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Only four months before trial, the Firm was retained by a pharmaceutical company that had been defrauded by a grey-market diverter working through a front company located in New Zealand. While the former attorneys for the client had gathered some evidence, the case was far from ready for trial. Compounding the difficulty of the case was the fact that the client had previously sued the diverter, and had settled with him in reliance upon his assertion that he was an innocent victim of the New Zealand entity. Under the settlement agreement, the diverter had returned some of the fraudulently diverted product. However, when the client later discovered that the diverter was not an innocent victim, but was in fact the architect of the diversion scheme, the client did not pay for the product. The diverter sued the client to enforce the settlement agreement. In order to prevail, we had to prove that the diverter was in fact working with the New Zealand entity, that the settlement agreement was induced by fraud, and that the fraudulent diversion of less than $300,000 worth of product caused millions of dollars in damages to the client. Following a lengthy court trial, the Judge ruled that the settlement agreement could not be enforced, found in our client's favor on all four causes of action alleged in the cross-complaint, and awarded our client over $10 million in damages, including $2 million in punitive damages. Prior to trial, the diverter had refused to offer any amount in settlement, insisting that the client pay him.
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