Investors sue founder of local travel company for emptying company assets for personal use following foreclosure over allegations of sexual misconduct

0

COLUMBUS, Ohio – Investors sue the founder of a local student travel company, alleging he failed to repay a loan after emptying the company of money through a series of insider trading , making him unable to repay them.

Lawsuit filed in Lake County Common Pleas this month says Henry “David” Venning, even after being kicked out of his CEO role in 2014 for allegations of sexual misconduct, abused his power continued on Rustic Pathways, embezzling money and other company assets for its own account. win when he knew the Willougby-based company was insolvent. The lawsuit says he also distorted the value of Thai real estate he used as collateral for individuals who made the company’s $ 6 million loan in 2018 to help keep Rustic Pathways afloat.

“These breaches of contracts and the commission of commercial crimes have been used to fund the playing field akin to a shady Venning empire, spanning Lake County, Ohio, to Thailand and elsewhere in Southeast Asia,” indicates the trial.

The lawsuit seeks to seize Venning’s personal property, including his Lake County home and other real estate in Ohio, to cover the $ 6 million loan, plus $ 1.5 million from interest and legal fees. He names as defendants Venning, Willoughby’s attorney Michael Lucas, a man named Chatchai Pongkan who lives with Venning, and RPOldCo, a company owned by Venning which was once the parent company of Rustic Pathways, but was later renamed. that the company’s brand was sold to new ownership in 2019.

As part of the 2019 sale, Venning received $ 2 million in exchange for canceling various “insider deals” with Rustic Pathways, according to the lawsuit. Rustic Pathways is now run by the new company, and a company spokesperson said Venning was no longer involved.

Lucas, who has been Venning’s personal attorney in the past, declined to comment when reached by phone on Tuesday. He said he would pass a message on to Venning.

Rustic Pathways investors are represented by Calfee, Halter & Griswold, a law firm with offices in Cleveland and New York.

In a report, H. Jeffrey Schwartz, the partner in charge of Calfee’s New York office, said: “It is a privilege for me to lead the legal mandate to obtain justice for the unjustly wronged noteholders by obtaining redress for them in the Court of Pleas. Commons in Lake County, Ohio, as well as Thailand, Laos, Myanmar, Australia, and Costa Rica – all of the sites where a large portion of Mr. Venning’s loan collateral resides.

(Scroll down to read the full trial, or click here for a PDF.)

Venning founded Rustic Pathways in 1990, the company eventually growing into an international presence generating millions of dollars in annual revenue, according to the lawsuit. As revealed on cleveland.com in 2015, Venning resigned from the management of the company, which organized international travel for students, in 2014, after a confidential internal report found he had coerced three staff members Asian woman of lower rank to have sexual contact with him in a company establishment. in Thailand.

The internal investigation, launched following a complaint filed by a student client in March 2013, found that Venning, then president and CEO at the time, had ordered at least 10 Asian staff to give him private nightly massages which sometimes led to unwelcome sexual touching, as before. reported by cleveland.com. The company’s internal investigation found that Venning’s actions could make him wanted for sex trafficking by force or coercion, a federal crime.

The Lake County lawsuit cites the cleveland.com report and the Rustic Pathways internal investigation report, prepared by a law firm which recommended that Rustic Pathways separate from Venning “immediately and unequivocally”.

But, the Lake County lawsuit indicates that Venning continued to own the company and exercised “de facto” control through its corporate structure, which placed 70% ownership of Venning in a revocable trust controlled by Lucas. , and gave positions on the company’s board of directors to Lucas and his accountants.

The lawsuit says the former Rustic Pathways company followed the recommendation to part with Venning “in form but not in substance, saying” Venning did not relinquish governance or financial control and continued to siphon substantially Rustic Pathways capital through a series of insider transactions. The lawsuit indicates, for example, that Venning used the company’s money to buy real estate, which he then leased to company, and instructed the company to hire employees to maintain the properties year round, even though the student travel season was only four months.

The lawsuit also says Rustic Pathways paid Venning nearly $ 1 million a year after leaving the company, through various internal deals, including a 2016 deal that paid Venning “fees. consulting ”from $ 325,000 to $ 425,000 through 2019. And, the lawsuit says Venning used company money to pay for a Rustic Pathways-branded family travel business that he was operating after leaving his company. official employment.

“Venning’s systematic extraction of millions of dollars from RP OldCo for his own personal gain through these inherently unfair insider trading, which reports and beliefs occurred while RP OldCo was insolvent on the balance sheet, did only worsened the insolvency before 2018, “says the lawsuit.

Judge Patrick Condon has issued a temporary restraining order prohibiting Venning or any of the defendants from transferring real estate while the case is ongoing. A hearing is scheduled in the case on October 14 for another judge currently handling the case, Judge Eugene Lucci, to consider whether to make the restraining order more permanent by converting it. in what is called a preliminary injunction.

Court documents say Venning and Pongkan received a copy of the lawsuit on Friday at the old Rustic Pathways headquarters in Geauga County. Venning sold the building, an eight-bedroom, five-and-a-half-bathroom home, in 2016, according to property records.


Source link

Share.

Leave A Reply