Merced County businessman sued by two partners for nearly $9 million
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- Partners sue Merced businessman for $8.79M alleging nine years of embezzlement.
- Lawsuit claims SBA COVID-19 EIDL funds and company transfers funneled to Anthony.
- Plaintiffs seek $8.79M plus interest, costs and punitive damages in California court.
A Merced County businessman is being sued by his two business partners for nearly $9 million, according to court records.
The lawsuit alleges Edwin Anthony of Merced County embezzled $8,790,700 in corporate funds from businesses co-owned with Surinder Kumar and Kasturi Lal, both of Merced.
The theft of the money for personal use happened over nine years, the lawsuit alleges.
Anthony and his partners owned Kainth Brothers Inc., Valley Prime Hospitality Inc. and Merced Hotels Management Inc., according to the lawsuit. The businesses operate as the County Inn & Suites in Fresno and the Courtyard Marriott and Quality Inn, both in Merced.
The allegedly embezzled funds were used by Anthony to pay for cars, alimony payments to his ex-wife and a house, among other things, the lawsuits says. Arti Bala and Arvin Kainth — Anthony’s ex-wife and son, respectively — also are listed as defendants.
The lawsuit was filed Jan. 28 in the California Superior Court in Fresno and includes both individual claims on behalf of Kumar and Lal, as well as derivative claims on behalf of the shareholders of their companies.
COVID-19 disaster loans part of lawsuit
A major portion of the embezzled funds came from Small Business Administration COVID-19 Economic Injury Disaster Loans obtained in the name of the companies without shareholder authorization and using forged signatures, according to the lawsuit.
Of the money these companies received in SBA COVID-19 EIDL loans, transfers were made in the amounts of $770,000, $1,545,529 and $565,676 to companies Anthony owned individually, the lawsuit claims.
The suit does not state the full amount of the loans, and notes that a full accounting has not been done and that additional amounts may be uncovered.
The lawsuit claims Anthony took company funds for personal use, including:
- $1 million in administrative fees that were never agreed to by his partners
- Purchases of automobiles
- Payments to Anthony’s ex-wife, Bala, totalling $188,400 for work not done
- Receipt of $43,000 in cash payments that should have gone to the businesses
- Unauthorized payroll checks totalling $20,924
- Alimony payments to Bala totalling $131,360
The lawsuit seeks a judgment of $8,790,700 plus interest, lawyer costs and punitive damages.
Kumar and Lal are represented by the Fresno law firm of McCormick, Barstow, Sheppard, Wayte & Carruth LLP.
The plaintiffs’ lawyer, David Emerzian, sent the following statement to the Merced Sun-Star in response to a request for comment: “My clients have no comment at this time other than expressing their desire to see this matter toward a result at trial that will compensate them for all damages they have suffered.”
The Sun-Star also reached out to Merced County District Attorney Nicole Silveira, who declined to comment other than to say that her office has not filed anything related to this case.
