LexShares Case #310: When Winning Still Loses Money
UKnight v. Knights of Columbus — a $100 million lawsuit wins at trial, but the $500,000 verdict doesn’t cover the litigation funding
The Numbers
| Invested | $170,000 |
| Returned | $149,937 |
| Net Profit | ($20,063) |
| MOIC | 0.88x |
| IRR | -4.41% |
| Holding Period | 1,018 days |
The Case
List Interactive v. Knights of Columbus (D. Colorado, 1:17-cv-00210)
In 2009, UKnight began building websites for local Knights of Columbus councils in Dallas. The platform was so successful at increasing membership, improving communications, and boosting insurance sales that KC Supreme — the parent organization — invited UKnight to pitch a national rollout.
On September 10, 2011, KC Supreme allegedly told UKnight they were the “designated vendor” for all 15,392 local councils. UKnight would handle subscriptions; KC Supreme just had to make the announcement.
The announcement never came.
Instead, according to UKnight’s complaint:
- KC Supreme repeatedly promised the announcement was “imminent” — for years
- UKnight spent thousands upgrading servers, email capacity, and payment systems in anticipation
- KC Supreme demanded UKnight’s proprietary strategies, design data, and trade secrets under the guise of “understanding the system”
- In January 2016, KC Supreme suddenly claimed there was “never any contractual relationship”
- Three months later, KC Supreme sent an RFP to competing vendors — using UKnight’s design elements
UKnight also alleged something more explosive: KC Supreme was running an “elaborate conspiracy” to inflate membership numbers. With $105 billion in life insurance policies backed by only $22 billion in assets, KC Supreme allegedly needed growing membership to maintain viability. UKnight’s platform would have exposed the true numbers.
Note: LexShares’ involvement in funding this case is publicly documented.
Timeline
| Date | Event |
|---|---|
| Sept 2011 | KC Supreme allegedly designates UKnight as sole vendor |
| Jan 2016 | KC Supreme claims “no contractual relationship ever existed” |
| Apr 2016 | KC Supreme sends RFP to competing vendors |
| Jan 2017 | Lawsuit filed (RICO + 7 other claims) |
| Jul 2017 | Motion to dismiss — RICO & defamation dismissed, 6 claims survive |
| Aug 30, 2017 | My investment — $170,000 (1st LexShares SPV, $225K funded) |
| Apr 2018 | Additional LexShares funding (2nd SPV) |
| Oct 2018 | Plaintiff’s counsel (Condit Csajaghy) withdraws |
| Jan 2019 | New counsel (G. Stephen Long) enters |
| Mar 2019 | Additional LexShares funding (3rd SPV) |
| May 2019 | Summary judgment denied — case proceeds to trial |
| Aug 2019 | Additional LexShares funding (4th SPV); 12-day jury trial begins |
| Sep 12, 2019 | Jury verdict for UKnight — but only $500,000 |
| Oct 2019 | UKnight moves for new trial; Condit Csajaghy asserts fee lien |
| Dec 2019 | New trial denied; prejudgment interest granted |
| Mar 2020 | Fee lien mediation before Magistrate Judge Varholak |
| Apr 2020 | Fee lien dispute settled; LexShares collects remaining proceeds |
| Jun 11, 2020 | Distribution received — $149,937 |
The Math (My SPV)
The figures below are from the LexShares disbursement letter dated June 11, 2020. They reflect only my SPV (the September 2017 vehicle, $225,000 funded), not the aggregate across all four LexShares SPVs that funded the case.
| Item | Amount |
|---|---|
| Total LexShares funding across 4 SPVs (Sep 2017 – Aug 2019) | $925,000 |
| Jury verdict (Sep 12, 2019) | $500,000 |
| My SPV’s gross recovery ($225K funded) | $231,986 |
| − My SPV’s fund expenses | ($33,541) |
| My SPV net recovery | $198,445 |
| My pro-rata share (75.56% of SPV) | $149,937 |
| Principal recovery rate (per LexShares) | 88% |
Why a Win Wasn’t Enough
The jury believed UKnight — but not their damages. After 12 days of testimony, the jury found that KC Supreme breached their contract. But they awarded only $500,000, a tiny fraction of the $100 million claimed. Speculative lost profits from a platform that was never rolled out to 15,000 councils didn’t resonate.
$925,000 was invested across four funding rounds. Per the LexShares disbursement letter, $925,000 was invested across four special purpose vehicles between September 2017 and August 2019. Even with prejudgment interest, the recovery couldn’t return full principal.
Three different law firms. UKnight went through multiple counsel changes — the original firm, Condit Csajaghy (who later asserted a fee lien), and finally G. Stephen Long who took it to trial. Turnover like this often signals problems.
The fee lien fight. After the verdict, Condit Csajaghy claimed a portion of the judgment. LexShares ultimately reached a settlement with that firm in April 2020 and proceeded to collect the remaining proceeds from the court for distribution to investors. This delayed the distribution by months.
The “accidental overcommitment” hurt. Due to a DocuSign glitch, I accidentally invested $170,000 — making this my largest single-case exposure. When the case underperformed, it cost me more than it should have.
What I Learned
Winning at trial doesn’t mean winning money. The jury agreed UKnight was wronged. But “$100 million in lost profits” is a hard sell when the platform was never rolled out. Speculative damages rarely survive jury scrutiny.
Funding escalation can backfire. Each additional round signals deeper conviction — and lifts the breakeven for everyone already in. By the fourth round, no realistic recovery clears it.
Attorney turnover is a red flag. Three law firms in one case is unusual. When Condit Csajaghy withdrew and later asserted a fee lien, it signaled deeper problems. Watch for counsel changes.
Position sizing matters more than conviction. My accidental $170K commitment turned a portfolio annoyance into my biggest single-case loss. Never let a glitch determine your allocation.
Fraternal organizations fight hard. The Knights of Columbus — with $105B in insurance assets and reputational stakes — litigated to the end. They don’t settle when their integrity is questioned.
88% recovery is actually a good outcome. In litigation finance, many losses are total. Recovering 88 cents on the dollar from a case that “won” but underperformed beats zero.
Sources
- CourtListener Docket
- National Catholic Register (confirms LexShares funding)
- Vanderbilt Law Review — “The Shadows of Litigation Finance”
- LexShares disbursement letter, June 11, 2020 (private)
This was my 8th LexShares investment and my largest position. The jury believed UKnight, but not their damages. After 2.8 years, I got back 88% of my money. It’s not a win, but it’s not the disaster it could have been.
