At trial, James Leprino describes forcing heirs out of Leprino Foods
This story first ran on BusinessDen.com, a BizWest news partner.
Jurors in a downtown courtroom Wednesday watched intently as James Leprino, one of the city’s richest and most reclusive men, described in his own words how he pushed his nieces out of Denver-based Leprino Foods and left their 25-percent stake in the company worthless.
For three hours, clips from a video deposition of the 84-year-old billionaire were played before eight jurors on a large flat-screen television in the courtroom.
In the clips, Leprino said that in 2014 he came to believe his older brother, Mike Leprino, had cheated him in business, though he didn’t say why he believed that. James Leprino and his daughters, who together own 75 percent of the private company, then removed Mike Leprino from the board of Leprino Foods. He testified that he didn’t warn his brother before the vote.
“I was making room for more productive board members,” Leprino said. “He spent a lot of his time on his own ranch and olive oil business and very little time in his office in Denver.”
Leprino and his daughters then changed the bylaws of Leprino Foods’ board to ensure that shareholders would not receive dividends from the company, beyond a one-time payout.
In place of dividends, Leprino and his daughters loaned their $400 million from the one-time payout back to Leprino Foods in the form of 20- and 30-year loans, which will generate $165 million in interest for Leprino, his children and his grandchildren, Leprino testified in the video.
When asked if his nieces — Mike Leprino’s three daughters — were allowed to loan their $90 million in payouts back to the company, Leprino said, “No, I never made that offer.”
Because they cannot generate cash flow from Leprino Foods through dividends or loan interest, his nieces’ 25 percent of shares are now worthless, James Leprino testified. But in his hands, the stock would be very valuable, according to Leprino.
“After your brother died (in 2018), you told your nieces that their stock was worth zero. Isn’t that true, sir?” Mike Burg, an attorney for the nieces, asked at the deposition.
“Yes,” James Leprino said.
Burg later asked, “The actual value of the stock owned by your nieces is zero, correct?”
“Correct,” Leprino said.
Leprino also acknowledged telling his nieces to leave Leprino Foods’ headquarters in north Denver and barring them from returning, but said it was a short-lived ban.
“It lasted maybe a couple weeks or a week even,” he said during the deposition, which was recorded over two days in January, according to timestamps on the video.
“You didn’t want to tear your family apart?” Leprino was asked by Burg.
“Absolutely not,” he said forcefully.
Leprino also attended the trial in person Wednesday, as he has since it began Monday. He sat in a wheelchair wearing a black suit with a gray tie. He listened to much of his own testimony through a court-provided listening device but closed his eyes and rested at times.
The video deposition took up most of Wednesday, the third day of a 10-day trial. Nancy and Mary Leprino, two of Mike Leprino’s three daughters, are suing Leprino Foods, James Leprino and the two daughters of James Leprino. They allege the defendants rendered their stock worthless and prohibited them from making the loans, costing them $600 to $900 million.
Leprino Foods, which grew out of a grocery store that James and Mike Leprino’s parents operated in Denver, became the largest maker of mozzarella in the world and provides cheese for the country’s largest pizza chains.
The trial’s afternoon session began with talk of a juror’s expletive.
After a lunch break and before jurors returned to the courtroom, attorneys for both sides debated whether defense attorney Michael Hofmann crossed a line by asking Nancy Leprino, a witness who testified Tuesday and early Wednesday, why she wanted to dissolve Leprino Foods.
Nancy and Mary Leprino’s initial lawsuit called for the company to be dissolved as a result of their uncle’s actions. However, Judge Stephanie Scoville ruled before the trial that it does not have to dissolve. As a result, it is not a matter for jurors to decide in the trial.
Nancy Leprino responded to the question by saying that she didn’t want to dissolve the company, but thought it was required by law in cases like this.
Burg, an attorney for the nieces, told Scoville that jurors had been tainted by Hofmann’s question. He said several observers in the courtroom saw a female juror roll her eyes and mouth the words, “What the [expletive]?”
“This was not a mistake. This was intentional by them,” Burg said, pointing at the defense table.
After taking 15 minutes to consider whether the defense’s questions and the juror’s reaction warranted a mistrial, Scoville returned to the courtroom and ruled they did not. She said the defense’s line of questioning was fair. After the jury returned, Scoville reminded them to keep an open mind and to not express their preference for one side or the other.