After a seven-week trial for a case in which a fund manager was accused of holding on to a company for use as a private cash cow instead of selling it for investors' benefit, a Manhattan jury issued a split decision awarding $15 million for the investor-plaintiffs.

Investors in an offshore private equity firm MapleWood Equity Partners, which is incorporated in the Cayman Islands and managed by Robert Glaser, alleged that the firm breached its fiduciary duty by refusing to sell off two companies in its portfolio, AMC Computer Corp. and Parts Depot.

Ropes & Gray senior counsel Jerome Katz, who led the legal team representing the investors, said that Glaser used the profits from the companies, especially the relatively higher-value Parts Depot, to cover losses from other acquisitions in his portfolio.

The suit was filed more than a decade ago and went to trial this year in Manhattan Supreme Court. With respect to Parts Depot, Katz said, plaintiffs' attorneys argued that Glaser used the company as sort of a “cash machine,” bleeding the company dry until there was nothing left for investors.  

“It was our argument to the jury that the reason that he didn't sell it when he could was because he needed it and he used the income from Parts Depot to compensate for his other failures,” Katz said.

After a day of deliberations, Katz said, the six-person jury came back with split verdicts on four questions. The jury found that the breach of fiduciary duty claim regarding AMC Computer Corp. was just six months over the six-year statute of limitations, thus not reaching the merits of the suit.

But on the matter of Parts Depot, the plaintiff won 5-1 votes on the issues of breach of fiduciary duty and damages and to award a roughly $15 million verdict.

In addition to Katz, the Ropes & Gray team working the case included associates Julian Helisek and Kendall Scott; and retired partner William Sussman.

MapleWood's legal team was led by Akerman partner Brian Miller and included Akerman attorneys Scott Kessler, Samantha Kavanaugh and James Bombulie.

In an interview, Miller said the investors' victory in the Parts Depot matter is one of 18 cases that Castia, the private equity firm suing MapleWood on behalf of a group of investors, has brought against his client in New York, and that his client has prevailed in most of them. He said his client is reviewing the matter as to whether or not to challenge the verdict.

The verdict is subject to approval by Manhattan Supreme Court Justice Robert Reed, who presided over the case.