Huntington Beach : Woman Settles Claim Against Ex-Husband

A wife whose husband fraudulently persuaded her that their $70-million firm had little value has agreed to a cash settlement of her lawsuit seeking a larger share of the proceeds, the woman’s attorney said Monday.

The deal means that Connie L. Stewart of Huntington Beach has dropped her claim against her ex-husband, Keith, who kept the firm while she took $750,000 as her share of marital property in 1983.

“We have a settlement in principle. We are working out a few remaining details,” said Marvin Gross, Connie Stewart’s attorney.

Gross declined to reveal the amount or details of the settlement, saying that non-disclosure was part of the agreement. He did say that the settlement was for “cash” and that the agreement leaves Connie Stewart with “none of the (firm’s) stock.” Keith Stewart’s attorney, Vernon W. Hunt Jr., could not be reached for comment.

In August, Orange County Superior Court Judge Judith M. Ryan voided the Stewarts’ 1983 marital settlement, finding that their split of community property was not fair because Keith had concealed the true value of his firm from her.

Within a month of that agreement, Gradco Systems Inc., the private firm controlled by Keith Stewart, sold its stock to the public at $18 per share.

During their 20-year marriage, the Stewarts had amassed 2.1 million shares of Gradco, which had a patent on a device used to sort documents produced by copying machines.

Connie Stewart testified that in reaching the property settlement, she relied on her estranged husband’s statements that the firm was heavily in debt. Hunt, her husband’s attorney, had contended that she was aware that the firm had “speculative” value but chose to take hard assets--two homes the couple owned--and leave Keith his 55% ownership in the firm, and the right to “sink or swim.”