowingly been subject to for years."
The Withers team was led by partners Kimberly Pallen and Dean Nicyper, senior associate Vahe Mesropyan and associate Tyler Goss, and included Senior Counsel, Steve Wilson of Haynes Boone.