Kaye Scholer Secures Dismissal for CFO Accused of Negligent Misrepresentation After CEO’s Fraud
Kaye Scholer successfully secured dismissal of a negligent misrepresentation case brought against the former CFO of a public company that went into bankruptcy due to a fraud allegedly perpetrated by the Company’s CEO (Vion Operations, LLC, et al. v Brian Wasserman, US District Court, Maryland). Two of the Company’s factors sued the Company’s former CFO of Continuity X, based on what they claimed were negligent representations made by the former CFO in connection with their entering into a factoring agreement with the Company. In addition to noting the CFO’s position that he too had been a victim of the CEO’s fraud, which as CFO he helped to expose, the Court concluded that the CFO did not have any relationship with the Company’s factors which would create a duty of care running from him to the factors, who were sophisticated lenders entering into an arm’s length financing arrangement.
The case was removed from Maryland state court, where it was original filed, to the US District Court for the District of Maryland, which rendered the decision dismissing the complaint with prejudice.
John Geelan led the Firm’s representation of the Company’s CFO, with the assistance of Ben Mintz and Noah Peters.