U.S. Senate candidate Greg Brannon owes two investors in his failed startup company more than $250,000 after a jury found Tuesday that he provided them bogus information about a potential deal.
The political cost remains unknown.
In the verdict, the 12-person jury decided Brannon bore sole responsibility for giving misleading or false information in 2010 to investors regarding a mobile application being developed by Neogence Enterprises, a now-defunct tech company he helped start.
The jury cleared a second defendant, Robert Rice, the company’s co-founder and former CEO.
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Brannon slumped his head and looked downward as the verdict was read in Wake County Superior Court. As he left the courthouse, Brannon said he would appeal to “defend my integrity.”
“Very clearly I think that the way the court worked, it was not fairly on our side,” Brannon said. “I cannot wait to go to the appeal process.”
An appeal means the case will continue to color his underdog campaign for the Republican nomination. But the tea party candidate – who appeared by phone on conservative firebrand Glenn Beck’s radio show while jurors deliberated down the hallway – said the verdict won’t affect his campaign.
“No way,” he said. “I’m not stopping.”
Brannon, who is backed by Kentucky Sen. Rand Paul and a national tea party group, reaffirmed he would file formal candidacy papers this week. He is expected to face five Republican rivals, including front-runner Thom Tillis, vying to challenge Democratic incumbent Kay Hagan.
In addition to keeping him off the campaign trail for more than a week, the testimony and arguments at the trial provided plenty of unflattering material about Brannon that his political opponents could use against him.
One of the investors, Maine eye surgeon Dr. Larry Piazza, said he felt betrayed by Brannon, his medical school classmate and friend. Brannon is a Cary OB-GYN and the other investor, Raleigh’s Sam Lampuri, described how Brannon pitched his company during his wife’s doctor’s appointments.
Their attorney, Poyner Spruill’s Steve Epstein, suggested Brannon’s quest to get rich motivated him to send an email that exaggerated a potential deal the company explored with Verizon to develop a smartphone application.
The case involved complicated financial matters and jurors deliberated over the course of two days.
Brannon didn’t testify in his own defense, unlike his co-defendant. But his attorney, Mike Frazier, told jurors Brannon merely repeated information about the Verizon deal that another company official told him.
Frazier argued that Brannon deserved the least culpability in the case because he served mostly in the role as company cheerleader, outside the day-to-day management. He also insisted that the investors knew they were entering a high-risk startup company.
Before the appeal, Judge Bryan Collins will finalize an order detailing how much Brannon owes in damages. The investors can recoup the combined $250,000 they put into the company in 2010 plus 8 percent interest per year in addition to attorneys fees.
“My clients are gratified that justice has been done,” Epstein said.