Federal Jury Awards $21.4M in Shareholder Suit Over Misused Corporate Funds

On July 10, 2024, a federal jury returned a $21.4 million civil verdict in favor of minority shareholders, represented by Umhofer, Mitchell & King LLP, in a complex shareholder suit, filed in March 2020 in the Central District of California.

After a two-week trial, the jury found that each of the defendant directors and officers of Applied Technologies Associates (ATA) and Scientific Drilling International (SDI), oil and gas exploration companies, breached their fiduciary duties to the minority shareholders by diverting millions of dollars of corporate assets and resources to Adelaida Cellars. Adelaida, a winery in Paso Robles, California, is wholly owned and controlled by ATA and SDI’s controlling shareholder, defendant Kedrin Van Steenwyk. At the core, this case was about the controlling shareholder using company assets to fund her hobby winery, to the detriment of the other shareholders. The jury found the directors and officers failed to safeguard the interests of those they were obligated to protect. This was a hard-fought case, and UMK is thrilled that the jury recognized the misconduct and took steps to make the corporations and the minority shareholder whole.