Atlanta Attorney Lands $4.7M Verdict Against ‘Toxic’ COO

David Lilenfeld, Lilenfeld P.C., Atlanta. (Photo: John Disney/ ALM)

Seven months after his contentious ouster as COO of Monster, controversial Miami businessman Fereidoun “Fred” Khalilian is in trouble again after a Fulton County jury awarded $4.7 million to his former Atlanta business partner.

The trial in Fulton County Superior Court centered on allegations of misappropriated investment funds, competing online gambling enterprises and the defendant’s rakish wink at the jury that may have backfired.

At the end of a three-day trial, the jury of 10 women and two men found Khalilian liable for $4.7 million in damages to Atlanta website developer and internet marketer Stefano Grossi, said Grossi’s attorney, David Lilenfeld of Lilenfeld PC. Khalilian, a former Atlanta resident, now claims residency in Los Angeles and Miami where, a decade ago, he partnered with Paris Hilton in two Florida nightclubs.

Khalilian was ousted by Los Angeles audio/video cable-maker Monster last year after he was labeled a “toxic” member of the company’s management team in a corporate brawl that included the issuance of a temporary restraining order against Khalilian, and a police complaint alleging allegations of fraud, theft and conspiracy.

He previously ran afoul of the Federal Trade Commission, which secured a permanent injunction and a $4.2 million judgment against Khalilian and his company, The Dolce Group Worldwide, in 2010. That barred him from engaging in a robocalling business that made deceptive sales of extended auto warranties.

In 2000, the FTC shut down two Florida businesses in which Khalilian was a principal, Leisure Time Marketing and Discovery Rental Inc.

Grossi sued Khalilian in 2014 after investing $1.7 million in a business venture—United Artists Group—that developed online poker venues for Native American tribes, Lilenfeld said. That partnership soured “when the $1.7 million my client invested ran out,” Lilenfeld said. “I told the jury in my closing argument that, when the money was gone, Fred was gone.”

Lilenfeld said that after diverting Grossi’s investment funds to fuel an extravagant lifestyle that featured Rolex watches, a Lamborghini sports car and stays at deluxe hotels, Khalilian set up a mirror company, Universal Entertainment Group, and began marketing the development of online gambling websites to other Native American tribes and, eventually, to Monster.

“My client’s position was there never really was a formal split,” Lilenfeld said. “It wasn’t a formal end to the partnership. Fred just went on his merry way.”

Grossi “was the expertise” in the partnership,” Lilenfeld explained. “Fred had the connections. He was the dealmaker. … My client had the expertise to oversee the development of the website and to market it. … He was able to oversee all the technical aspects. Fred walks into a room with a nice suit and charms everybody. Not a lot of people can do that.”

Khalilian displayed that braggadocio when he testified, Lilenfeld said. Recounting his first meeting with Grossi, Khalilian told the jury he drove a $1.1 million vehicle to the meeting. Khalilian then winked at jurors, Lilenfeld said.

The lawyer said, when he talked to jurors after the trial, they expressed distaste for the defendant. “They singled out the winking,” he said.

The $4.7 million award reimbursed Gross for his 50 percent share of a $9.4 million deal that Khalilian struck with the Cheyenne and Arapaho Tribes of Oklahoma based on the online poker application Grossi developed for United Artists, Lilenfeld said.

The jury declined to award Grossi a percentage of earnings that Khalilian generated in his deals with Monster and another Oklahoma tribe, finding that too much time had elapsed between Khalilian’s partnership with Grossi and deals he subsequently generated through his new company, United Entertainment, Lilenfeld said.

Bryan Knight of Atlanta’s Knight Johnson, who defended Khalilian, said Thursday that he and Khalilian “are obviously disappointed with the jury verdict.” But there was a “somewhat of a silver lining” because Lilenfeld had asked the jury to award Gross $30 million as well as punitive damages and legal fees, Knight added. In addition to limiting its verdict to $4.7 million, the jury declined to award either punitives or fees, Knight said.

Knight said he intends to ask Fulton County Senior Superior Court Judge Jerry Baxter, who presided over the three-day trial, to halve the jury award. Although Grossi was the sole plaintiff, Knight contended he actually sued on behalf of United Artists. “This was really a judgment for United Artists Group,” he argued. Because Grossi and Khalilian were 50 percent partners, half the verdict should be credited to Khalilian, he said.

Knight also said he and Khalilian “envision an appeal based on certain evidence that was excluded at trial.” He declined to elaborate.