We have handled a number of matters for clients of prominent entertainment lawyer Michael Barnes, named Variety Dealmaker of the Year in 2010 in connection with the Miramax acquisition. This year, Barnes and an investment group he lead became clients of the firm. Merely two weeks before trial, we were asked to step in to try a securities fraud action against James Roberts, promoter of a produce venture in which Barnes’ group were the major investors. The case was tried as an adversary proceeding for non-dischargeability in Roberts’ bankruptcy case.
At trial, we presented compelling evidence that Mr. Roberts was desperate to earn management fees funded by our client’s investments, and that he was willing to procure those investments through lies, concealments and wildly unfounded financial projections.
In a Memorandum of Decision filed September 9, 2015, Bankruptcy Judge Maureen Tighe found that Roberts induced the investment of Barnes’ group through nondisclosure that the manager of the venture was a convicted felon. The Decision also finds that Barnes’ investments were induced through offering materials containing reckless and misleading financial projections. Roberts also provided false assurances regarding the experience of the venture partners, the venture’s readiness to fulfill orders and non-existent purchase contracts. Judge Tighe concluded “Roberts fraudulently induced [Barnes’] investments through misrepresentations, false pretenses and concealments.” The Court further concluded that Barnes conducted reasonable investigations based upon the information presented and reasonably relied on the investor materials and assurances, but if told the truth he would not have invested.
The Court held that Roberts was liable for fraudulently inducing the entire investment of the Barnes group of $825,000, and that the debt is not dischargeable under 11 USC § 523(a)(2)(A). Barnes is additionally claiming pre-judgment interest and punitive damages.
We are very pleased that our good friend and client Michael Barnes was thoroughly vindicated by Judge Tighe’s decision.
The Los Angeles Daily Journal wrote a piece featuring the victory in its September 11, 2015 edition.
The case is Barnes v. Roberts, USBC C.D. Cal. 1:12-ap-01371-MT.