Jury Renders $20 million Verdict to Shareholder Employees of Former MA Defense Contractor

A Massachusetts jury has rendered a verdict of over $16 million (worth over $22 million with an expected award of prejudgment interest) against Lau Technologies and Lau Business trust, along with it’s officers and directors; Joanna Lau CEO, Denis Berube, Lau’s husband, and COO, Paul Principato CFO, and outside directors Robert Anderson and Marilyn Swartz-Lloyd. Joanna Lau is a former director of the Kennedy Center Library. Marilyn Swartz-Lloyd is and the head of a major Boston non-profit. The Lawsuit against shareholders resulted in Lau Technologies being found liable to other shareholders for total damages of over $14 million dollars.

 

Ironically, Lau started this litigation against its largest shareholder, and in a colossal boomerang, became liable to all shareholders for a wide range of breaches of fiduciary duty. The jury rendered its verdict in connection with shareholder litigation filed by trustees of the Eugenie Bender Trust, a family trust that held shares in Lau Technologies Corp.  Lau is a former Massachusetts defense contractor that sold the last of its operating assets in 2002, and then Lau dragged their employee shareholders involuntarily along as they became an investment company.

 

The company’s chairperson and CEO, Joanna Lau, is currently a director of Designer Brands, Inc. (NASDAQ: DSW). Ms. Lau and her husband, Denis Berube, Lao’s COO, were found liable for over $14 million dollars in damages for breaches of fiduciary duty to Lau Technologies itself. Lau Technologies was found liable for over $1.8 million (over $2.8 million with expected prejudgment interest) in damages to the Bender Trust for underpaying the family trust in connection with four stock redemptions in 2009, 2011, 2012, and 2016.

 

Lau and Berube were specifically found liable for breaching fiduciary duties to Lau the Company in connection with two personal consulting contracts worth a total of $2.5 million which Lau and Berube signed onto with a related company called Viisage, then publicly traded on the NYSE, in 2002. The jury found that the contracts were properly assets of Lau corporation that Berube and Ms. Lau misappropriated for themselves. The jury further found Lau and Berube to be liable for various breaches of fiduciary duty in connection with the Lau Corp.’s investments from March 5, 2012 to the present. The jury found, among other things, that Lau, Berube and the Company’s Board failed to retain necessary expertise to make investment decisions, made imprudent investment decisions, and failed to disclose shareholder information to the shareholders, resulting in $11,500,000 in damages to the company.

 

According to Joanna Lau’s Linkedln Profile, her prior public board experience included such companies as InfoSoft, FSI International, Boston Federal Savings Bank, and TD Bank.  She is also well known as a contributor to various Massachusetts politicians, including Senator Edward Kennedy, and was a member of the Board of Directors of the JFK Library Foundation and a member of the Board of the National Defense Industrial Association.

 

The jury also found breaches of fiduciary duty against Lau Board members Robert Anderson and Marilyn Swartz-Lloyd.  Swartz-Lloyd is the President of the Medical Academic Scientific Community Organization, a non-profit organization that provides facilities management and infrastructure assistance to non-profits located in Boston’s Longwood Medical and Academic area.  Anderson is the former CEO and board member of GenRod, then a publicly held company, as well as numerous private companies.  Both were found to have breached their fiduciary duty to Lau in their capacity as directors in connection with the $2.5 million dollar consulting contracts as well as breaching fiduciary duties to Lau by permitting the Company to pay excessive compensation to Lau and Berube. They were also found to be liable for failing to retain necessary expertise to make investment decisions for the Company as well as failing to maintain appropriate company financial records and failing to make appropriate disclosures to shareholders, resulting in the $11.5 million dollar damages award.

 

The Bender Trust was represented in the litigation by Raymond P. Ausrotas, Esq. and Edward Foye.