Thursday October 3rd, 2013 - 4:07PM
A state court in Chicago has awarded damages of $9.79 million to ICD Publications following previous court rulings that former company president Ian Gittlitz defrauded the company and breached his fiduciary duty by embezzling ICD funds.
ICD Publications is the Lincolnshire, IL-based parent of HomeWorld Business, as well as sister publications Gourmet Insider, Hotel Business and Hotel Business Design.
Judge Patrick Sherlock awarded damages to ICD after a trial in the Cook County Circuit Court that marked the culmination of six years of civil and criminal court proceedings involving ICD and Gittlitz, including Gittlitz’ mail fraud conviction and summary judgment rulings for ICD in its civil case against Gittlitz.
Dave Palcek, co-founder and current president of ICD, said, “We are extremely pleased that both the civil and criminal courts validated ICD’s claims. It is a credit to the entire ICD team to have maintained the excellence and leadership of our publications and digital content platforms during these lengthy legal proceedings.”
ICD Publications terminated Gittlitz in July 2007 and sued him for fraud against the company and breach of fiduciary duties, among other claims. In March 2009, Gittlitz was arrested and charged with embezzlement in Lake Country, IL, state court. He pled guilty in October 2011 to felony mail fraud for embezzling ICD funds from October 2001 to June 2007 by falsifying expense reports to receive double reimbursement from ICD on select expenses with intent to defraud the company.
Prior to the July 2013 civil case trial, the circuit court in July 2012 granted summary judgment for ICD— based in part on Gittlitz’ mail fraud conviction— that Gittlitz defrauded the company and breached his fiduciary duties by embezzling funds. The court in a subsequent summary judgment ordered Gittlitz, because he breached the ICD shareholders agreement, to transfer his ICD shares to the company at book value calculated as of December 31, 2006.
The trial decision awarded ICD compensatory damages, interest on embezzled funds, disgorgement of compensation and punitive damages.
“Gittlitz admitted to embezzlement and to breaching his ‘duty of honesty’ to his fellow shareholders continuously over an almost seven-year period,” Circuit Court Judge Sherlock said in his trial decision on September 27, 2013. “This is not a situation where Gittlitz made a few accounting errors or where he simply over expensed a few charges,” Judge Sherlock continued in his decision “...The court finds this type of conduct should be punished.”
The court denied all counterclaims and affirmative defenses asserted by Gittlitz.
Judge Sherlock in his trial decision cited the credible testimony of ICD principals Palcek and Cynthia Evans, who co-founded ICD as equal partners with Gittlitz in July 1989.
“The court finds Cynthia Evans and David Palcek to have given cohesive, credible, comprehensive and understandable testimony,” Judge Sherlock said in his decision. “On the other hand, the testimony of Gittlitz was evasive and, for the most part, not credible. Indeed, Gittlitz had a difficult time admitting to things which should have been routine— this type of testimony led the Court’s finding as to his lack of credibility.”