Posted on 21 February 2015.
If those last three names seem out of place, it’s because Boyd, Campbell and Williamson are lawyers in Wise County, not legendary Broadway actors.
They do, however, fit perfectly on the list of people who have worked with Austin theater producer Charles Duggan.
LEGENDARY PRODUCER – Austin theater producer Charles Duggan was an interesting client for a team of Wise County lawyers. Photo Courtesy the Austin American-Statesman
Duggan, who has brought the “Greater Tuna” plays as well as numerous others to the stage during a long and successful career, hired the local law firm of Simpson Boyd Powers and Williamson to represent him in a complex lawsuit after he lost nearly $2 million in a real estate Ponzi scheme in 2008.
The scheme’s mastermind, Robert Langguth, is serving a four-year sentence in federal prison for defrauding investors of between $16 and $20 million through a series of real estate deals.
The lawsuit targeted Langguth, but it also took aim at Gracy Title Co., a venerable Central Texas firm in existence since 1873. The suit alleged that the title company participated in the scheme by allowing Langguth “to use an escrow account held at Gracy Title as his personal bank account.”
On Feb. 5, a jury in Travis County unanimously agreed, saying the Gracy Title office Langguth was working with committed “fraud and misapplication of fiduciary property” with Duggan’s investments.
The nine-man, three-woman jury awarded Duggan actual damages of $3,345,927 along with punitive damages of $3 million from Gracy Title and $5 million from Langguth – a total award of $11,345,927.
Boyd, who served as the lead attorney on the case, said he expects the verdict to be appealed once the judge has issued his final ruling March 4.
“There’ll be some disagreement about what the numbers are, whether there’s evidence to support them,” he said. “The fact that we got a unanimous finding on all counts makes us feel pretty confident that we’ll get a judgment on something.”
Fast and loose with the funds
According to the lawsuit petition, in September 2008 Duggan wired $1,980,000 into an escrow account at Gracy Title to be part of a real estate investment group put together by Langguth.
When he pled guilty to federal criminal charges in November 2012, Langguth admitted that from November 2005 to December 2009, he devised a scheme to obtain money from investors under false pretenses.
Langguth told investors they were buying a participation in a real estate “bridge” loan – evidenced by a note and secured, in most cases, by a first lien on real property. In return, he promised investors he would pass through their share of the monthly interest payments made by borrowers.
He also promised that when the borrower paid off the loan, the capital would be returned to the investor.
In reality, he pocketed between $16 and $20 million from 250 victims who invested in his company.
What made it a Ponzi scheme was that he was paying off earlier investors with money from newer ones. It fell apart when he was no longer able to attract new investors.
Langguth filed for bankruptcy in March 2010.
Boyd said they had a strong case that the title company failed to meet its fiduciary responsibilities. In fact, after his expert witness testified, the other side opted not to put their expert on the stand.
“It’s kind of like, you hire somebody to paint your house, and they let their buddy in the back door to steal your TV,” Boyd said. “Just because they didn’t steal your TV, that doesn’t make them not responsible. You can’t assist somebody.
“There’s no way Langguth could have gotten the money out of that title company. He had to have help getting it out.”
The most damning piece of evidence came from the title company itself. On Sept. 12, 2008, Duggan got a letter from Gracy Title stating, in part, that “as of today, $800,000 has been placed and is secured by liens. The balance of $1,180,000 is being held.”
Evidence at trial showed this was simply not true. To the contrary, the funds were released to Langguth by Gracy Title’s escrow officer, without any security.
Boyd’s team even produced evidence showing the escrow officer had received payments from Langguth out of accounts she was handling, including $5,500 from the escrow account into which Duggan wired funds.
According to Boyd, the letter looked bad enough – but when you consider that the person who wrote it was receiving money from Langguth under the table, it looked particularly bad.
“I think the jury got the picture of what was going on,” he said.
The branch manager, who was not criminally prosecuted, doesn’t work for Gracy Title anymore. She was the first witness Boyd called during the trial.
The jury specifically found that Gracy Title failed to comply with its fiduciary duty, committed fraud, knowingly participated in Langguth’s breach of fiduciary duty, committed a misapplication of fiduciary funds and conspired with Langguth.
Gracy Title CEO David Tandy told the Austin American-Statesman his company did not agree with the outcome of the case.
“There are many issues that need to be worked out on appeal,” he said.
Boyd said the appeal process could take two years or more.
FIRM GETS ONE OF ITS MOST INTERESTING CLIENTS
Defending the rights of a legendary theater producer was a step outside the box for the Wise County law firm of Simpson, Boyd, Powers and Williamson.
COURTROOM DRAMA – Wise County lawyers Allen Williamson, Derrick Boyd and Kristy Campbell of Simpson, Boyd, Powers and Williamson represented “Greater Tuna” producer Charles Duggan in a lawsuit that ended earlier this month in Austin. Messenger photo by Jimmy Alford
Charles Duggan is, by any measure, “a character,” according to lead attorney Derrick Boyd.
“The godmother of his two boys is Joan Collins, who he had produced a play for, and worked with,” Boyd said. “He’s just had an interesting career as a producer. He runs in circles a lot of us don’t run in.”
That made it a challenge to find 12 regular folks who might be sympathetic.
“It was unique because you’re not going to find a jury full of people who have lived his life,” he said. “You’ve got to relate to a jury. But they exonerated him all the way across the board.”
The jury found Duggan’s honesty refreshing, he said.
“He basically got up there and admitted things he had to admit,” Boyd said. “It was a good case, and we represented a good guy.”
Duggan produced “Greater Tuna” and other plays throughout the U.S. – and used his influence, connections and resources to help numerous artistic causes in the Austin area.
“He’s a great guy,” said Williamson, who assisted at trial. “It was an honor to represent him.”
According to a 2009 story in The Austin Chronicle, Duggan, 61, is an “old-school” producer who grew up with a passion for the stage. He earned a degree from Stanford University, then toured for two years in stage productions with the likes of Rogers, Grable and Merman before attending law school at Georgetown University.
He went into corporate, real estate and entertainment law in San Francisco, but eventually agreed to co-produce a short-lived, but Tony-award-winning mountain-climbing drama, “K-2,” on Broadway.
Returning to the theater – this time behind the scenes – he found his true calling.
He bought the Marines’ Memorial Theatre in San Francisco in July 1982, and staged a series of hits there. He worked on stages there, on Broadway and in London before moving to Austin in 1992.
He’s best known as the producer of “Greater Tuna,” “A Tuna Christmas,” and “Red, White and Tuna” – working with the original creative team of Joe Sears and Jaston Williams for a quarter of a century.
He has a reputation as a fearless, creative force with unerring instincts for what works in a theater.
His fortunes took a nosedive, however, when he got involved with a real estate huckster who portrayed an experienced professional in a real-life drama.