MANCHESTER, NH – A Bedford man, the financial adviser for years to a prominent Vermont family, must pay $27,631,816 to the investment company he managed after a jury last week found he was negligent and breached his fiduciary duty causing BDP Holdings to lose millions of dollars.
While the Hillsborough County Superior Court North jury determined Ronald Roberts and his companies, The Eideard Group LLC and Roberts Asset Management LLC (RAM), had made negligent misrepresentations or omissions to BDP, they said it was not fraud.
“The jury reached its decision after listening to eight days of testimony concerning sometimes complicated business issues. The collective wisdom and experience of the twelve jurors, combined with the careful instruction they received from the Court on the law, led the jury to the correct result,” said Attorney Scott Harris.
Roberts intends to ask the judge to nullify the verdict and then, if need be, appeal to the New Hampshire Supreme Court.
“My clients and I were disappointed by the jury verdict, especially given that the irrefutable evidence at trial demonstrated that through the efforts of Eideard Group and Ron Roberts, the wealth of the Hoehl Family was increased by $124 million over a period of 15 years, net of the loss from the G-Form investment,” said lead attorney Lawrence G. Green of Boston. “The G-Form investment was made in complete good faith, and could have worked out but for COVID, and I also note that the jury specifically rejected the claim that the Hoehls were defrauded. We will be proceeding with our judicial recourse to file a post-trial motion to have the verdict nullified, and to otherwise appeal to the New Hampshire Supreme Court. We are at least grateful that the Defendants John Aubin and Kevin Gaboriault were found not to be liable, as these gentlemen never should have been sued.”
BDP filed the lawsuit in May 2021 alleging Roberts, Aubin, Gaboriault, George Li, Eideard and RAM misappropriated the Hoehl Family assets leading to the family’s loss of more than $50 million. Li was dropped from the case.
The Hoehl family gained its wealth through its patriarch, Robert H. Hoehl, who founded IDX Systems Corp., a healthcare software technology company. GE Healthcare acquired IDX in 2005 for $1.2 billion.
After IDX was sold, Roberts, along with Aubin, founded RAM in January 2006. It changed its name to Eideard Group LLC in 2011. The Hoehls gave him the responsibility for their finances. The family appointed him manager of BDP, the investment company established by the Hoehls’ adult children.
The Hoehls maintained the defendants tried to obscure their misconduct by attributing the losses to market risk.
Roberts denied the allegations and said the investments he made were prudent and made with full authority. In court documents, he said for more than 25 years he was a trusted advisor to members of the Hoehl family, beginning with the father in 1995 and continuing through early 2020.
“During this time period, as a result of the investment advisory and related services provided to them by Roberts and the other defendants in this action, members of the Hoehl Family have been enriched by multiples of tens of millions of dollars. The Hoehl Family members granted Roberts broad discretionary authority, including express authority to make ‘alternative investments’, i.e., investments in newer companies involving greater risk but potentially exponential returns,” according to court documents.
BDP contended Roberts used Eideard for self-enrichment at BDP’s expense. Another lawsuit, in federal court in Burlington, Vt., was filed by the Hoehl Family Foundation with many of the same claims against several of the defendants.
The New Hampshire lawsuit focused on the investment of BDP’s assets in G-Form LLC of Providence, R.I., described in court records as a small, struggling manufacturer of athletic protective gear.
Roberts, the Hoehls said, was on all sides of the G-Form investment: as manager of BDP, as an investor and member of G-Form through his revocable trust, as chair of the board of managers of G-Form, and as principal of Eideard which managed a fund which was also a lender and investor in G-Form, according to the lawsuit.
BDP, between 2013 and 2018, loaned and invested equity of more than $40 million in G-Form.
“During the period, from 2011 to 2019, G-Form never made a profit, but instead suffered aggregate operating losses of approximately $80 million,” according to the lawsuit. “In the face of G-Form’s staggering, unrelenting losses, Roberts and Eideard continued to loan millions of dollars of BDP’s capital to G-form to prop up its operations.”
In 2014, G-Form’s auditors noted the company was at substantial risk of being unable to continue as a going concern.
Instead of declaring a default, Roberts increased BDP’s loan limits to G-Form to $17 million, then $20 million and finally $23 million, according to the lawsuit.
The Hoehl family alleged Roberts hid the losses from them until 2019. Needing another source of funds to keep G-Form afloat, Roberts and Eideard executed a “debt-to-equity swap,” whereby BDP’s $30 million plus secured debt was converted to a minority equity interest in G-Form.
“BDP sacrificed its rights and powers as a secured creditor in exchange for a minority equity position in a failing company. If BDP had instead exercised its rights as a secured creditor, Roberts’ personal equity interest likely would have been wiped out. Thus, the debt-to-equity swap can be seen as a ‘Hail Mary’ pass to save Roberts’s personal equity stake.”
