Judge Reduces Jury Award Against Casden Properties

A jury verdict in favor of former investors in a series of limited partnerships operated by Los Angeles apartment tycoon Alan Casden was upheld by a federal judge, but damages were reduced by $64 million to about $120 million.

Casden and his associates at Casden Properties Inc. were found guilty in November of violating federal securities laws and breaching their fiduciary duties. A class-action lawsuit filed on behalf of about 18,000 investors in 1998 charged that Casden Properties unlawfully made misleading statements in seeking investors’ votes to approve a transfer of ownership in 98 apartment complex partnerships.

U.S. District Judge Dean Pregerson in Los Angeles late Thursday reduced the jury’s award of $92.5 million in punitive damages to $2.6 million. But he upheld the $92.5 million in compensatory damages and awarded $25 million in prejudgment interest, said Nicholas Chimicles, senior partner at Chimicles & Tikellis, a Haversford, Pa., law firm that represents the investors.

“This validates the jury’s verdict in the court’s eyes and now sets the stage for the defendants to appeal,” Chimicles said.

Casden Properties will indeed appeal the verdict, said New York attorney Robert Zito of Schiff, Hardin & Waite, who represents Casden.

He also said the judge was required to reduce the damages because they exceeded limits on punitive damages set by California law.

In addition to Alan Casden, who owned National Partnership Investments Corp., the managing general partner for the investors group, other defendants included his brother Henry Casden, Bruce Nelson and Charles Boxenbaum. Those three were officers or directors of National Partnership.

Casden Properties is owned by Denver-based Apartment Investment & Management Co., which bought closely held Casden in March 2002 for more than $800 million. Apartment Investment has said the individual defendants are liable for the award.