By Cara Salvatore

Law360 (May 5, 2020, 8:03 PM EDT ) A Missouri federal judge ruled Monday that DuraSeal Pipe's former CEO must post a $2 million bond to stay a $24 million judgment against him and others in a bankruptcy-linked civil conspiracy trial during post-trial proceedings, despite the man's arguments of coronavirus-related hardships.

Lee Kraus, the former CEO of oil pipeline maker DuraSeal Pipe, and others are jointly and severally liable for $24 million after a trial over their roles in forcing the bankruptcy of pipeline coating maker Xurex Inc. in order to take its intellectual property.

U.S. District Judge Ortrie Smith has allowed the judgment to be stayed for a month under federal rules, but he said Monday that Kraus must put up a hefty bond — despite Kraus's arguments that he was having difficulty coming up with money and talking to bond providers.

Citing a lack of ready cash and a stay-at-home order in his home state of Connecticut, Kraus told the court he's "unable to meet and consult with professionals to obtain a bond or discuss alternative options, as well as meet with and obtain counsel to defend any enforcement proceeding" over the judgment.

In the last two months of 2019, Kraus took out three loans from his wife whose collateral was their shared house; he also transferred a Nevada property interest to his sister, Xurex's bankruptcy trustee said.

"The court is concerned by Kraus's financial transactions after verdicts were rendered in this case. And, regardless of those actions, Kraus has not demonstrated the relevant factors support his request for an unsecured stay. ... A bond in the amount of $2,000,000 is sufficient and appropriate," the judge said.

Kraus will have 30 days to get that bond and present it to the court. He's also barred from certain fund and asset transfers.

Kraus is jointly and severally liable with a few others for $24 million of a total $93 million judgment in the case.

A father-son investment duo, Venezuelan-Italian former owner of Piaggio Aerospace Jose Di Mase and son Giacomo Di Mase, are liable for the entire $93 million over a chain of events starting when they bought DuraSeal Pipe.

A Kansas City jury found in November that the Di Mases and others conspired to take over Xurex and push it into bankruptcy, breaching contracts under which DuraSeal had promised to buy over $100 million in anticorrosive pipeline coatings from Xurex.

The suit was filed by Xurex's bankruptcy trustee, Jerald Enslein.

Xurex was started in 2005 as a creator of nano-coatings, according to Enslein. An investor formed DuraSeal in 2008 to market pipelines using Xurex coatings and entered into a long-term exclusive license with Xurex.

In 2010, Jose Di Mase purchased DuraSeal outright, as well as 36% of Xurex's stock, according to the trustee. DuraSeal signed a license agreement under which it promised to buy a minimum of $100 million worth of Xurex coatings, the suit said.

The trustee alleged that Di Mase then stocked the Xurex boardroom with accomplices and moved to push Xurex into bankruptcy and take its intellectual property and assets.

The Di Mases have insisted their maneuverings were legal business acts.

Representatives for the parties were not immediately available for comment.

The trustee is represented by Todd Bartels, Robert Spake Jr. and E. Benton Keatley of Polsinelli PC.

The defendants are representing themselves.

The case is Enslein v. Di Mase et al., case number 4:16-cv-09020, in the U.S. District Court for the Western District of Missouri.

--Additional reporting by Daniel Siegal. Editing by Brian Baresch.

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