The Inbox – When Suits Break Bad
Federal prosecutors recently indicted David Colletti, a former VP of marketing with MillerCoors LLC, on charges relating to a scheme to embezzle $7 million from the beer brewing giant. Mr. Colletti, a thirty-year veteran of the company, allegedly broke bad by conspiring with others to defraud the company through fictitious invoices for promotional and other events that were never held. According to Law 360, MillerCoors sued its former marketing executive for $13.3 million last year in an effort to recover for the alleged fraud. Prosecutors claim that Mr. Colletti and his co-conspirators used the proceeds to purchase collectible firearms, golf and hunting trips, and—perhaps inspired by Pink Floyd—even bought an arena football team.
Nanoventions Holdings is a Georgia company that designs and manufactures microstructure technology used to prevent the counterfeiting of such things as currency, driver’s licenses, and event tickets. In 2011, $2 million went missing, and an investigation revealed that that its CFO, Steve Daniels, allegedly forged checks and converted funds to his own use as owner of a company called BIW Enterprises. In an interesting twist, BIW is engaged in the business of growing and distributing marijuana in California. According to Courthouse News Service, the company is suing Mr. Daniels for compensatory, treble and punitive damages under Georgia RICO statutes, and related causes of action. If the allegations are true, one might find a historical equivalent to these events in the 1920s, when the president of the Loft Candy Company stole thousands of dollars to buy Pepsi-Cola out of bankruptcy. Loft Candy ended up owning Pepsi on the basis that it was a stolen corporate opportunity. If Georgia shared Colorado’s stance on marijuana legalization, would the court award ownership of the pot business to Nanoventions? Oh what a difference a century makes.
When life gives you lemons, you make lemonade, or so the saying goes. And when your boss hands over your walking papers, one option is to create your own company and embrace your latent entrepreneurial spirit. This is what a former executive at Experian PLC attempted to do. The problem, however, is that his former employer took issue with the business he created upon learning that his position was being eliminated. Law 360 reported that the executive, along with former Experian professionals, founded a competing company. According to Experian’s lawsuit, the company claims that the exec lured other employees to join him while stealing confidential and proprietary information in an effort to unfairly compete and otherwise damage Experian’s role in the marketplace.
As Standard Register Co. navigated its Chapter 11 reorganization, it had to deal with its existing $4.3 million bonus plan. According to the Dayton Daily News, the US Trustee objected to the bonus payments, arguing that they were not “necessary to preserve the value of the company through the bidding process.” In an effort to find a more suitable number, Standard Register reduced the figure and eliminated the CEO as a bonus recipient. As a result, CEO Joe Morgan, Jr. became the odd man out and was replaced by 6 non-executive employees. The bonus payments will be assumed by the company’s buyer, and not by Standard Register in its wind-down proceedings.