July 17 (Reuters) - Duane Morris has been sued for
negligence and breach of fiduciary duty by the former chief
executive officer of a Maryland credit card processing company
for more than $192 million in damages.
In a lawsuit filed Monday in the Circuit Court for
Baltimore, Marc Potash, the former CEO of SecureNet, claimed he
was advised by a Duane Morris lawyer when he sold SecureNet in
2010 to a venture capital firm.
But, according to court documents, the lawyer failed to
disclose he had a "longstanding relationship" with the firm, the
Baltimore-based Sterling Partners.
Potash's lawsuit identified the lawyer as George Nemphos,
managing partner of Duane Morris' Baltimore office and chairman
of the firm's corporate practice group. According to the
lawsuit, Nemphos previously advised Sterling in other matters.
The lawsuit also claimed Nemphos kept Potash in the dark
about some of the transaction's key details and that, as a
result, Potash lost his job after the deal was struck.
"When was hired to do a major transaction,
somewhere along the way the guy forgot to tell the seller that
he was working with the buyer," said Andrew Hall, the lawyer
"We reject the allegations in the complaint, and we expect
to be vindicated in court," said a spokesman for Duane Morris, a
full-service firm based in Philadelphia with more than 700
Nemphos did not immediately return a request for comment.
The case dates to September 2010, when Potash signed over a
52 percent controlling interest in SecureNet to Sterling
Partners. Under the agreement, Potash said he was to be paid $56
million, a portion of which came from incremental installments
when the company's earnings reached certain milestones under his
supervision as CEO.
What Potash said he didn't know -- and what he claimed
Nemphos failed to inform him -- was that those incremental
payments hinged on his employment with the company, which could
be stripped from him with or without cause.
After the sale was completed, Potash said he was immediately
stripped of his power as CEO. He was eventually fired by Eric
Becker, a senior managing partner at Sterling, for reasons that
weren't disclosed in the lawsuit.
According to court documents, Becker told Potash -- reading
from a memo on his iPod written by Nemphos -- that he no longer
had the right to receive his interest in the company.
"Through this shocking breach of Nemphos' duty and the
applicable ethical rules, it was clear that defendant Nemphos
was assisting SecureNet ... in its termination of Potash and its
claims that he was not entitled to further payments."
Becker declined comment through the firm's spokesman.
Potash now seeks more than $92 million in compensatory
damages and $100 million in punitive damages.
The case is Marc Potash, et al vs. Duane Morris et al, No.
For Potash: Andrew Hall and Adam Lamb of Hall, Lamb and
For Duane Morris: Not immediately available.
(Reporting By Casey Sullivan)
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