Investor seeking ownership sues after terms changed – $1,429,275 Verdict

The case involved claims of fraudulent inducement, breach of contract, and quantum meruit arising from defendant Akira Technologies Inc.’s solicitation of a $250,000 investment from plaintiff Inna Bochkova in the spring 2011. Akira is a small government contractor that was registered in the U.S. Small Business Administration 8(a) program at that time.

The parties had extensive communications regarding the terms of Bochkova’s investment, including that she would receive 12.5 percent of Akira’s stock and serve as a member of its board of directors. The investment was part of a round of financing to restructure Akira to grow through new bid proposals and an application for HUBZone status.

The parties signed a convertible promissory note which stated that they intended to convert the investment into shares, and that Akira would submit an ownership change request to the SBA concerning Bochkova’s investment. The note attached a shareholder agreement and statement of good governance principles that defined Bochkova’s rights as a shareholder upon conversion. Bochkova paid her $250,000 investment to Akira ahead of schedule.

Defendants claimed that they submitted an ownership change request to the SBA, but that the SBA lost it. The SBA denied having any record of such a request. When Akira graduated from the 8(a) program in November 2015, defendants told Bochkova that SBA approval was no longer needed for her ownership interest and they would soon convert her investment into shares.

Defendants delayed providing Bochkova with conversion documents until 2017. Those proposed conversion documents sought to change her shareholder rights from those found in the attachments to her note and added new financial obligations. When defendants refused to convert her in accordance with her original terms in August 2017, Bochkova sued.

Defendants argued at trial that Bochkova should only receive back her investment plus interest. The jury agreed with the plaintiff that Akira breached its contract with her and that she was entitled to the value a 12.5 percent interest in Akira, and awarded plaintiff $1,429,275 in damages based on her expert’s analysis of value.

18-T-115

Type of action: Breach of contract

Injuries alleged: Failure to tender shares in company to investor

Name of case: Bochkova v. Akira Technologies Inc. and Chennamaraja

Court: Fairfax Circuit Court

Case no.: 2017-11557

Tried before: Jury

Name of judge: Judge Daniel E. Ortiz

Date resolved: Sept. 25, 2018

Verdict or settlement: Verdict

Amount: $1,429,275.00

Attorneys for plaintiff: Jeffrey Rhodes, Michael Smith, and Abigail Reigle, Arlington

Attorneys for defendant: Kenneth Misken, Tysons Corner; and Craig Hoovler, Baltimore, MD

Plaintiff’s experts: Patrick Lowry of Evergreen Advisors, LLC

Defendant’s experts: Michael Smigocki of Federal Strategies Group, LLC and A. John Shoraka of GovContractPros