Reality Bites

04.18.12

Taylor Armstrong of ‘Real Housewives of Beverly Hills’: The Lawsuit

In the wake of her husband’s suicide, Taylor Armstrong is left to defend his questionable business dealings in court. Was the 'Real Housewives of Beverly Hills' star part of the fraud?

The Real Housewives of Beverly Hills star Taylor Armstrong is hoping the years of physical abuse she says she suffered at the hands of her late husband, Russell Armstrong, will get her out of a $1.5 million lawsuit in Los Angeles Superior Court.

The suit, filed in July by MyMedicalRecords.com, a company in which Russell Armstrong once held a controlling interest, charges that he pocketed investor money with Taylor Armstrong’s assistance. Through his company, NuWay Digital Services, Russell Armstrong owned 60 percent of MMR’s stock and, allegedly with Taylor often at his side, raised investor capital for the startup. The lawsuit alleges that Russell Armstrong was eventually ousted from MMR for his “self dealing” through a legal settlement in which he paid the company $250,000.
But the settlement agreement called for Russell Armstrong to relinquish all of his shares in MMR and for both Russell and Taylor Armstrong to disclose every investor from whom they had gotten money. The settlement included a “damages” clause for monetary penalties to be levied if more investors with legitimate claims surfaced.

According to the lawsuit, Russell and Taylor Armstrong failed to disclose the identities of three investors, entitling MMR to $1.5 million. But Taylor Armstrong maintains she was “never aware of the investors” who purchased NDS or MMR shares through her late husband and “as such, she neither negligently nor intentionally withheld the identity of any alleged investor from MMR.” She also states that her late husband threatened her with physical harm if she didn’t sign the agreement.

Russell Armstrong committed suicide Aug. 15, two weeks after MMR filed the lawsuit, leaving his wife of nearly six years to fight the Delaware corporation alone in court. A routine hearing in the case will take place today; the trial has been set for July 11.

Here’s a look at the seven most interesting claims in the lawsuit, as recorded in the court file reviewed by The Daily Beast.

1) According to the July 29 complaint, Taylor Armstrong “held herself out as being a member of the Ford Family” and claimed that her prestigious relatives were major investors in MyMedicalRecords.com and NuWay Digital Services as a way of luring new investors.

2) Court documents allege that Russell and Taylor Armstrong “successfully and secretly” funneled money that should have been paid to MMR to their own accounts so that they could “live a lavish life-style, redecorate their mansion and become business colleagues of [actress] Eva Longoria in an upscale restaurant.”

3) When Russell Armstrong was ousted from MMR, he and Taylor Armstrong agreed to pay $250,000, according to the complaint. The company used the sum to settle scores with people who had invested in NDS only to have their money filtered to the Armstrongs’ accounts. “In order to preserve its reputation in the community, MMR has gone to extraordinary measures to exchange the NDS shares or other ‘investments’ with shares in MMR, so that those people who paid money to NDS, loaned money to Russell, Taylor and NDS or provided personal services to Russell and Taylor and NDS in exchange for payment in shares of MMR in fact receive the interest in MMR that they were promised.”

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Taylor Armstrong opens up about abuse

4) In her declaration, Taylor Armstrong denies having had any business dealings with MyMedicalRecords.com or being an officer, shareholder, or employee of her husband.

5) Taylor Armstrong admits that Russell Armstrong paid $250,000 to MMR “to settle all disputes” but alleges that she was forced to sign the agreement under duress and threat of physical harm: “I was under the threat of physical abuse from my late husband if I did not sign the settlement agreement … and my late husband had caused me such severe physical harm before that I took his threats seriously.” But MMR charges that Taylor Armstrong has not provided a “scintilla of evidence” to prove that her husband forced her to enter the agreement and that, even if he did, she has not proven that MMR had knowledge of the alleged duress.

6) Taylor Armstrong has petitioned the court for a “protective order” that would keep all of her discovery responses out of the public eye because she does not want her “personal contact information and biographical information to be made public.” She also is asking that information relating to the abusive treatment by her late husband should not be divulged to the public.

7) MMR is fighting the protective order by citing Taylor Armstrong’s memoir, Hiding From Reality, and the many media interviews she has done about her abusive marriage. “Taylor has taken it upon herself to extensively publicize the abuse by her [late] husband … Taylor has disseminated the very facts she wishes to have protected by protective order. Taylor is clearly using the sensitive nature of these facts as a guise to obtain a protective order as to all discovery … Unlike stage or screen actors, who play a ‘part’ or a ‘role,’ Taylor has chosen to play ‘herself’ on a reality program. She has chosen to release juicy ‘tidbits’ about her life for public consumption and to increase ratings. So, from any legitimate perspective, it is impossible to determine what type of ‘private’ information has or has not been released about Taylor, or for that matter, how this ‘private’ information has embarrassed her. Stated otherwise, Taylor cannot have her case and eat it at the expense of the plaintiff.”