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. A Tilted Kilt at a water park themed hotel? Who planned that one? I guess the Dad's need something to do while the kids are on the water slides.

  2. Don't come down on the fair for offering drinks. This is a craft and certainly one that belongs in agriculture due to ingredients. And for those worrying about how much you can drink. I'm sure it's more to do with liability than anything else. They don't want people suing for being over served. If you want a buzz, do a little pre-drinking before you go.

  3. I don't drink but go into this "controlled area" so my friend can drink. They have their 3 drink limit and then I give my friend my 3 drink limit. How is the fair going to control this very likely situation????

  4. I feel the conditions of the alcohol sales are a bit heavy handed, but you need to realize this is the first year in quite some time that beer & wine will be sold at the fair. They're starting off slowly to get a gauge on how it will perform this year - I would assume if everything goes fine that they relax some of the limits in the next year or couple of years. That said, I think requiring the consumption of alcohol to only occur in the beer tent is a bit much. That is going to be an awkward situation for those with minors - "Honey, I'm getting a beer... Ok, sure go ahead... Alright see you in just a min- half an hour."

  5. This might be an effort on the part of the State Fair Board to manage the risk until they get a better feel for it. However, the blanket notion that alcohol should not be served at "family oriented" events is perhaps an oversimplification. and not too realistic. For 15 years, I was a volunteer at the Indianapolis Air Show, which was as family oriented an event as it gets. We sold beer donated by Monarch Beverage Company and served by licensed and trained employees of United Package Liquors who were unpaid volunteers. And where did that money go? To central Indiana children's charities, including Riley Hospital for Children! It's all about managing the risk.

ADVERTISEMENT