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Judge awards $22.75M to defrauded investors, including a judge and pro golfer

A federal judge in Kansas City awarded $22.75 million in damages to a Missouri state court judge and a professional golfer who were defrauded by a longtime acquaintance.

In her Nov. 22 judgment, Chief U.S. District Judge Beth Phillips found in favor of PR Group, which Jerry Rellihan and Tom Pernice formed to take advantage of a series of purported investments in Eastern Europe offered by Douglas Combs. Although Combs promised the men a “guaranteed return” within a few years, Phillips found that he had no intention of making good on his promises.

Tom Pernice Jr.

Tom Pernice Jr., a Kansas City native shown after a 2016 PGA Tour Champions victory, is one of the plaintiffs in a fraud case. (AP Photo/Mark J. Terrill)

“In particular, Combs’ testimony demonstrates that he presented [Rellihan and Pernice] with a unique combination of intentional falsehoods coupled with a complete disinterest in presenting truthful statements in an attempt to induce them to invest $1.5 million,” she wrote.

The judgment followed a bench trial held in October at which neither Combs nor representatives of his company, Windmill International Ltd., appeared. Their defense counsel withdrew from the case with the court’s permission prior to trial. No contact information was listed in court records for Combs.

Despite that, Brandon Boulware, an attorney for the plaintiffs, said he believes there are avenues to collect the judgment.

“This has been a long, hard-fought journey, and we are obviously very pleased with the final outcome,” he said.

Rellihan is a St. Clair County associate circuit judge, and Pernice is a Kansas City native who plays on the PGA Tour and Champions Tour. According to the judgment, they are lifelong friends who had met Combs in the early 1990s at a golf tournament in Morocco.

In 2006, Combs approached Pernice with an opportunity to invest in an alleged expansion of the cable system in Bulgaria, as well as two real estate projects in that country. Combs suggested that a $1.5 million investment in Windmill would generate a return of $3.5 million to $4 million within three years. Pernice teamed up with Rellihan, and each agreed to invest $750,000.

Later that year, Combs told them that Windmill no longer was pursuing the cable deal but that their investment in the land deals would be increased. PR Group had not received any money by the “expected exit” date of August 2009, however, and Combs became increasingly difficult to reach and declined to provide information that Pernice and Rellihan requested.

PR Group filed a lawsuit in Cass County Circuit Court in December 2011. The suit later was transferred to federal court. A Bulgarian law firm hired by the plaintiffs later determined that both the properties in which Pernice and Rellihan allegedly had invested had been sold in 2009. PR Group received no proceeds from either sale. A company called VM Worldwide, which Combs controlled, had purchased both properties before PR Group made its $1.5 million investment.

Phillips’ ruling cited Combs’ deposition, in which he testified he did not know where all of the money went. Asked what PR Group received for its investment, Combs answered: “Nothing,” and when asked whether he cared about the group’s investment, he answered: “Not at all.”

“This was not a simple case of failing to fulfill a contract’s terms: when Defendants represented that Plaintiffs would receive a return on their investment when the properties were sold, Defendants simultaneously had no intention of returning any money to Plaintiffs,” the judge wrote.

The judgment represents the $4 million the plaintiffs should have earned on their investment, as well as $3.75 million in interest from the 2009 sale dates of the two properties. Phillips also awarded $15 million in punitive damages.

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Breakdown: $4,000,000 actual damages, $15,000,000 punitive damages, $3,750,000 in prejudgment interest

Venue: U.S. District Court for Western District of Missouri

Case Number/Date: 4:14-cv-00401/Nov. 22, 2019

Judge: Beth Phillips

Caption: PR Group LLC, Jerry Rellihan and Tom Pernice v. Windmill International Ltd. and Douglas Combs

Plaintiffs’ Attorneys: Brandon Boulware and Erin Lawrence, Boulware Law, Kansas City

Defendants’ Attorney: None