A legal battle has erupted involving allegations of fraud, embezzlement, and breach of fiduciary duty in a tech company dispute. On December 12, 2024, Eric Grigsby filed a complaint in the Superior Court of California, County of Santa Clara against Sarah Ho. The case involves multiple accusations including conversion and unfair business practices.
Eric Grigsby, the plaintiff, claims that Sarah Ho engaged in fraudulent activities to usurp control over Kungtech Inc., a Delaware limited liability company originally founded by Grigsby. According to the complaint, Grigsby founded Kungtech LLC in January 2016 to develop a proprietary gravity-packing centrifuge for cannabis pre-rolls. By 2018, he recruited Sarah Ho to manage daily operations. However, it is alleged that Ho took advantage of her position by unilaterally converting the company from a California LLC to a Delaware corporation without Grigsby's consent. Furthermore, she allegedly forged his signature on official documents and misappropriated company funds for personal use.
Grigsby asserts that he owns 65% of Kungtech's stock and has been wrongfully excluded from its operations since early 2021 when Ho locked him out of the business. The complaint accuses Ho of opening unauthorized bank accounts under Kungtech's name and making withdrawals for personal gain. It also alleges that she altered ownership interests in tax filings without proper authorization or consent from other stakeholders.
The lawsuit details numerous instances where Ho purportedly violated her fiduciary duties as Chief Operating Officer by engaging in self-dealing transactions and failing to maintain accurate financial records. These actions are said to have caused significant financial harm to both Grigsby and Kungtech Inc., leading to calls for judicial dissolution of the company due to irreparable damage.
Grigsby seeks various forms of relief from the court including compensatory damages for financial losses incurred due to Ho's misconduct; punitive damages as allowed under Civil Code section 3294; appointment of a receiver to oversee Kungtech’s operations during litigation; restitution for unjust enrichment; invalidation of interested director transactions under Corporations Code §310; an accounting for misappropriated funds; and ultimately dissolution if deemed necessary by judicial decree.
Representing Eric Grigsby are attorneys David R. Welch and Robert Ahn from Enso Law LLP based in Los Angeles. The case is being reviewed by Judge J. Nguyen with Case ID: 24CV453888.