He Erred, Karl Says on Stand
One-time video business whiz Stuart Karl, indirectly embroiled in an ongoing legal malpractice trial, admitted Tuesday that he made mistakes in his well-publicized dealings with entertainment giant Lorimar but stressed that he is now “trying to look forward, not back.”
In Superior Court in Fullerton, the 37-year-old Karl repeatedly had trouble remembering details of his business dealings, saying that some of his recollections were vague and that he was trying to put that chapter of his life behind him.
In the mid-1980s, Karl, along with plaintiffs Court Shannon and Gary Hunt, ran the Irvine-based Karl-Lorimar Home Video, a division of Lorimar Telepictures. However, all three were forced to resign when Lorimar discovered that they had an interest in Continental Marketing Distributors, a video supplier to Karl-Lorimar.
Karl was the first witness for the defense in a legal malpractice suit filed by Shannon and Hunt against Newport Beach attorney Michael Genovese, who is accused of giving the pair bad advice that led to the loss of their jobs.
Genovese denies any wrongdoing. His attorneys declined to discuss the case with reporters Tuesday.
Karl had been so reluctant to discuss his involvement in the Lorimar affair publicly that his lawyer had earlier sought to have his testimony heard in secret. But Judge Kazuharu Makino rejected that move late last month, saying that he would not grant Karl “a private court.”
While seeking to justify his past business practices, Karl also said he takes responsibility for his decision not to disclose to his bosses at Lorimar his financial stake in a Lorimar supplier. He resigned in March, 1987, amid charges that the arrangement amounted to a conflict of interest.
“I made the mistake. I didn’t listen to . . . advice,” Karl said at one point during his more than three hours on the stand.
Karl said that it was never his intention to hide his financial stake in the Torrance- based CMD from the Lorimar board of directors. Rather, he simply decided not to deal with the matter until CMD gained more clients.
“I guess I avoided what I should do and go to the board,” he said. “I just put it off.”
He took this action against the advice of Genovese, who as Karl’s attorney advised his client to approach Lorimar with the issue, Karl testified.
However, Karl defended the legitimacy of the arrangement between Karl-Lorimar and CMD, saying that he believed the deal was honest because outside bids were taken before awarding contracts to CMD and because he was kept at “arms length” from the process.
Karl continually stressed that positive thinking and a good attitude got him through his troubled times, which included an admission that he made illegal campaign contributions to former presidential candidate Gary Hart and his filing for bankruptcy protection against about $4 million in delinquent taxes.
At the beginning of his testimony, Karl revealed that he underwent cancer surgery six months ago. Bonnie Brown, an attorney of the plaintiffs, said he had skin cancer. Karl and his attorney declined to discuss any aspects of his day in court.
