Jury Awards $2.7 Million to Brazilian Investor in Failed Christian Media Company

Amanda Bronstad

The National Law Journal

06-22-2012

A jury in Los Angeles has awarded $2.73 million to a Brazilian businessman who claimed he was fraudulently lured into investing in a now-defunct Christian entertainment company run by former Paramount Pictures senior executive David Kirkpatrick and Martha Cotton, a former senior producer of NBC's "Today Show."

The jury on Monday awarded the amount of his lost investment, plus expenses, to Washington Umberto Cinel of Sao Paulo, Brazil, who alleged that he had invested $2.25 million in Good News Holdings. On Wednesday, the panel ordered all of the defendants to pay an additional $447,000 in punitive damages.

Cinel's claims included breach of contract and breach of fiduciary duty.

"It turned out my client was the only person to bring in a substantial amount of money," said Robert Platt, a partner at Manatt, Phelps & Phillips who represents Cinel.

According to the complaint, filed in 2008, Good News Holdings, based in Sherman Oaks, Calif., focused on creating and distributing Christian-themed entertainment and content for film, the Internet and mobile applications. The complaint says the company was founded by Kirkpatrick, who served as managing director; Cotton; George Barna, founder and director of the Barna Group, a research organization in Ventura, Calif., that focuses on Christian ministries and who served as chairman of Good News Holdings; Thom Black, a former partner in the Barna Group; Christopher Chisholm, the former chief executive officer and president of Good News Holdings; and Richard Christopher, a former board member.

"They were a multimedia company. They were going to make movies, have a number of platforms on which to show Christian faith-based entertainment products," Platt said.

Cinel, who had previously invested in a Christian-themed online social network, signed an investment agreement with Good News Holdings on Dec. 18, 2006 -- the last date on which the founders told him the share price could be purchased at $5. They expected that price to rise by as much as $10 a share.

"He showed up at the first board meeting in Feb. 26, 2007, and he found out they lied to him," Platt said. In particular, the founders had continued to reach out to potential investors after Dec. 18, 2006, despite the deadline they gave to Cinel, he continued. Furthermore, Cinel discovered that he was the largest investor in Good News Holdings, even though the founders had earlier referenced a larger funder. The company's share price, meanwhile, failed to increase as promised, Platt said. Later, Cinel discovered that the founders had paid themselves large sums, he said.

In trial briefs filed last month, the four defendants maintained that Cinel was a sophisticated investor who had been advised by lawyers about the opportunity at Good News Holdings. They added that he failed to follow through on all his promised investments.

The trial involved four of the six founders of Good News Holdings, many of whom had filed counterclaims against each other. Barna's attorney, Richard Kahdeman of Kahdeman Frost in Westlake Village, Calif., did not return a call for comment. Black, Cotton and Kirkpatrick, who represented themselves in the case, did not return calls for comment.

Christopher settled the litigation for an undisclosed sum before trial; his attorney, Mark Fredkin, of Morgan, Franich, Fredkin & Marsh in San Jose, Calif., did not return a call for comment. Chisholm is scheduled to go to trial separately this fall. His attorney, Fred Cassity of the Law Offices of C. Fred Cassity in Pasadena, Calif., did not return a call for comment.