A buyout firm that was co-founded by Pro Football Hall of Fame quarterback Steve Young has settled a high-profile lawsuit that accused it of a massive fraud cover-up, The Post has learned.
The truce — which settles allegations that Young’s firm HGGC “falsified test results” at its company Citadel Plastics before selling it to manufacturer A. Schulman in 2015 for $800 million — appears to be valued at roughly $100 million.
That’s on the low end of the $100 million to $270 million that A. Schulman was seeking in the Delaware Chancery Court case.
It’s also despite the fact that HGGC claims it was Citadel’s previous owner, private equity firm River Associates, that had falsified the test results.
Now, Young’s firm is looking to pass along some of the costs for the alleged fraud.
As part of the settlement, Young’s firm has joined A. Schulman and others as a plaintiff in what is a second and still pending suit against River Associates in front of the same Delaware judge, Travis Laster.
Young was not personally named as a defendant in the suit against HGGC, formerly known as Huntsman Gay Capital Partners, where Young is a founder and managing director.
Citadel allegedly had been selling plastic products with the claim that they met Underwriters Laboratories specs, when they did not, according to court testimony.
HGGC’s Citadel in 2013 bought Lucent Polymers from River Associates, and said it was unaware that River’s Lucent had been selling fraudulent goods.
“We are pleased that all of the defrauded parties now sit together on the same side of the table and are committed to working together toward securing a favorable judgment and fair remuneration,” HGGC said in a Dec. 3 letter to investors that was reviewed by The Post.
HGGC said its cash return from the Citadel deal would move from 2.3 times to 2.0 times due to the settlement. Based on those figures, The Post calculated that the settlement was for roughly $100 million.
HGGC, which also said in the investor letter it did not admit to any wrongdoing in the settlement, declined to comment further.
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