Civil rights activists have delivered a potentially fatal blow to one of America's largest Ku Klux Klan groups with a legal victory that is likely to bankrupt its leader.

A jury in Kentucky awarded $2.5m (£1.7m) in damages against the Imperial Klans of America after hearing testimony from a Hispanic teenager who recalled being kicked in the head by white supremacists wearing steel-capped boots.

The award is significant because it includes a $1m personal judgment against Ron Edwards, the group's self-styled Imperial Wizard, who was not present during the assault but who was held responsible for the actions of his followers.

"It shows that those who promote hate and violence will be held accountable and made to pay a steep price," said Morris Dees, the founder and chief trial attorney of the Southern Poverty Law Centre, (SPLC), which brought the case. "We look forward to collecting every dime that we can for our client and to putting the Imperial Klans of America out of business."

The court heard that Jordan Gruver, 16, suffered a fractured arm, broken jaw and shattered teeth in the assault by Jarred Hensley and other skinhead Klansmen, who threw whisky in his face and kicked him to the ground during a recruitment drive at a county fair.

Edwards, whose group has 16 chapters in eight states, according to the SPLC, testified that his members wore boots with red laces because "that means someone shed blood for their race". He appeared in court with several tattoos visible, including one stating: "Fuck SPLC".

To settle the judgment Edwards will almost certainly have to forfeit his 15-acre compound in Dawson Springs, Kentucky, used in the past for fundraising concerts and anti-Hispanic rallies.

"Mr Edwards hates a lot of things, but one thing he loves is money," said Richard Cohen, president of the SPLC, who said his staff suffered death threats during the three-day trial. "There will be hangers-on who see him as a persecuted figure, but most people will see him as trouble and not want to get involved."

Rick Ross, founder of a New Jersey-based institute that monitors cults and race-hate groups in the US, said the policy of pursuing Klan leaders was like "putting a stake through their heart".

He added: "Going after a group's money and assets cuts directly into their lifeblood. How can you carry on with no means to continue? You're also discouraging people from stepping up to become the next leader. Who wants to take that job when the last one ... went bankrupt?"