Verdict Hammers Pre-Paid

by louabbott on November 16, 2005

TheStreet.com – November 16, 2005

Pre-Paid Legal Services tumbled 5% Wednesday after the company suffered a rare legal setback.

Ada, Okla.-based Pre-Paid and its founding CEO were ordered to pay $9.9 million in punitive damages for defrauding a customer in Mississippi.

Pre-Paid must fork over $4.4 million of that total with CEO Harland Stonecipher on the hook for the rest, says plaintiff attorney Doug Minor. The damages represent 10% of each party’s estimated net worth, Minor says.

A separate jury earlier found Pre-Paid liable for $40,000 worth of compensatory damages, the company said. Pre-Paid said the award came on claims by a customer “who paid the company less than $800 during the life of a membership originally purchased in 2000.” Pre-Paid plans to appeal.

Pre-Paid got slapped with the punitive damages after jurors reportedly viewed videos produced by the company. Stonecipher “claimed that Pre-Paid customers ‘never have to reach for their wallets’ to pay a lawyer in any legal proceeding,” states a press release issued by Minor’s firm. But “among the most damaging statements from the videos was Stonecipher’s spirited declaration, ‘Three cheers for greed,’ made while he tore $100 bills in half as part of a speech to thousands of Pre-Paid sales associates.”

Read the entire article at TheStreet.com

Also, read our company overview:  Pre-Paid Legal Facts, News and Review

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