SANTA CLARA, Calif.--(BUSINESS WIRE)--The plaintiff in a fraud and breach of fiduciary duty lawsuit against venture capital company founder Andrew Chung today said it believes a judge’s decision to unseal documents will benefit its efforts to ultimately prevail in its litigation against the venture capitalist.
U.S. District Judge Vince Chhabria denied a petition to overturn an arbitration award as sought by investor and plaintiff Global Industrial Investment Limited (GIIL) in a case against 1955 Capital. However, the judge has denied 1955 Capital’s request to seal the arbitration award and the associated exhibits in their entirety and will allow the disputed arbitration award, or at least portions of it, and the parties’ entire briefings to be unsealed.
"While we are disappointed that the arbitrator’s final order — awarding 1955 Capital-related entities attorneys’ fees on causes of action that he found merited only nominal damages and determining contracts never submitted to him for decision were valid — was not vacated, we are pleased that the court did not seal the briefing, and ordered either that the arbitrator’s final award be filed publicly or that the respondents move to seal limited portions of it, which will allow the public to evaluate the merits for itself," said GIIL attorney Yan Zhang, a partner at Baker Botts L.L.P.
GIIL, is a wholly-owned subsidiary of China Fortune Land Development, a publicly-traded real estate company and leading developer and operator of industrial mixed-use projects in China. GIIL is suing Andrew Chung of 1955 Capital for fraud and breach of fiduciary duty for secretly changing contractual language in a scheme to steal $80 million of its initial investment money, according to a lawsuit filed by GIIL.
The most recent unsealed briefing shows that “the arbitrator found that Andrew Chung and 1955 Capital recklessly breached fiduciary duties by attempting to make and conceal material post-signing changes to the investment agreements in 2015 shortly after 1955 Capital received GIIL’s initial investment deposit of $80 million,” said Zhang.
“This is an extraordinary betrayal of a sole investor’s trust by 1955 Capital and explains why 1955 Capital and its attorneys have attempted to seal voluminous documents filed and hide its scheme to steal all of GIIL’s money,” Zhang added. “While portraying the arbitration award as a total victory for itself, 1955 Capital nevertheless went to great lengths to prevent the public from reviewing the arbitration award or learning what really happened. Once these documents are opened by the courts, the public will see the grave violations against GIIL and why GIIL had no choice but to defend its interests and protect its reputation.”
“GIIL will ultimately hold Mr. Chung and the fiduciaries' accountable for their wrongdoing and scheme to rob GIIL of $80 million,” Zhang added.
Andrew Chung, 42, a former partner at Khosla Ventures and principal at Lightspeed Venture Partners, is married to Coral Chung, CEO of Silicon Valley luxury purse startup Senreve. GIIL is suing both Mr. and Mrs. Chung for fraud in a separate legal action in China based upon their promises made to GIIL there. That fraud case will be heard in China in the coming months as the case winds through the Hague Service Convention for defendants who remain outside China.
GIIL 1955 Capital Litigation Background
In 2015, pursuant to agreements that are in dispute, GIIL invested into 1955 China Fund LP and 1955 Capital Fund LP. Chung’s company, 1955 Capital, is the general partner for both funds. In its lawsuit, GIIL says Chung and the funds unilaterally and secretly made changes to the investment agreements to strengthen the contractual default remedies that benefited them at the expense of investor GIIL and did not provide the altered documents to GIIL until nearly a year later, after GIIL had invested in the funds. Once these changes were in place, 1955 Capital initiated an arbitration proceeding to put 1955 Capital in default and seek remedies in hundreds of millions of dollars in scheming to pocket at least GIIL’s initial investment deposit of $80 million.