Raleigh, N.C. — Whether U.S. Senate candidate Greg Brannon will be found liable for repaying money investors lost in a technology start-up will come down to whether the jury in his civil trial believes he over-sold the potential for a deal between his company and wireless giant Verizon.
Brannon, a Republican allied with the tea party wing, is one of at least five GOP candidates expected to run for the chance to take on Democratic U.S. Sen. Kay Hagan this year. As the candidate filing period opened on Monday, Brannon was sidelined from the campaign trail by a lawsuit over Neogence, a company that promised to produce an "augmented reality" application called Mirascape for smartphones.
Superior Court Judge Bryan Collins declined to issue a directed verdict that would have essentially ended the the trial Friday, saying that there were "factual disputes here that need to be resolved by the jury." If Brannon and company co-founder Robert Rice lose the case, they could be forced to repay what their investors put into the company, plus penalties.
Testimony in the trial wrapped up Friday. Closing arguments are expected Monday morning, and Collins said that he anticipated a verdict could be in hand by Monday afternoon or Tuesday.
The trial would likely have gone largely unnoticed, but Brannon is one of the two best-funded and best-known rivals to state House Speaker Thom Tillis, the leading candidate in the Republican primary. Although it would not be a criminal finding, if Brannon loses at trial, it would amount to a verdict that he lied to investors. That could be problematic in the upcoming campaign.
Brannon, a Cary obstetrician, did not testify. He sat in court Friday as both sides in the civil suit questioned David Kirkbride, a co-owner of the now defunct company who was also sued but was dismissed as a defendant in the lawsuit.
Asked about Brannon's role in the company, Kirkbride said that Brannon probably spent five to 10 hours a week helping run the start-up.
"He was always there in an advisory capacity," Kirkbride said, stressing that Brannon did not have responsibility for day-to-day operations. "He was always available but never, ever an employee."
The most contentious part of Kirkbride's testimony came over a meeting attended by John Cummings, Neogence's chief salesman. In 2010, as the company was trying to land investors, Cummings had a meeting at an ad agency in New York that purportedly involved an official with Verizon. Cummings reported back that Verizon liked Neogence's product and would consider including the start-up in an advertising campaign.
Lawrence Piazza and Salvatore Lampuri, the two investors who filed the suit seeking the return of tens of thousands of dollars, said they were told that Verizon was considering adopting Neogence's product as standard equipment for all new Droid phones. That would be a far bigger deal for the company than a simple advertising arrangement, which would bring publicity but no revenue.
Kirkbride testified that having the software bundled as part of a phone's original package was "the holy grail" for Neogence but not a short-term possibility arising out of Cummings' New York meeting. Both Piazza and Lampuri testified they were not told that it was only an advertising deal that was in the works. Rather, they were under the impression that the investment could help the company land the bigger prize of becoming original software.
Steven Epstein, a lawyer for Piazza and Lampuri, read an email from Rice to Kirkbride in which he said that Cummings had "oversold" the potential of the Verizon deal but went on to instruct Kirkbride to "do what is necessary" to land Piazza as an investor. Kirkbride insisted Friday that none of the company's owners misled the investors, saying that everyone involved knew that becoming part of Verizon's original equipment was a long-term goal.
"I don't have to tell you you are a man versus woman. It is the obvious. I don't have to tell you the obvious," Kirkbride said.
Through much of the exchange, Epstein pushed Kirkbride to acknowledge seeming conflicts between Neogence's testimony and written communications between company officials. Whether jurors believe Kirkbride may determine the outcome of the case.
Soon after lunch, Epstein tried to attack Kirkbride's credibility directly, asking him whether he had hugged Brannon on his way back into the courtroom. Kirkbride responded in front of jurors that he didn't think that he did but maybe offered a handshake. He acknowledged, "I like Dr. Brannon very much."
Shortly after the main trial proceedings for the day ended, Collins summoned Kirkbride to the front of the courtroom and instructed him to be remain silent.
"You were asked the question whether you gave Dr. Brannon a hug when you got in the courtroom," Collins said, pausing as Kirkbride began to say something. "It's really important that you not talk right now. You denied doing that, and I want the record to reflect that I saw you."
Collins told Kirkbride he was considering issuing a "show cause" order that would require him to demonstrate why he shouldn't be held in contempt or ask the district attorney to consider perjury charges. Collins said that he would not take either of those steps immediately but ordered Kirkbride to appear in court with his lawyer on Monday afternoon.