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The two co-owners of the parent company of Express Services Inc. are headed to a jury trial with one co-owner opposing the other, according to court documents.
William Stoller filed suit in October 2011 in federal court against Robert Funk, two directors and the company.
Neither side commented on the case.
“We believe it is improper for us to comment on the case at this time given the legal circumstances,” said Brent Gooden, a spokesperson for Funk. “Mr. Funk’s focus remains on leading Express Employment Professionals, which has recorded three consecutive years of record-breaking growth in terms of revenues and the number of people put to work through the company’s nationwide franchise organization.”
Stoller and Funk founded Express in 1983 along with a third founder who was later bought out. Express now ranks as the eighth-largest staffing firm in the U.S.
Stoller claims that Funk diverted more than $140 million from Express “to satisfy his insatiable cash appetite,” according to a status report on the case filed Oct. 2. The largest waste was Funk’s purchase of a $99 million ranch in New Mexico called the “UU Bar Ranch,” according to the report.
In addition, Stoller claims Funk convinced him to let Express serve as guarantor for Funk’s personal loan to purchase the ranch based on the understanding Funk would use all his reasonably available resources to pay the loan but has not made a payment, according to court records.
Also, Stoller argues Funk caused Express to pay workers’ comp and medical insurance for other Funk-owned companies and that Funk was given a salary in contravention of shareholder agreements. In addition, the plaintiff claims Funk has control over two of the company’s directors — Robert Fellinger and Jeri Craig.
An investigation by an outside law firm found that more than $35 million paid to Funk as a salary is the subject of bona fide dispute between the shareholders, according to court records outlining the plaintiff’s position.
On the other hand, the defense argues Stoller entered into the agreements knowingly and that payments on the ranch were agreed to by Stoller and that he had known about them for three years as they took place, according to court documents.
“This is a case of a shareholder seeking to use litigation to overturn certain shareholder agreements he has made and the decisions of the corporation’s board of directors to follow those agreements and acquire control over the corporation’s operations,” according to court documents.
Stoller offered to reverse his demands if Funk would give him a controlling interest, according to court documents.
The idea was Funk could take money as either loans or distributions, according to defense information in court documents. If taken as loan, Express would be fully repaid with interest after Funk’s death. If taken as distributions, Stoller could elect to take an equal distribution or be deemed to have lent his distribution back to the corporation and be re-paid the amount of the distribution plus interest after Funk’s death.
The outside law firm’s report deemed that the board took the action it deemed to be in the best interest of the company, according to the defense information in the lawsuit. The report by the law firm took a year and a half and cost $1.5 million, according to court documents.