A jury Wednesday awarded $13.7 million to a project management company that alleged the Beverly Hills Unified School District wrongfully terminated a contract for upgrading its facilities and tried to put the firm out of business.
The Los Angeles Superior Court panel deliberated for about 1 1/2 days before finding in favor of Strategic Concepts LLC, which was owned by Karen Christiansen.
Christiansen, who wept and hugged her attorney, Philip Kaufler, said after the verdict that she was relieved with the outcome.
“It’s been six years of hell and I’m excited it’s over,” Christiansen said.
Kaufler maintained that Jerry Gross, a former district superintendent, used his influence to get the firm’s agreement canceled with the complicity of the school board. Kaufler said Gross was a salesman for a competing company, TELACU, and wanted the $334 million building improvement project the plaintiff was overseeing transferred to his firm.
In the process, Strategic Concepts was destroyed, Kaufler said.
The jury awarded Strategic Concepts $7.7 million on its contract claim and $6 million on its allegation that the district’s actions put her company out of business.
Attorney Fred Fenster, on behalf of the school district, said the district will appeal. He said that only $72 million of the bond funds had been realized, yet the jury awarded Strategic Concepts a percentage based on the $334 million.
“We were very disappointed in the jury’s verdict because the jury awarded money that neither Karen Christiansen nor Strategic Concepts was entitled,” Fenster said.
Fenster said that Strategic Concepts’ contract was terminated by the board in 2009 due to Gross’ diligence in uncovering excessive payments to the firm.
“He was the first to actively take a look at what was going on in this case,” Fenster said during his final argument Monday.
Gross became aware of “slot machine-type payments being made month after month” to Strategic Concepts, Fenster said, and decided it was “time to stop the bleeding,” according to Fenster.
The trial began with Christiansen as one of the plaintiffs, and a countersuit by the district against her company still intact. However, Judge Stephen Czuleger trimmed the case to leave Strategic Concepts as the lone plaintiff, and he dismissed the district’s countersuit.
Christiansen and Strategic Concepts had strong reputations for completing work for the district on time and under budget, Kaufler said. The projects included a science and technology center at Beverly Hills High School and a major building addition at Beverly Vista Elementary, he said.
In 2008, Strategic Concepts was awarded a $16 million contract to oversee construction for the BHUSD’s building improvement project, which sought to improve facilities in case of an earthquake and make them more secure, Kaufler said. Some board members were so concerned about the state of the aging school structures that they thought they could be sued personally, Kaufler said.
Christiansen’s reputation reached such a level that then-Superintendent Jeffrey Hubbard increased her monthly district car allowance from $150 to $500 and gave her a $20,000 stipend, Kaufler said.
“Karen was on the rise,” Kaufler told jurors.
But Hubbard later left to become superintendent of the Newport Mesa Unified School District. Less than a year after the Strategic Concepts deal was approved, Gross had been appointed superintendent and began his successful effort to get the firm’s agreement with the BHUSD canceled by falsely maintaining that Christiansen had conflicts of interest that were allowing her to become personally enriched, Kaufler alleged.
“It was a striking tale of corruption and fraud,” Kaufler said, telling jurors it was actually Gross who had “a direct conflict of interest.”
Gross worked with an attorney to try and dissuade district employees who admired and supported Christiansen from speaking on her behalf, he said.
“These were pure intimidation tactics,” Kaufler said. “They acted like the mafia.”
The district later “raided” the office of Strategic Concepts and took financial records that have yet to be returned, Kaufler said.
The BHUSD did not hire TELACU to replace Strategic Concepts.
But Fenster said it was Christiansen, not Gross, who used heavy-handed tactics to obtain money for work that was never funded or approved by the board.
“The mafia, hardly, but a shakedown, yes,” Fenster said. “She was doing whatever she could to get as much money as she could from the district as she could possibly obtain. If you look up the word ‘overreach,’ you’ll find Karen Christiansen’s name in bold.”
Both Christiansen and Hubbard were found guilty in separate trials of misappropriating public funds and conflict-of-interest charges, respectively. However, the convictions were overturned in 2013 by panels of the 2nd District Court of Appeal.
