Jury finds ‘Surf Channel’ founder defrauded his partners
SM COURTHOUSE — A Santa Monica businessman must pay his former partners nearly $900,000 after being found liable for fraud by a jury here.
Cyril Viguier, 39, a founder of Surf Channel, which made extreme-sport television shows in the late 1990s, defrauded a woman who helped him create the shows and a man who did video editing on all of the programs, jurors decided on Christmas Eve.
Keline Howard, 73, of West Hollywood, said she was promised one third of company shares when the two friends, both natives of France, first worked on the shows. But later, when paperwork was delivered, Howard’s shares dwindled to 10 percent.
Viguier, the creative brains of the project, told Howard the bulk of her shares were being used to raise more capital and she would still see her portion of profits, Howard testified. But Viguier then went on to forge a partnership with a new group that pumped $5 million into Surf Channel. A short time later, Viguier cashed out of the company for $2.2 million.
Despite Howard’s contract, which entitled her to 10 percent of the company, she was given nothing. The same went for video editor Phillipe Ney, 43, of West Hollywood, who said he was verbally promised 8 percent of the company by Viguier, but given nothing.
Surf Channel, a program for cable channels, specialized in board sports like surfing, snowboarding, windsurfing and skateboarding, among others.
After a little more than a day of deliberations, a visibly frustrated jury — that had to return to the courthouse Dec. 24 to finish deliberations after misreading their instructions the evening before — found both Surf Channel and Viguier liable for fraud and breach of contract.
They awarded Ney $84,000 and Howard $200,000 on those actions. After hearing further testimony based on how much money Viguier and Surf Channel were worth, the jury awarded another $300,000 to each plaintiff in punitive damages. Viguier and Surf Channel are equally responsible for those payments.
Howard, through her attorney, at one point suggested to jurors she could be owed as much as $1.67 million — one-third of the $5 million representing the total investment. And that was without punitive damages factored in.
“He (Viguier) couldn’t really remember anything and his testimony was, oftentimes, in contradiction,” said juror Ralyn O’Quinn, a human resources worker from West Los Angeles.
“Greed is the word. Greed.” — — KELINE HOWARD Plaintiff
“(Viguier) couldn’t really remember anything and his testimony was, oftentimes, in contradiction.” — — RALYN O’QUINN Juror
The week-long trial was heard in the courtroom of Santa Monica Superior Court Judge Lorna Parnell.
After jurors delivered their verdict, Viguier lingered in the hallway out front, speaking in French to the plaintiffs and debating with jurors the facts of the case, demanding how they could award such a high sum to people he said only worked on the project for four months.
Asked how he felt about the jury’s finding, Viguier said, “It’s difficult to consider. It’s very difficult because I saw so many jurors, they didn’t like me at all.”
Howard, on the other hand, was visibly pleased by the verdict — leaning over and smiling at Blaha shortly after it was read. Asked why she thinks Viguier didn’t share the profits, Howard, who maintained she wasn’t given any explanation, said, “Greed is the word. Greed.”
Jay Woollacott, Viguier’s attorney, argued that Howard’s work for Surf Channel was simply in return for favors supplied earlier by Viguier and said Howard was reimbursed for her expenses. As to Ney, Woollacott said he had already been paid for his work. What’s more, Woollacott argued neither Howard nor Ney could be given a percentage of shares because company officials had never voted on the matter.
If they were to find that a breach of contract or fraud had occurred, jurors should find against Surf Channel, a limited liability corporation, and not against Viguier personally, Woollacott argued. And, under that scenario, jurors should award the plaintiffs little or nothing because the alleged fraud and breach of contract occurred before the company was worth anything, he added.
“Let’s be real,” he said in his closing argument. “The company at that point had burned up the $200,000 (investor Jean Pierre) Murray had put in....
“The assets of Surf Channel were not much, if anything,” he added, saying the $5 million later invested was simply a nest egg for future growth. “Surf Channel had debts.”
After Woollacott finished his closing arguments, Michael Blaha, the plaintiffs’ attorney, countered that the labor Ney and Howard put into the project made it valuable to the new investors. He also said that although Ney received some payments, they only offset the cost of the equipment Ney used to edit the programs — and did-n’t compensate him for his time.
In an impassioned plea to jurors, Blaha said, “I am just amazed that the fraud continues into this afternoon.... We were outsiders in this transaction and that’s why we didn’t get included...”
Originally published in the Santa Monica Daily Press print edition on December 27, 2003. Read the original PDF.