- Associated Press - Tuesday, April 5, 2016

RALEIGH, N.C. (AP) - A state Court of Appeals panel on Tuesday let stand a jury decision finding congressional candidate Greg Brannon liable for making false and misleading statements while urging two people to invest in a now-defunct technology company.

A majority on the three-judge panel refused Brannon’s request of a new trial. He was directed in early 2014 to pay the two investors in the company, called Neogence Enterprises, more than $250,000 and another $132,000 in attorney fees and court costs arising from the civil case.

Since that trial, the Cary obstetrician and tea-party favored candidate has finished second in two Republican U.S. Senate primaries, including one three weeks ago won by Sen. Richard Burr. He quickly shifted to the 2nd Congressional District race, in which he’s competing against both Reps. George Holding and Renee Ellmers.

A third judge on the panel said Brannon deserves a new trial in part because Brannon’s co-defendant in the lawsuit, the company’s ex-CEO, was absolved of wronging by the same Wake County jury for providing similar information to at least one of the investors who sued.

The 2-1 decision means the state Supreme Court must take up any appeal, which Brannon said in a release he expects to ultimately prevail. The matter is unlikely to be resolved before the June 7 congressional primary.

Sam Lampuri and Larry Piazza sued Brannon - previously a Neogence director - ex-CEO Robert Rice and a company founder, whose claims against him were dismissed earlier. The lawsuit alleged Rice and Brannon had given them misleading information that Verizon was interested in preinstalling its application on company smartphones, when in fact Verizon never said that. The deal with Verizon was actually a potential deal with an advertising firm that never occurred, according to court documents.

Brannon sent an April 2010 email to Piazza and others that the company needed money as soon as possible before company leaders returned to Verizon. Lampuri said Brannon pressed him to invest in Neogence when he visited Brannon’s medical office with his wife, who was one of Brannon’s patients. Piazza invested $150,000 and Lampuri $100,000.

Brannon’s attorneys said their client was only repeating what the company’s chief sales officer had told them about a meeting. His lawyers also said the trial judge should have told jurors about a state law allowing company directors like Brannon to avoid liability if relying on the information of a company employee.

Judge Bob Hunter, writing for the majority, disagreed. He said Brannon waived that defense option, and even if he retained it, he was not soliciting investments based on a collective message approved by the company’s board.

“Brannon acted individually and touted securities based upon inside information,” Hunter wrote. Court of Appeals Judge Linda McGee agreed with Hunter.

In a mostly dissenting opinion, Judge John Tyson said jurors should have been instructed on the director liability law and wrote that it was unreasonable to require every communication a director has with a third party be approved by the board. Tyson also said the opposite jury verdicts for Brannon and Rice involving Piazza’s allegations were inconsistent.

“To deem Brannon’s statements to Piazza as ‘securities fraud,’ while acquitting Rice … is extreme, legally unsound, and patently illogical,” Tyson wrote.

Brannon, in a statement released by his political consultant, said the majority ruling “means our Court of Appeals judges are legally unsound and illogical, or politically motivated.” He said it also “puts the financial futures of everyone who sits on a board of directors in peril.”

Attorney Steve Epstein, representing the two investors, wrote in an email it was incredible of Brannon to suggest there was a “political witch hunt against him.” Epstein said his clients were pleased with the majority’s decision and “will not end their quest for justice until Dr. Brannon finally pays back the money he wrongfully secured from them nearly six years ago.” Their awards, if upheld, are growing by 8 percent annually, by the trial’s order.

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