$96.4 MILLION VERDICT SECURED BY WHARTON, ALDHIZER & WEAVER, PLC, AMONG LARGEST IN VIRGINIA HISTORY

An Alexandria federal jury returned a verdict last week of $96.4 Million Dollars in favor of Honua Investment Management, Inc. and its bondholders who were defrauded by Man Ki Kim, a McLean businessman. The case was tried over a period of four days by James M. Ringer, of New York's Meister, Seelig & Fein, and Daniel L. Fitch of Harrisonburg's Wharton, Aldhizer & Weaver, PLC. The verdict is the fifth largest ever returned in Virginia and the biggest in the Commonwealth since 2002.

The City of Bonn, Germany awarded Defendant Kim's company, SMI Hyundai, a contract to develop, build and operate the United Nations World Conference Center at the site of the capital of the former West German Republic. UNCC, a company wholly owned by SMI Hyundai, was responsible for the construction and operation of the Project, estimated to be worth in excess of $200 Million. When SMI Hyundai issued some $48.2 Million in bonds to help finance the Project, Kim repeatedly represented to Honua that SMI Hyundai owned 100% of the shares of UNCC. SMI Hyundai further agreed to pledge the UNCC stock as the primary collateral for the loan, going so far as to deliver original stock certificates at the bond closing.

Unknown to the Honua and its bondholders, Kim had transferred most of the UNCC stock to another private lender, to secure a substantial personal loan. Kim's transfer occurred less than one month before the closing on the $48.2 Million Honua bond deal. Kim withheld this information from Honua, continuing to represent that SMI Hyundai still owned the valuable asset pledged to secure the bonds. When Kim's scheme was uncovered, the Project's financing collapsed. Kim later placed UNCC into receivership in a German court.

The jury unanimously found that Kim's false representations concerning SMI's ownership of the UNCC stock constituted actual fraud. In addition to awarding compensatory damages of $48.2 Million, the jury returned a punitive damages verdict of $48.2 Million and awarded prejudgment interest of over $11.5 Million for a total award of over $107 Million.

Post-verdict motions are pending before a final judgment is entered. Fitch noted that separate judgments, not related to Kimâ??s fraud, have been entered against SMI Hyundai and one of its affiliate companies, American Federal Contractors, which guaranteed the bonds.

Wharton Aldhizer & Weaver PLC is a full-service law firm with offices in Harrisonburg, Staunton, and Lexington. The firm serves individuals and businesses in the Shenandoah Valley and the Mid-Atlantic states in the areas of: bankruptcy, commercial and civil litigation, corporate finance, employment law, health care law, intellectual property matters, real estate and land use, tax planning, wills, estate planning, and administration.