Texas Appeals Court Affirms $5.2M Award for Hicks Thomas E-Commerce Site Client
HOUSTON – A Texas appeals court has affirmed a $5.2 million judgment in favor of e-commerce site LuxeYard, concluding long-running securities fraud litigation in which the Hicks Thomas legal team prevailed.
The Oct. 29 opinion from the 14th Court of Appeals in Houston upheld a 2017 trial court decision that found certain shareholders had conspired to illegally manipulate LuxeYard’s public stock price through a “pump and dump” scheme that defrauded the company and other unsuspecting investors.
“The conspiracy to manipulate LuxeYard’s stock price yielded millions of dollars in illegal profits,” said John B. Thomas, co-founder of Hicks Thomas, who represented LuxeYard. “We are pleased that the court has validated the damage award in favor of our client.”
Also representing LuxeYard on the Hicks Thomas legal team were trial lawyer Stephen Loftin and appellate specialist Stephen Barrick. Brian Keller
, of Keller & Associates, PC, was co-counsel with Hicks Thomas in the trial court and on appeal.
LuxeYard was a website selling luxury merchandise. Its founders enlisted Houston financial consultant Kevan Casey who led the company into a merger that took the company public. The court found that Mr. Casey conspired with investors including Robert Klinek to aid in the pump and dump scheme.
Evidence presented at trial showed that Mr. Klinek and others orchestrated a scheme to sell their shares after they had pumped up the stock price. In addition, co-conspirators paid marketing firms to tout the stock based on false projections.
Among those accused of illegally promoting the stock was NBT Equities Research, which was affiliated with Tobin Smith, a former Fox Business News analyst who was fired for being paid to tout certain stocks. In an unrelated case, Mr. Smith agreed to pay the Securities and Exchange Commission for fraudulently promoting a penny stock.
On appeal, Mr. Klinek made several arguments including one regarding the fiduciary duty owed by Mr. Casey, who had previously settled claims against him in related litigation.
“We are pleased that the appeals court rejected all those arguments, finding there was ‘ample evidence’ to support the judgment in the case,” said Mr. Barrick.
The case is Robert Klinek v. LuxeYard Inc., No. 14-17-00899-CV, in Texas’ 14th Court of Appeals
Founded in 1997, Texas-based Hicks Thomas LLP is a premier litigation firm representing plaintiffs and defendants across the nation. With offices in Houston, Austin, Beaumont, Amarillo, and Sacramento, California, the firm provides in-depth experience in cases involving oil and gas, environmental, complex commercial, toxic tort, construction, products liability, corporate governance, securities, banking, insurance coverage, transportation, trade secrets and business litigation. Visit the firm at http://www.hicks-thomas.com.