A Los Angeles judge has thrown out a politically damaging $78 million civil fraud verdict against GOP gubernatorial candidate Bill Simon´s family investment firm. Superior Court Judge James Chalfant has dismissed the huge compensatory and punitive damages verdict against William Simon and Sons, and a nearly $20 million verdict also levied by a jury against another investor group. Simon faces Democratic Governor Davis in the November election. He had described the July 30th jury verdict as “crazy” and “fundamentally flawed”, and maintained that it would not stand. Simon was not personally named in the lawsuit, but with corporate wrongdoing in the spotlight the fraud verdict was political poison that stunned the GOP and struck at a key theme of his candidacy: his boasts of private-sector success.
The verdict became another setback for his stumbling campaign, spooking donors and becoming the focus of a Davis attack ad that remains on the air. The lawsuit arose from a 1998 acquisition by investors including William Simon and Sons, the New Jersey and California firm Simon started with his brother and father, a former US Treasury secretary. The investment was in a Van Nuys pay phone company, Pacific Coin, founded by Paul Edward Hindelang of Santa Barbara. Hindelang was a convicted marijuana smuggler who had served 30 months in prison in the early 1980s, but investors said they didn´t know that at the time.