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Judge raises verdict by $754,586

A St. Louis County judge has increased a $4.9 million jury verdict to a printing company’s minority shareholder to more than $5.6 million.

Bob Selsor

Bob Selsor

A jury awarded $1.9 million in compensatory damages and $3 million in punitive damages to Stephen Smith on March 20 for his claim that Mark Shocker breached his fiduciary duty to Smith.

Smith was the only minority shareholder in MWS Enterprises, of which Shocker served as the chief financial officer, sole director and controlling shareholder. Smith alleged Shocker committed a breach of fiduciary duty by awarding himself excessive amounts of compensation without distributing any dividends to Smith and making business decisions that benefited himself and not the company.

In an order and judgment issued on Tuesday, Judge Carolyn Whittington increased Smith’s award by $754,586, ordering Shocker to buy Smith’s shares in the company.

Smith first invested in MWS Enterprises in 1996, when Shocker told him of the opportunity that MWS had to buy AdSell, a printing and direct-mail marketing business, that was looking for buyers so it could avoid formal bankruptcy.

Smith had never received a penny from his investment and believed for some time that the business was not making a profit or just breaking even, said Smith’s attorney Robert Selsor, of Polsinelli Shughart.

Selsor presented evidence at trial that Shocker had breached his fiduciary duties by overcompensating himself.

“The president of the company had greatly increased his salary by 1,200 percent, from $150,000 to $2 million,” he said. “Our experts testified that the most he could justify was $325,000 – above that he needed to split the dividends.”

In addition, the judgment ordered that MWS Enterprises and other associated companies owned by Shocker – MWS Holdings and MWS Digital – be a part of a constructive trust.

“The constructive trust places the separate and distinct companies into the assets of [MWS] Enterprises, so they’re all under the same umbrella,” Selsor said. “We argued that [MWS Holdings and MWS Digital] should have been part of that company as of day one. Was it not for breach of fiduciary duties, they would have been.”

Michael T. Lewis, with the accounting firm Rubin Brown, was appointed to be custodian of MWS Enterprises and will oversee the operation of the three businesses. He will be paid by the defendant and on the 15th of each month has to issue a report summarizing: his activities, number of hours worked and amount billed, expenses incurred by the persons, firms or the corporation and identifying any amounts paid by Shocker and the corporations to Smith, the custodian, or to persons, firms or corporations retained by the custodian. Each party has 10 days to file objections to the report.

The parties contested who the custodian should be and the custodian’s powers. 

“[The defense] wanted their person to be the custodian and have limited powers – essentially, walk in and check the books,” Selsor said. “We had wanted someone better qualified and who would replace the board of directors and CEO’s legal powers over the company. And that’s what we got.”

The court will maintain jurisdiction so Whittington can review the custodian’s reports and the defendants’ compliance with the order and judgment. 

Defense attorney Vincent Vogler, of the Vogler Law Firm, declined to comment.

The case is Stephen Smith v. Mark  Shocker and MWS Enterprises, 2105CC-02790.