US-based Indian tycoon ordered to pay Rs 20,000 cr in family feud

A long-standing, but mostly hidden, legal dispute spanning over two decades involving five Indian brothers who have accumulated wealth in diamonds and Los Angeles real estate has recently surfaced with a monumental US verdict. 

Following a five-month trial, a jury has mandated that Haresh Jogani pay his brothers—Shashikant, Rajesh, Chetan, and Shailesh Jogani—over $2.5 billion (approximately Rs 20,000 crore) in damages.

Additionally, the brothers are instructed to divide shares of their Southern California property empire, which consists of about 17,000 apartments valued at billions more.

The legal proceedings, centered on accusations that Haresh Jogani violated a longstanding partnership with his brothers, are ongoing. The trial, which has already resulted in a substantial monetary award, will proceed with a punitive damages hearing on Monday, potentially further augmenting the total amount.

The legal saga, initiated in 2003 and involving the Jogani brothers, has endured 18 appeals, numerous attorneys, and five judges in Los Angeles Superior Court. Drawing comparisons to Charles Dickens' fictional probate case in "Bleak House," lawyers are dubbing Jogani v. Jogani as the modern-day Jarndyce v. Jarndyce, albeit with a twist. Unlike the bleak outcome in Dickens' novel, this case involves billions that are yet to be distributed among the parties.

Adding an unusual twist, the Jogani v. Jogani case stands out as most multibillion-dollar verdicts in the US typically involve giant corporations. The final amount each brother receives hinges on the fluctuations of the real estate market, with apartment prices experiencing a decline from their 2022 peak due to higher interest rates impacting borrowing costs and reducing property values. 

As of January, Los Angeles area apartment prices averaged $329,000 per unit, reflecting a 26% decrease from the November 2022 high, according to MSCI Real Assets. Rick Richmond, the lawyer representing defendant Haresh Jogani, refrained from commenting as the jury's proceedings are ongoing.

Originally from Gujarat, India, the Jogani family established a global diamond trade empire with business ventures in Europe, Africa, the Middle East, and North America. Shashikant "Shashi" Jogani, the family's patriarch, ventured to California at the age of 22 in 1969, where he initiated a solo gem business and embarked on building a real estate portfolio. 

However, the properties faced setbacks during the early 1990s recession, exacerbated by the 1994 Northridge Earthquake that claimed 16 lives in one of Shashi's buildings. Subsequently, Shashi brought his brothers on board as partners.

The Jogani brothers expanded their real estate portfolio through an extensive acquisition campaign, amassing approximately 17,000 apartment units. However, the collaborative efforts among the brothers came to a halt when Haresh Jogani allegedly ousted his sibling from managerial responsibilities and declined to compensate him, as per Shashi Jogani's complaint.

In response, Haresh argued that, lacking a written agreement, his brothers couldn't substantiate their partnership claim. Nevertheless, the jury determined that Haresh had breached an oral contract.

During the trial, jurors were presented with testimony highlighting that oral agreements are customary practices within the diamond trade and among the Gujarati community.

As the trial approached its conclusion, Haresh Jogani attempted to disqualify the judge, accusing her of "racial animus" towards his lawyer and other misconduct. However, Judge Susan Bryant-Deason denied any impropriety and rejected the claim of bias, referring the motion to the court's supervising judge, where it is currently pending.

In the legal saga of the Jogani brothers, the vast real estate portfolio, comprising around 17,000 apartment units, generated a substantial net operating income, reaching as high as $137 million per year. 
Michael Friedman, who, along with his father Steve, represented Shashi Jogani since 2014, emphasized the sustainability of the extensive portfolio that Shashi built over the years. The case, known as Jogani v. Jogani, is a complex legal battle that has spanned two decades, drawing comparisons to Dickensian legal sagas.