Inside Sly Stone’s $5 Million Verdict: Opposing Attorneys Speak Out, What’s Next (Exclusive)

“This is endemic of the entertainment industry,” Stone’s attorney Nicholas Hornberger tells TheWrap. “There are bad people who leech off people and this has got to stop.”

Sly Stone, frontman for the iconic funk band Sly and the Family Stone, was awarded $5 million by a Los Angeles jury on Tuesday in a lawsuit against his former manager and entertainment attorney which alleged that the two diverted royalties owed to him over a span of more than two decades.

“Sly’s a deeply religious guy and he loves everybody and they just took him,” one of Stone’s attorneys, Nicholas Hornberger, told TheWrap exclusively after the verdict. “It’s sad that people would treat other people like that.”

The jury found in favor of Stone — whose real name is Sylvester Stewart — against former manager Gerald Goldstein, attorney Glenn Stone and the entertainment company Even St. Productions. Stone was represented by attorneys Robert Allan and Hornberger.

Greg Bodell, an attorney for the defense, told TheWrap exclusively that they see this as a $2.5 million dollar verdict rather than a $5 million dollar one.

“Effectively what we understand is that Even St. underpaid Mr. Stewart by $2.5 million under his employment agreement and we want Mr. Goldstein and Mr. Stone to pay that $2.5 million, period,” Bodell said, pointing out that Sly Stone was a co-owner of Even St. with Goldstein and Glenn Stone.

The breakdown of jury damages assesses $2.5 million against Even St., another $2.45 million against Goldstein and $50,000 against Glenn Stone. Even St. filed for Chapter 11 bankruptcy protection in 2013.

Stone formed Sly and the Family Stone in 1966, and the group was successful for a decade before breaking up in the mid-1970s. Their hits included “Everyday People,” “Dance To The Music,” “Family Affair,” “Hot Fun in the Summertime” and “Thank You.”

Goldstein is himself a former musician who was once a member of The Strangeloves. He co-wrote The Angels’ “My Boyfriend’s Back” and “Come on Down to My Boat Baby” for Every Mother’s Son. He also produced music for the band War.

According to Hornberger, Goldstein met Stone after he’d been out of the music business for awhile and offered to “re-create his career,” but insteade took advantage of him.

“I’m not so sure that Sly’s time had passed by then, but Goldstein talks him into it and flatters him and says he’ll take over the management of Sly’s business; handle his royalties,” Hornberger said. “But he doesn’t. He just starts taking his money through Goldstein’s lawyers and bad management and his accountants, etc. and so forth. Starts taking royalties and supposedly gets Sly into a negative position where he can’t pay off Goldstein.

“This is not a case that is [just] endemic of the record industry,” Hornberger told TheWrap. “This is endemic of the entertainment industry. There are bad people who leech off people and this has got to stop.”

Hornberger credited Allan with coming to Stone’s aid both personally and legally, calling him “the savior for Sly.” Stone struggled with cocaine addiction, and was purportedly at one time living in a trailer with electricity provided by another family.

Bodell paints a different picture, saying that it was Sly Stone who approached Goldstein and Glenn Stone about revitalizing his career. “At the time, he had no royalties because he owed the IRS over $10 million in taxes,” Bodell told TheWrap, stating that it was his clients who helped Stone eliminate that debt.

“There were three streams of royalties – Sony, Warner-Chappell, and BMI. BMI royalties were going to the IRS. Sony [royalties] were not being received by him because Sony had pre-paid and were repaying themselves and those [weren’t going to be] repaid until the late 1990s … Warner-Chappell were being taken by his prior manager so when [Stone] met my client, he had no royalties and would likely have not seen any again.

“My clients were not found liable for stealing his royalties,” Bodell told TheWrap. “The company was found failing to pay monies due under a contract and the jury determined that they got the money and should put it back in to take care of [Sly Stone].”

According to Allan, a second phase of the trial will take place in front of a judge to determine other issues in the case.

“We’re coming back to court in a few weeks,” Hornberger told TheWrap. “I believe the judge will rule for us because he has to be impressed by the fact that the jury was unanimous. I want to see Sly get back on his feet and make his own decisions rather than rely on some crooked manager. He needs to be on his own. At the very least, he needs to hire someone who is honest.”

Bodell is planning further legal action on behalf of his clients, telling TheWrap, “We believe the evidence on which the jury relied was incorrect, unsupported and will be changed by further proceedings. We’re disappointed in the jury behavior and decision and will challenge the outcome before the trial court.”

City News Service contributed to this report.