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The former chief executive officer from a Maryland credit card processing company has sued Duane Morris for negligence and breach of fiduciary duty. The lawsuit is asking for over $192 million in damages and was filed on Monday in the Circuit Court for Baltimore. The former CEO of SecureNet, Marc Potash, claims that he was advised by a lawyer from Duane Morris when he sold the company to a venture capital firm in 2010. According to the lawsuit, the lawyer with Duane Morris did not disclose to Potash that he had a ‘longstanding relationship’ with the purchasing firm, Sterling Partners. Sterling Partners is based in Baltimore.
The lawyer identified by the lawsuit is George Nemphos, who works as the managing partner for the Baltimore office of Duane Morris and is chairman of the law firm’s corporate practice group. Nemphos previously advised Sterling Partners in other matters, according to the lawsuit. The lawsuit also said that Nemphos did not inform Potash of some of the transaction’s important issues, which resulted in Potash losing his job after the deal went through between the two companies.
“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,” Andrew Hall said. Hall is representing Potash.
“We reject the allegations in the complaint, and we expect to be vindicated in court,” a spokesman for Duane Morris said. Morris is based in Philadelphia and is a full-service law firm with over 700 lawyers.
The case began in 2010, when a 52 percent controlling interest in SecureNet was signed over by Potash to Sterling Partners. Potash said he was going to be paid $56 million in the agreement. A portion of that payment was supposed to come from incremental installments when the earnings of the company hit specific milestones under his watch as the CEO. Potash claims that he did not know the incremental payments only came if he was employed by the company. Potash also said that this was information withheld from him by Nemphos. Potash also said that the deal said employment could be taken away from Potash with or without cause.
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Potash said that as soon as the sale was completed, he lost he job as CEO. Potash said that he was fired by Eric Becker, who works as a senior managing partner for Sterling Partners. Potash said that he was fired for reasons not mentioned in the lawsuit. According to the lawsuit, Potash was told by Becker, while reading from a memo on an iPod that was written by Nemphos, that he did not have the right to receive interest in the company any longer.
“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.”
Potash is asking for $92 million in compensatory damages and $100 million in punitive damages.
