Owners battle over controlling interest in UGS sinkhole repair company

by Michael Mosher on June 14, 2012

The ads are unmistakable.

A bucktoothed cartoon gopher sprouts from a hole in the ground. It’s wearing a miner’s helmet and a white T-shirt and it has a question: “Does your home have a confirmed sinkhole?” For the next half minute, the rodent sings and dances as the earth shakes and a home in the background begins to crumble.

Then comes the slogan that’s so hard to forget.

“If the house is a mess, call U-G-S.”

Universal Ground Services & Construction Co. has, over the last year, become one of the best-known names in the local world of sinkhole repair.

But over the last two weeks, the company has faced a more significant mess — its own.

The corporation’s owners, Todd Smith and Robert J. Brown, have each accused the other of fraud, and each now insists he has controlling interest in the business.

On May 11, Brown staged a hostile takeover of the company and fired nearly a dozen employees. Smith then asked a Hernando County circuit judge for a temporary injunction, barring his business partner from even coming on the property. Brown’s attorney fired back, filing a motion that argues his client is the sole owner of the business.

A judge will hear both sides Monday afternoon, but the damage to the company’s reputation may be irreparable.

“The phone’s ringing off the hook with people wanting to know what the hell is going on,” Smith said Friday. “It’s insane.”

• • •

On Aug. 25 last year, Smith and Brown and several dozen other people posed for a photograph.

The two men, who have known each other for years, looked alike that day. Round faces, broad shoulders and broader waists. Brown, wearing a blue button-down shirt and jeans, held a thick red ribbon inscribed with the words “Hernando County Chamber of Commerce.” Smith, wearing a white visor and matching polo, held an oversized pair of gold scissors.

They both smiled.

That might have been the happiest moment in their business partnership.

Two months later, they signed a shareholder agreement giving Smith full control: Brown, the corporation’s founder, got 49 percent; Smith got 51 percent.

Brown, who had the licenses necessary to do the corporation’s contract work, would remain president, according to the deal. Smith, who had sinkhole expertise, would become vice president and chief operations officer, taking over the company’s finances.

The corporation announced this month that on May 15 it would hold a shareholders meeting where it would elect directors.

But soon after that announcement, in a May 10 filing with the Secretary of State, Brown was listed as the company’s only director.

Before sunrise the next day, records show, Brown and at least five other people entered UGS’s headquarters on Broad Street and staged a hostile takeover.

No one seems to agree on what happened next, and the motives behind the actions remain unclear.

• • •

A complaint filed by Smith’s attorney said this: Brown threatened criminal sanctions if any of the company’s employees left the office that morning. He searched their purses and cars and confiscated their phones, then removed equipment and more than 25 computers. He downloaded corporate trade secrets, customer lists, marketing details and other information for his own personal gain. He fired a dozen employees and refused to pay others’ salaries.

Also, the complaint said, Brown moved more than $250,000 out of company bank accounts and into his own.

At least three of the corporation’s employees said one of Brown’s associates, Barbara Bradley, told them she was an agent with the Florida Department of Law Enforcement and that they were under investigation, according to Hernando County Sheriff’s Office reports.

Bradley denied those allegations.

“That’s ridiculous,” she said. “I know not to do no stupid stuff like that.”

She did, however, acknowledge participating in the takeover. She and the others searched company cars and cellphones and fired several people, she said, but did nothing illegal.

Bradley would not offer specifics, but said she discovered before the takeover that Smith had grossly mishandled the company’s operations. She called him a crook and a liar.

“Things were not correct,” Bradley said. “We looked further and further into it and noticed it was very not correct.”

Bradley, who also owns a local credit repair company, noted that Brown recently made her UGS’s vice president.

• • •

Smith, who says the company is still operating, plans to press charges against those involved in the takeover. He was incensed.

“I want to see every f—— one of them rotting in jail,” he said Friday. “And I’m not a spiteful person.”

Brown, he added, had no right to commandeer the corporate headquarters, fire anyone or appoint new officers because, with 49 percent ownership, he has no control.

Judge Lisa Herndon, as of last Monday, seemed to agree. She granted a temporary injunction against Brown, forbidding him from stepping foot on company property or making any more decisions.

Brown’s attorney, David Banker, said that ruling won’t last.

The shareholder agreement was only binding, he said, if Smith met several specific stipulations.

Smith, Banker said, was supposed to become the company’s “financially responsible officer” and post a $100,000 bond with the Florida Construction Industry Licensing Board, thereby helping protect the company from liability.

Because Smith never did either of those things, Banker said, the contract was voided, giving his client full control and the right to take back what was originally his.

Just before meeting with an attorney Friday afternoon, Smith acknowledged to the Tampa Bay Times that he never became the financially responsible officer or posted the bond. That, he said, was Brown’s responsibility.

Not so, according to the agreement, which specifically gave Smith that duty.

Smith declined to answer more questions Friday afternoon. He said his attorney had ordered him not to discuss the case any further.


Full article …here

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