A federal judge has temporarily halted a lawsuit alleging a Boise tech startup cofounder cheated his ex-wife of her share of $1.8 million from a stock sale.
U.S. District Judge David Nye, in a written decision Thursday, ruled that the issues between Amy Evans and her ex-husband, James Hepworth, cofounder of First to File and former chief technology officer for MarkMonitor, should first be handled in divorce court.
Evans filed the lawsuit in October, alleging that Hepworth secretly sold off the couple’s shares in Redtop Holdings Limited Co., the parent company of CPA Global, an intellectual property management and technology company. Evans said she did not learn until last spring that the shares had been liquidated two years earlier.
The couple divorced in 2015 after 18 years of marriage. As part of the divorce decree, Ada County Magistrate Diane Walker ordered the couple to split the shares of stock. Walker directed Hepworth to let Evans know if he sold the stock and to divide the proceeds by half.
Evans returned to divorce court over the summer, and Walker ordered Hepworth to pay his ex-wife $898,000. Evans sued after concluding she would be unable to collect the entire amount from Hepworth’s bank accounts.
She sought assets from several companies reportedly formed by Hepworth and his girlfriend, Michela Swartout. Evans claimed Hepworth and Swartout diverted money from her share of the stocks to those companies and engaged in lavish spending.
In court filings, Hepworth and Swartout have denied doing anything improper.
Some of the companies targeted, Swartout told the Idaho Statesman by phone, are not owned by her or Hepworth. Swartout said they were startup companies owned by people who have asked for help or advice. The owners are having to hire lawyers to defend themselves, she said.
Hepworth did not reply to a phone call seeking comment for this story.
So far, Evans has collected about $600,000 through garnishments of Hepworth’s bank accounts, Nye wrote in his 16-page decision.
On Jan. 10, Walker ordered Hepworth to pay $33,244 in a supplemental judgment. Evans had sought interest and attorney fees. Divorce case files are sealed, so the only information publicly available is the judgment amount.
It would be improper, Nye wrote, for the federal court to attach Hepworth’s assets, including his bank accounts, when the divorce court has garnished money to compensate Evans.
“The state divorce court will have to determine whether Evans has been compensated for her half of the proceeds from sale of the Redtop Shares through its garnishment of Hepworth’s bank accounts, and whether Evans is entitled to compensation for interest, an additional payment from the sale of the Redtop shares, and an award of attorney fees,” Nye wrote “Any judgment from this court would interfere with the divorce court’s decisions on these issues.”
The stay, Nye wrote, will protect Evans’ right to damages if she is not fully compensated through the divorce court.
Matt Christensen, a Boise attorney who represents Evans in the federal suit, said he does not believe the stay will remain in place for long. He said there are still some loose ends over interest and attorney fees in the divorce court, and he expects them to be dealt with fairly quickly. When that happens, he said he will file a motion asking Judge Nye to move the case forward again.
“The divorce case, honestly, is nearly complete,” Christensen said by phone.
Hepworth’s lawyers unsuccessfully sought to have Nye dismiss the lawsuit. They argued that federal courts must abstain from hearing cases that would interfere with a state case. Nye said that’s why he stayed the case.