A jury deliberating whether Goldman Sachs was negligent in helping arrange the $580m sale of speech-recognition pioneer Dragon Systems Inc. will review statements from a former Dragon president who testified for the bank.
Bloomberg reports that the former executive, John D. Shagoury, testified on January 9th in federal court in Boston that he didn’t blame the bank for the 2000 all-stock deal that was rendered worthless months later when buyer Lernout & Hauspie Speech Products NV collapsed in an accounting fraud and filed for bankruptcy. U.S. District Court Judge Patti Saris said Tuesday that the jury can review a transcript of Shagoury’s testimony.
Dragon founders Jim and Janet Baker and two other shareholders, Robert Roth and Paul Bamberg, are suing for gross negligence and intentional misrepresentation. The four sold a small part of their Lernout & Hauspie stock for $11 million before the fraud was exposed. The Bakers lost the technology they spent decades developing.
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image: © James Kuhn