IBJNews

Federal judge dismisses Brightpoint fraud suit

Back to TopCommentsE-mailPrintBookmark and Share

A federal judge has dismissed a lawsuit filed by a London-based hedge fund over a $10 million loan it said Indianapolis-based Brightpoint Inc. fraudulently brokered in anticipation of an acquisition that never materialized.

Sofaer Global Hedge Fund claimed Brightpoint CEO Bob Laikin persuaded the fund to lend $10 million to Hong-Kong based Chinatron Group Holdings Ltd., a company that invested in wireless communications firms. In Sofaer’s complaint, Laikin was described as a founding shareholder and former director of Chinatron.

According to the 2009 lawsuit, Brightpoint had been a Chinatron customer for a decade. The complaint alleged that Chinatron owed the mobile phone distributor $5.4 million from a line of credit extended during a previous business deal, but lacked funds to repay it.

“If Chinatron could not repay its debt to Brightpoint by the end of 2007, Brightpoint would be forced to record it as ‘bad debt’ on its books, which would be subject to scrutiny by Brightpoint’s audit committee, a situation Laikin very much wanted to avoid,” according to Sofaer’s complaint.

The lawsuit also alleges that Laikin had been in discussions with Chinatron throughout 2007 about the possibility of Brightpoint's purchasing Chinatron subsidiary Mobiltron France for $14 million by March 2008. Sofaer loaned Chinatron $10 million, in anticipation of a $12 million repayment due in March 2008 from the proceeds of the Mobiltron deal, which never came together.

Brightpoint asked the court to dismiss the lawsuit, arguing that Sofaer had no legal claim against Brightpoint or Laikin.

Judge Tanya Walton Pratt issued her ruling on Friday, siding with Brightpoint.

“Sofaer simply had to understand that there was some risk that the deal would fall apart,” she wrote. “Apparently, though, Sofaer was blinded by rose-colored glasses,  believing that a deal in its infancy was actually carved in stone.”

Sofaer’s lawsuit alleged that on Dec. 17, 2007, Laikin and the Chinatron CEO held a conference call finalizing details of the loan with Sofaer.

“Laikin told Sofaer on this call that the deal for Brightpoint to purchase Mobiltron France for [$14 million] by the end of March 2008 was ‘as good as a done deal,’ that the deal was ’99.9 [percent] done’ and that Laikin was ‘99.9 [percent] certain’ that the deal would go through,” Sofaer’s complaint read.

Sofaer made the $10 million loan to Chinatron in December 2007, according to the complaint, and Chinatron used the money to repay the $5.4 million it owed Brightpoint.

According to the complaint, subsequent Brightpoint due diligence led the company to offer just $6.25 million for Mobiltron France. Chinatron turned down that offer.

“If a promise was actually in place for a $14 million purchase price, then Chinatron’s counter-offer for $6.25 million for 92.5 percent of Mobiltron France makes virtually no sense, and forcefully demonstrates that the deal was speculative,” Judge Walton Pratt wrote.

In response to the ruling, James Masella III, an attorney with Blank Rome LLP in New York representing Brightpoint and Laikin, said Monday: "We have maintained throughout this litigation that Bob Laikin is a man of his word, and I believe the decision gives Mr. Laikin and Brightpoint complete vindication."

 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. So much for Eric Holder's conversation about race. If white people have got something to say, they get sued over it. Bottom line: white people have un-freer speech than others as a consequence of the misnamed "Civil rights laws."

  2. I agree, having seen three shows, that I was less than wowed. Disappointing!!

  3. Start drilling, start fracking, and start using our own energy. Other states have enriched their citizens and nearly elminated unemployment by using these resources that are on private land. If you are against the 'low prices' of discount stores, the best way to allow shoppers more choice is to empower them with better earnings. NOT through manipulated gov mandated min wage hikes, but better jobs and higher competitive pay. This would be direct result of using our own energy resources, yet Obama knows that Americans who arent dependent of gov welfare are much less likely to vote Dem, so he looks for ways to ensure America's decline and keep its citizens dependent of gov.

  4. Say It Loud, I'm Black and Ashamed: It's too bad that with certain "black" entertainment events, it seems violence and thuggery follows and the collateral damage that it leaves behinds continues to be a strain on the city in terms of people getting hurt, killed or becoming victims of crimes and/or stretching city resources. I remember shopping in the Meadows area years ago until violence and crime ended make most of the business pack you and leave as did with Lafayette Square and Washington Square. Over the past 10 to 12 years, I remember going to the Indiana Black Expo Soul Picnic in Washington Park. Violence, gang fights and homicides ended that. My great grandmother still bears the scares on her leg from when she was trampled by a group of thugs running from gun fire from a rival gang. With hundreds of police offices downtown still multiple shootings, people getting shot downtown during Black Expo. A number of people getting shots or murdered at black clubs around the city like Club Six on the west side, The Industry downtown, Jamal Tinsley's shot out in front of the Conrad, multiple fights and shootings at the skating rinks, shootings at Circle Center Mall and shooting and robberies and car jackings at Lafayette Mall. Shootings and gang violence and the State Fair. I can go on and on and on. Now Broad Ripple. (Shaking head side to side) Say It Loud, I'm Black and I'm Ashamed.

  5. Ballard Administration. Too funny. This is the least fiscally responsive administration I have ever seen. One thing this article failed to mention, is that the Hoosier State line delivers rail cars to the Amtrak Beech Grove maintenance facility for refurbishment. That's an economic development issue. And the jobs there are high-paying. That alone is worth the City's investment.

ADVERTISEMENT