San Francisco – San Francisco Oakland Bay Area venture capital company founder Andrew Chung is being sued for breach of fiduciary duty for secretly changing contractual language in a scheme to steal $80 million of its money, according to a lawsuit filed in Santa Clara County Superior Court by Global Industrial Investment Limited (GIIL).
Chung, who founded 1955 Capital, is being sued by Global Industrial Investment Limited (GIIL), a wholly-owned subsidiary of China Fortune Land Development, a publicly-traded real estate company and leading developer and operator of industrial mixed-use projects in China.
“This is an action based upon Andrew Chung’s having breached fiduciary duties to GIIL . . . . GIIL brings this action to put an end to Chung’s and the fiduciaries’ scheme to rob GIIL of its $80 million investment and to hold Chung accountable for his wrongdoing,” according to the complaint filed by GIIL’s attorneys.
Chung, 42, a former partner at Khosla Ventures and principal at Lightspeed Venture Partners, is married to Coral Chung, CEO of Silicon Valley luxury purse startup Senreve. GIIL is suing both Mr. and Mrs. Chung for fraud in a separate legal action in China.
In 2015, pursuant to agreements that are in dispute, GIIL invested into 1955 China Fund LP and 1955 Capital Fund LP. Chung’s company, 1955 Capital, is the general partner for both funds. In its lawsuit, GIIL says Chung and the funds unilaterally made changes to contractual documents, and did not provide the altered documents to GIIL until nearly a year later, after GIIL had invested in the funds.
“There is ample evidence that Chung recklessly breached his fiduciary duty to GIIL by secretly changing the deal terms in a scheme to keep all the $80 million investment for himself,” said attorney Yan Zhang, a partner at Baker Botts L.L.P. Zhang said the lawsuit seeks the return of the $80 million, additional compensatory damages, punitive damages, and injunctive relief.
Zhang also said, based on his knowledge, a similar lawsuit has been filed in China that alleges fraud both by Andrew Chung and his wife Coral Chung based upon promises made to GIIL there. That lawsuit seeks the return of GIIL’s $80 million investment and $28.2 million in compensatory damages.
Zhang said additional action by GIIL against Mr. Chung, Mrs. Chung, and others is anticipated.