Lindsmith, litigation team victorious in $300 million Textron trial
The co-counsel team of Gibson Dunn & Crutcher and Bricker & Eckler attorneys, including Quintin Lindsmith, recently secured a jury-trial victory on behalf of client Textron Financial Corporation. The verdict ended a decade-long Ponzi scheme saga with over $300 million at stake.
Detailed in an Akron Beacon Journal and The Indiana Lawyer, in 2002, Textron financed the leveraged buyout of a 70-year-old company in Akron. Over time, the new owners began using investors’ money to fund their lavish lifestyles, including yachts, collector cars, a jet, gambling losses and luxury homes. They had to sell more securities and, at some point, it turned into a Ponzi scheme. The operation collapsed with an FBI raid in 2009, and the company was forced into bankruptcy. Parties who participated in the scheme were convicted and imprisoned, and over 5,000 investors in Northeast Ohio lost small and large amounts, including entire life savings.
The bankruptcy trustee hired his own firm, Baker & Hostetler, and sued many parties, including Textron. The claim at trial was not for fraud or conspiracy to commit fraud but a bankruptcy avoidance claim which sought to avoid and recover all payments made to Textron under a revolving line of credit. Even though the loan never exceeded $17.5 million, the trustee asserted a novel claim which multiplied the amount sought to over $317 million.
It appeared that the trustee and his counsel hoped the jury would be inflamed by what happened and would ignore the law, but the jury followed the law as instructed. After hearing evidence for almost three weeks, the jury returned a complete defense verdict in under four hours.