Press Release |
Famed Keepsake Creator Christopher Radko Presses Legal Action against Unit of Politically...
* Reuters is not responsible for the content in this press release.
Famed Keepsake Creator Christopher Radko Presses Legal Action against Unit of Politically Powerful Private Equity Group Radko Launches Countersuit against Rauch Industries for Securities Fraud and Breach of Contract NEW YORK--(Business Wire)-- Noted Christmas keepsake, gift and home decor designer Christopher Radko has mounted a legal challenge against Rauch Industries, Inc. a company owned by a politically powerful private equity firm that numbers among its directors former Secretary of State James A. Baker IV. Radko attorneys filed a countersuit in the U.S. District Court in Charlotte against Rauch, the North Carolina company that bought his Christmas ornament firm, Starad, in March 2005. The countersuit alleges numerous violations including securities fraud, fraudulent concealment, breach of contract, conversion of his personal assets, wrongful termination and unjust enrichment. Mr. Radko accuses Rauch of "gross incompetence in managing their business in general and their manufactured-ornament division specifically (which) has caused substantial financial losses at Rauch and a devastating and ongoing diminution in the value of Radko's stock in Rauch." Rauch is owned principally by Blackstreet Capital Partners, the Bethesda, MD, private equity firm formerly known as Milestone Capital Partners. Blackstreet's board of directors is comprised of some of the most powerful names in Washington, including former Secretary of State James A Baker IV, who is managing partner of the prestigious law firm of Baker Botts; Thomas Hale Boggs, Jr., chairman of the Patton Boggs law firm; former U.S. Ambassador to Germany Richard Burt, CEO of Diligence, LLC; Edward J. Mathias, managing director of The Carlyle Group; Robert P. Pincus, chairman, Fidelity Bank; top lobbyist Ed Rogers, a partner in the lobbying firm Barbour Griffith & Rogers; investment industry leader Arthur P. Solomon, president of DSF Advisors and Peter B. Teeley, retired senior vice president for government affairs of Amgen, Inc. The countersuit by Mr. Radko is in response to a legal action filed against him by Rauch last year. The Radko countersuit contends the "lawsuit by Rauch is not an attempt to recover damages allegedly caused by Radko, but is instead an elaborate facade designed to conceal Rauch's gross incompetence, and a diversionary tactic shamelessly attempting to blame Radko for Rauch's pre-existing and self-created financial problems." Rather than address problems raised by Mr. Radko, the countersuit maintains, "Rauch and Blackstreet have borrowed a technique long-used by Washington insiders to redirect the blame for Rauch's misdeeds. In a classic effort at political spin, Rauch, whose Chairman is a managing partner at Blackstreet, now blames Radko for its financial demise." Mr. Radko's countersuit claims that when he "wrote a letter to Blackstreet's managing partner complaining of the incompetent management at Rauch and multi-million dollar losses suffered by the Christopher Radko Division, Chairman Aldus Chapin began retaliating against Radko, culminating in Radko being placed on administrative leave in April 2007. Radko was escorted off Rauch's property and was not even given the opportunity to recover his personal items from his office." They then "concocted a scheme to force Radko out of the company and to divest him of any control of the line of ornaments that bears his name." Finally "in August 2007, disgusted with Rauch's ineptitude and gross mismanagement of the company, Radko resigned from the Board of Directors. He did this to protest the management policies and deceit in which Rauch has engaged." The countersuit lays much of the blame for the business failure at the feet of Blackstreet, noting that Mr. Radko "attended Blackstreet meetings at which Blackstreet management bragged about buying companies and then pressuring the sellers through various methods to renegotiate and reduce the sales price so that the sellers would receive less than the compensation initially promised and agreed to by Blackstreet. Radko was astounded to learn of the true modus operandi of Blackstreet and Rauch. This bait and switch tactic is exactly what Blackstreet, through Rauch, is attempting to do here to Chris Radko." Furthermore, Mr. Radko contends, "Rauch also promised that Milestone's (Blackstreet's) capital would be used to ensure the smooth and consistent financial operation of the Christopher Radko division (but) to Radko's surprise, Milestone/Blackstreet, despite owning 90% or more of Rauch's stock, did not provide enough capital for smooth and consistent financial operations. Because of the lack of funding from Milestone/Blackstreet, Rauch limped along in a precarious financial position." In his countersuit Mr. Radko notes that "in an effort to disguise its managerial and financial blunders, Rauch attempted to transfer the manufacturing of Radko brand ornaments to China and planned to sell Radko brand ornaments through mass trade channels such as K-Mart. Radko rebuked this proposal because it was contrary to Rauch's representation that it would maintain the high quality of the glass ornaments, the integrity of the Radko glass ornament brand and distribution at high-end channels only. Instead, the switch to Chinese manufacturers would degrade the quality and value of the Radko ornaments and Radko brand." Mr. Radko's countersuit also notes that "nowhere in Rauch's complaint (against Radko) does Rauch reveal that it owes at least $4 million for ornaments Rauch ordered from Northstar (a quality ornament manufacturer) that Rauch has refused to pay for. Rauch's payment defaults caused Northstar to seek bankruptcy protection in Poland, resulting in the tragic loss of hundreds of jobs." Last month Rauch's attorneys Sally D. Garr, Deborah M. Lodge, and Jason M. A. Twining, all of Patton Boggs LLP, the law firm whose chairman is Mr. Boggs, the Blackstreet board member, as well as Kiah T. Ford IV of Parker Poe Adams & Bernstein LLP, asked the Federal court in Charlotte for permission to withdraw as counsel for Rauch. No explanation was given for their request, which was granted. In another development, the court said the Radko-Rauch case has been reassigned to Senior Judge Graham Mullen. A notice from the court said simply, "Chief Judge Robert J. Conrad, Jr. no longer assigned to the case." Christopher Radko Media: Kim Lucchese, 212-687-1765 email@example.com Copyright Business Wire 2008