Former Triangle CEO and his lawyer told to pay more than $269K in legal fees

Former Triangle CEO Kenneth Moch and his Winston-Salem lawyer owe more than a quarter-million dollars in legal fees to a prominent Durham venture capital firm, resulting from a months-long anonymous email campaign Moch had waged against the firm.

Wake County Judge A. Graham Shirley said the firm, Pappas Ventures, hired lawyers billing as much as $450 an hour to investigate and defend itself against Moch’s criminal allegations. Moch, in 2014 and 2015, had anonymously accused venture capitalists Art Pappas and Ford Worthy of misappropriating $2 million and Pappas of committing domestic violence, sending his anonymous emails to investors and others, including then-State Treasurer Janet Cowell.

Shirley’s ruling is a setback for Moch, a veteran pharmaceutical executive, and marks the latest development in a bitter business dispute that dates back to Moch’s abrupt resignation in 2014 from Durham drug maker Chimerix. Pappas was a member of the company’s board of directors. Moch began emailing anonymous accusations a few months after leaving Chimerix.

After zeroing in on Moch, Pappas Ventures promised not to report him to law enforcement for cyberstalking if he paid more than $10 million for the damage he caused to the firm’s reputation. When Moch refused, Pappas Ventures sued him, and Moch counter-sued for alleged extortion.

The extortion suit was dismissed last year by a trial court and on appeal, and Pappas Ventures asked the court to sanction Moch and his lawyer, Jeffrey Patton. Last week, Shirley ruled that Moch’s legal actions against Pappas Ventures were frivolous, malicious and costly, and ordered him and his lawyer to pay $269,054.77 in legal fees to the venture capital firm.

“The nature and allegations of unethical and criminal conduct in the Complaint and Amended Complaint were incendiary,” Shirley wrote. “Moch knew or should have known that this action was frivolous or malicious.”

It’s not clear if Moch and Patton will pay or appeal; neither could be reached for comment Wednesday. Moch is now CEO and president of Cognition Therapeutics in Pittsburgh, Penn.

Pappas Ventures issued a statement on Wednesday stating the company was pleased with the Superior Court judge’s order.

Shirley’s ruling does not end Moch’s legal travails and financial exposure. Moch is the subject of a separate defamation suit filed by Pappas Ventures that is still pending in Durham County and could result in further penalties.

Shirley said Moch used the court system to wage his smear campaign.

“Moch used the filing of this lawsuit as a vehicle ... to attack the Defendants’ professional reputations,” Shirley wrote.

Shirley also said Moch’s extortion claim “was directly contradicted by the clear terms” of the October 2015 letter Pappas Ventures had sent him.

John Murawski: 919-829-8932, @johnmurawski