In a breach of fiduciary duty complaint, Russell John has filed a lawsuit against Justin Fine and his associated entities in the Ventura County Superior Court on May 14, 2024. The case, which involves significant financial disputes over biotech investments, has resulted in substantial monetary judgments against Fine.
The dispute began when Russell John, an insurance executive, invested $500,000 for an 87 percent membership interest in Biorap LLC, a company formed by Justin Fine to invest in biotech stocks using a proprietary algorithm. Despite initial optimism, John's expectations were not met as the returns from Biorap fell short. By 2018, John demanded a refund but was informed that he was only entitled to the value of his capital account—an amount significantly less than his initial investment. Consequently, John filed a lawsuit in 2019 against Fine and ENIF Inc., alleging breach of fiduciary duty, negligence, fraud, breach of contract, violation of the Corporations Code, and derivative claims on behalf of himself and other members of Biorap.
The trial spanned six days and included testimonies from both parties as well as expert witness Wayne Lorch, CPA. The court found that Fine had breached his fiduciary duty by loaning over $600,000 from Biorap’s funds to ENIF Inc., which were then used to settle ENIF’s loans and other expenses unrelated to Biorap's benefit. The judgment awarded John monetary damages totaling $2,387,311.42 including prejudgment interest and punitive damages.
Fine appealed the judgment but faced challenges due to an inadequate record for review. His appeal presented six arguments including alleged errors under People v. Sanchez (2016) related to expert testimony based on hearsay; excessive damages; procedural irregularities; surprise testimony; new evidence regarding investments; and insufficient evidence for fraud findings. However, these arguments were largely dismissed due to forfeiture or lack of adequate documentation.
The trial court’s decision emphasized that Fine's actions constituted multiple violations including negligence and fraud under the Corporations Code. The court underscored that Fine’s mismanagement involved diverting funds for personal benefits such as paying off car loans rather than serving the interests of Biorap or its investors.
Russell John seeks comprehensive relief through this legal action including compensatory damages for financial losses incurred due to mismanagement and fraudulent activities by Justin Fine. The plaintiff is also seeking punitive damages aimed at deterring similar conduct in future business dealings.
Representing themselves respectively were Justin C. Fine for the defense while Silver and Arsht with attorneys Samuel J. Arsht, Marsha C. Brilliant, and Jeffrey A. Meinhardt represented Russell John. Presiding over the case was Judge Henry J. Walsh with Justices Cody J., Gilbert P.J., and Yegan J concurring in affirming the judgment.