© 2013 The Texas Lawbook.
By Natalie Posgate
Staff Writer for The Texas Lawbook
High profile Dallas philanthropist and investor Ted Skokos has been sued for a $4 million financial investment dispute with an old friend and business associate.
New York attorney Arthur N. Abbey claimed in a lawsuit filed Friday in federal court that Skokos tricked him into an investment that resulted in Abbey losing money and Skokos pocketing a large profit for himself. Abbey is suing on claims of fraud, breach of contract and breach of fiduciary duty.
Skokos and his wife Shannon are best known in Dallas for their $10 million gift to the AT&T Performing Arts Center. The stage at the Winspear Opera House and the pavilion at the Annette Strauss Artist Square are both named after them. Mrs. Skokos is a lawyer and a former Miss Arkansas.
According to the lawsuit, Abbey invested $4 million in 2005 with Skokos to purchase stock in 3F Therapeutics, Inc., a privately held medical device company founded by Skokos in 1998. The two agreed that Skokos would receive 20 percent of the profits generated from the investment after Abbey received the capital from the original $4 million.
After receiving the money, Skokos convinced Abbey to let him transfer the $4 million to a limited partnership Skokos created to facilitate receiving his end of the deal. He assured Abbey the investment structure would not hurt him, the complaint says.
In 2006, 3F Therapeutics merged into ATS Medical, Inc., and in 2010, Medtronic, Inc. As part of the merger agreement, Medtronic bought all outstanding stock of ATS, including Abbey’s shares in 3F Management II (the limited partnership), according to the complaint.
The buyout generated more than $7 million in cash. Roughly $4.7 million of the reported proceeds tied back to Abbey’s $4 million investment, and the agreement between the two men allotted 20 percent of that profit to Skokos, the lawsuit says.
Instead of taking a 20 percent share of the sale profits, however, Abbey claims Skokos “feathered his own nest” by taking a 20.8 percent share of the sale proceeds, which totaled more than $1 million.
“While the Limited Partnership received a sufficient amount from the sale of its assets to repay Mr. Abbey’s entire $4 million investment with a profit, Mr. Skokos has contrived and executed a distribution plan that results in Mr. Abbey suffering a substantial loss on the profitable Medtronic sale,” the complaint says.
Abbey is also suing Harold Asher, a Louisiana accountant who Abbey claims provided an analysis, “unreasonable and factually insupportable,” that justified Skokos’ actions. According to the complaint, Asher was involved in a 2003 lawsuit in a Louisiana federal court with similar allegations against him.
Skokos could not be reached for comment. Asher did not immediately return a message The Texas Lawbook left on his voicemail.
Kelly Hine, one of Abbey’s attorneys, declined to comment on the lawsuit. Hine, a partner in Perkins Coie’s Dallas office, said he did not know who Skokos’ legal counsel is.
Hine said Abbey and Skokos became friends “a long time ago” when Skokos (formerly an attorney) was still practicing law in Arkansas.
In New York, Abbey practices securities, antitrust and consumer litigation. He currently serves as Chairman of the Board at New York Law School.
Abbey is seeking more than $1 million in damages, including punitive damages. The case was filed in the U.S. District Court for the Northern District of Texas and was assigned to Judge Barbara Lynn.
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