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IN THE SUPERIOR COURT OF FULTON COUNTY
STATE OF GEORGIA
CIVIL DIVISION
MATTHEW WHITLEY, ) JURY TRIAL DEMANDED)
Plaintiff, ))
v. ))
THE COCA-COLA COMPANY, ) CIVIL ACTION NO: _____________STEVEN HEYER, STEVEN )VONDERHAAR, TOM MOORE, )JACK WILSON, MIKE OERTLE, )AND BRIAN HANNAFEY )
)Defendants. )
PLAINTIFF’S ORIGINAL COMPLAINT
Plaintiff Matthew Whitley hereby files his original complaint
and states:
JURISDICTION
1. This Court has subject matter jurisdiction pursuant to
GA Const. Art 6, § 4, I, OCGA § 9-4-2 et seq., and OCGA § 16-4-6.
2. This Court has personal jurisdiction over the parties
pursuant to OCGA § 9-10-91.
3. Venue is proper pursuant to OCGA § 9-10-31.
PARTIES
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4. Plaintiff Matthew Whitley is a citizen of the United States
and a resident of Dacula, Gwinnett County, Georgia. He is 37 years
old.
5. At all times relevant to this lawsuit, plaintiff was, until
March 26, 2003, employed by defendant The Coca-Cola Company (“TCCC”).
Most recently, until being illegally and extortionately fired,
plaintiff was the Director of Finance - Supply Management in the
Fountain Division of defendant TCCC.
6. At all relevant times, plaintiff worked for defendant TCCC
in Atlanta, Fulton County, Georgia. He spent 11 years employed by
defendant TCCC.
7. Defendant The Coca-Cola Company is a Delaware Corporation
headquartered in Atlanta, Fulton County, Georgia. The defendant may
be served with process by delivering a copy of the Summons and
Complaint to its registered agent for service, C.T. Corporation
System, 1201 Peachtree Street, N.E., Atlanta, Georgia 30361.
8. Defendant Steven Heyer is the Chief Operating Officer of
defendant TCCC.
9. Defendant Steven Vonderhaar is the Vice President and Chief
of Internal Audits for defendant TCCC.
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10. Defendant Tom Moore is the President and General Manager
of the Fountain Division of defendant TCCC.
11. Defendant Jack Wilson is the Senior Vice President for
Fountain Operations of defendant TCCC.
12. Defendant Mike Oertle was the Vice President for Supply
Management for the Fountain Division of defendant TCCC, until on or
about April 2003 when he retired.
13. Defendant Brian Hannafey was until a recent promotion the
Director of Finance for the Fountain Division of defendant TCCC. At
all relevant times, defendant Hannafey was the direct supervisor of
plaintiff Matthew Whitley.
STATEMENT OF FACTS
Summary: the Defendants’ Racketeering EnterpriseAnd Sale of Drinks with Metal Residue in Them
14. Over the past five years, plaintiff Matthew Whitley
repeatedly identified to defendant TCCC’s senior management –
including the individual defendants – various illegal and fraudulent
schemes and discriminatory misconduct in the Fountain Division.
15. The illegal activities included: (a) the promotion and
sale to children of frozen-uncarbonated beverages that defendant TCCC
knows contain metal residue that may be potentially harmful; (b) a
$65 million fraud on the Burger King Corporation ratified by members
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of defendant TCCC’s Board of Directors; (c) the intentional
overstatement of defendant TCCC’s revenues and gross profits by
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$750 million annually; (d) the use of off-the-books slush funds and
illegal money-laundering to materially falsify another publicly-
traded company’s financial information in order to cover-up a failed
$50 million project highlighted in defendant TCCC’s last two annual
reports; (e) illegal price discrimination against customers and
unfair competitive practices totaling nearly $1 Billion; and (f) the
continued intentional discrimination by defendant TCCC against
African-American and Hispanic employees.
16. The defendants conspired to and ran the Fountain Division
as an illegal racketeering enterprise. They executed their illegal
activities using theft, fraud, and deception to cheat shareholders,
customers, and competitors; the defendants used extortionate threats,
intimidation, and fear against TCCC employees to coerce their
complicity in the racketeering enterprise; and the defendants
obstructed justice to cover-up their crimes, influence potential
witness, conceal the availability of information from official
proceedings, and hinder and prevent the communication to law
enforcement of information relating to the commission of these
offenses.
17. When plaintiff Matthew Whitley reported these illegal
activities to senior TCCC management, including defendant Heyer, the
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plaintiff was simply trying to protect the customers, shareholders,
and employees of defendant TCCC, including the illegally-
discriminated against minority employees.
18. Nevertheless, the defendants illegally conspired to and
maliciously used lies and extortionate intimidation, fear, and
coercion to ruin plaintiff Matthew Whitley’s career, destroy his
professional reputation, and punish him and his family emotionally
and psychologically – all as part of the defendants’ continued
operation of the Fountain Division as a criminal enterprise through
a pattern of racketeering activity.
I. DEFENDANT TCCC’S PATTERN OF ILLEGAL RACKETERRING ACTIVITIES
A. Introduction
19. During the past five years, plaintiff Matthew Whitley
repeatedly challenged management for, among other things:
(i) Crooked Accounting Practices at defendant TCCC to HidePotentially Harmful Products, Inflate and Misstate itsTrue Financial Performance in Violation of S.E.C. Rules . These include the fraudulent inflation of volume numbers,routine use of off-the-books slush funds, creation offictitious assets, hiding expenses in the purchase priceof unrelated assets, and refusal to write down impairedassets, all in willful disregard of GAAP to inflateprofits, conceal gross capital mismanagement, skirtcapital-funding controls, sugar-coat potentially dangerousproducts, and hide the failure of high-profile projectslike the iFountain dispenser – which defendant TCCC hasfraudulently highlighted as a “success” in its 2001 and
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2002 Annual Reports – and Frozen Uncarbonated Beverages.
(ii) Defendant TCCC’s Continuing Participation in aConspiracy to Falsify Material Financial Information ofAnother Publicly-Traded Company . For more than two years,defendant TCCC and Lancer Corp. have been covering up aniFountain slush fund by intentionally falsifying materialfinancial information about Lancer’s revenues. Thatinformation has been filed with the S.E.C. and relied onby Lancer’s shareholders;
(iii) Defendant TCCC’s Successful Marketing Fraud on theBurger King Corp. and Its Franchisees (Some of Whom areNow Bankrupt) to Knowingly Induce Their Investment of MoreThan $65 Million in the Failed Frozen Carbonated BeverageSnack Concept . In early 2000, defendant TCCCintentionally fabricated marketing results to swindleBurger King into proceeding with a national marketingcampaign to promote defendant TCCC’s frozen carbonatedsnacks as a way to increase traffic. As a direct resultof defendant TCCC’s fraud, Burger King bought about $32million of additional FCB equipment, spent nearly $10million more to aggressively advertise the product, andpaid TCCC another $30 million for syrup. All told,defendant TCCC’s fraud cost Burger King and itsfranchisees more than $65 million. The Audit Committeefor defendant TCCC’s Board of Directors learned about thefraud but did nothing to remedy it – except watch idly asdefendant TCCC promoted the scheme’s organizer and leader,John Fisher, for his “success” at Burger King’s expense. Burger King and its franchisees finally stoppedaggressively promoting FCB snacks because – as a truthfulmarketing report would have told them at the start – FCBsdo not increase traffic.
(iv) Defendant TCCC’s Use of “Payola” Annually Totalin g$750 Million in Unsubstantiated and Disproportionate“Marketing Allowances” to Overstate Net Operating Revenuesand Gross Profits and to Bribe Fountain Division Customersto Stay with defendant TCCC . For years, defendant TCCChas doled out more than $1 billion in marketing allowances
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to Fountain Division customers purportedly to fund theirrequired promotion of Coca-Cola products. In fact, as thedefendants well knew, its customers pocket most of thecash instead of spend it on marketing. The payments havebeen little more than “bribes” to keep the customers fromchanging to Pepsi. And what the customers do not know isthat defendant TCCC illegally discriminates among themwith disproportional payments in violation of Federalanti-trust and unfair competition laws. Most important,however, because defendant TCCC intentionally refused toaccurately account for these payments as “rebates,” TCCCwillfully and materially overstated its net operatingrevenues and gross profits by $750 million per year inviolation of S.E.C. Staff Accounting Bulletin No. 101. Defendant TCCC has knowingly and intentionally beenmisleading investors about its market share, growth rate,and productivity, not to mention is use of bribes to keepcustomers.
(v) Defendant TCCC’s Ongoing Disparate Treatment ofMinorities in the Fountain Division, Compared to WhiteMales, Accused of Code of Conduct Violations . Remarkably,even though defendant TCCC paid about $190 million inNovember 2000 to settle its historic Title VII race class-action case, the Fountain Division’s discipline decisionshave continued to reflect naked racism against African-Americans and Hispanics.
20. These facts prove one thing, if nothing else. Investors,
customers, and consumers cannot trust TCCC when it comes to numbers
– revenue numbers, expense numbers, asset numbers, marketing-survey
numbers, safety numbers, market-share numbers, efficiency numbers,
and earnings numbers.
21. In the face of rampant corporate illegality at defendant
TCCC, plaintiff Matthew Whitley tried to protect the shareholders,
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employees, and customers of defendant TCCC. So the defendants purged
him – destroying his career, ruining his reputation, and stealing his
financial future.
B. Defendant TCCC’s Culture of Dishonesty
22. In defendant TCCC’s the Code of Conduct, it states that all
employees to “act with honesty and integrity in all matters.” In
fact, “integrity” is one of defendant TCCC’s nine core values. And
the Code of Conduct demands that “[e]very company financial record
. . . must be accurate, timely, and in accordance with the law.”
These simple injunctions rightly echo state and federal prohibitions
against fraud and the S.E.C.’s insistence that the financial records
of publicly-traded companies comply with generally accepted
accounting principles – especially in the post-Enron era. (Attached
as Exhibit A and made a part of this complaint for all purposes
pursuant to OCGA § 9-11-10(c) is a copy of defendant TCCC’s Code of
Business Conduct.)
23. Plaintiff Matthew Whitley is a man of uncompromising
integrity, as his performance reviews consistently observed. He
regarded these elementary principles as his Holy Grail. He acted
accordingly. The defendants saw them as a punch-line for stockholder
meetings. And, sadly, the defendants acted accordingly.
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1. Crooked Accounting Practices at defendant TCCC to HidePotentially Harmful Products, Inflate and Misstate TCCC’s TrueFinancial Performance in Violation of S.E.C. Rules.
a. Defendant TCCC Conceals Metal Residue in Drinks and Refuses toWrite-Off Impaired Assets
24. Defendant TCCC has been selling Frozen Uncarbonated
Beverages to children and adults throughout the United States,
knowing those drinks contain metal residue that may, on information
and belief, be potentially be harmful to kids. Defendant TCCC has
known about the problem since at least January 15, 2003. And
defendant Heyer, the COO of defendant TCCC, has known since at least
February 4, 2003. Nevertheless, defendant TCCC has refused to notify
the consuming public and intentionally refusing to write-off impaired
assets over the past several months.
25. Generally Accepted Accounting Principles require that
“impaired” assets be written down from their historical cost basis
to their fair market value. An impaired asset is one whose value on
the books may not be recoverable. The underlying premise for GAAP’s
treatment of impaired assets is that worthless or substantially
devalued assets on a balance sheet create a false snapshot of the
company’s true financial picture. An accurate tally of assets and
write-offs is crucial in determining a company’s net worth,
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debt/equity ratio, and earnings-per-share, just to mention a few
formulas by which investors measure financial risk.
(1) Metal Residue in Frozen Uncarbonated Beverages
26. Defendant TCCC developed Frozen Uncarbonated Beverages
(“FUB”) dispensing equipment for the Planet Java product line. FUB
equipment leaves metal residue in the drinks that may, on
information and belief, be potentially harmful. Such metal residue
would not good for kids or adults. As defendant TCCC has secretly
admitted, the metal residue results from a manufacturing defect in
the equipment. Defendant TCCC has known about the metal-residue
problem since at least on or about January 15, 2003. Defendant
Steven Heyer, the COO, learned about the problem on February 4, 2003.
27. But defendants TCCC and Heyer have kept the consuming
public ignorant about FUB’s potential dangers because defendant TCCC
has never disclosed them to consumers. Nor has defendant TCCC ever
disclosed to the consuming public that its FUB contains metal
residue.
28. The manufacturer of the FUB equipment is the Lancer Corp.
Currently, defendant TCCC is carrying about $6.72 million of “zero-
turning” FUB equipment inventory on its books (1,050 units @ $6,120
each). That inventory has been near “zero-turning” since January
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2002. The problems with FUB are numerous, serious, and apparently
unfixable, however. Defendant TCCC has decided that no new
placements will occur until defendant TCCC can certify there is no
risk of metal residue in the drinks. And the equipment suffers a 70
percent “out of box” failure rate. And sales force has no desire to
sell the product. And 7-11 Hawaii and Wal-Mart canceled their FUB
programs because, on information and belief, the product tastes bad
and did not come close to meeting defendant TCCC’s sales forecast.
29. Defendant TCCC even tried to give away FUB dispensers but
no customers were interested. During the life of the FUB project,
sales were expected to be 1,000 units per year. But three years of
actual sales have totaled only 119 units through March 13, 2003 – a
96-percent shortfall in sales estimates.
30. Defendant TCCC recently accrued a $2 million expense
purportedly to research FUB’s failure. But in truth and in fact, as
defendant TCCC well knows, the impairment problem is at least 4.5
times bigger than this $2 million deduction.
31. If TCCC honestly applied GAAP – not to mention leveling
with the consuming public that FUB has metal residue in it – then
defendant TCCC would have to write off all of the FUB inventory and
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incur a total expense of more than $8.9 million ($6.72 in inventory,
$1.4 million owed to Lancer for outstanding purchase orders, and an
R&D penalty of $796,000).
32. The truth is that defendant TCCC is once again putting
profits over the public’s right to know and also delaying recognition
of a material expense, covering-up another failed high-profile
project, and inflating earnings by artfully amortizing the FUB
problem.
33. Plaintiff Matthew Whitley repeatedly advocated complete
compliance with GAAP’s impairment rules for the FUB problem, most
recently on February 26, 2003. Exactly 30 days later, defendant TCCC
fired plaintiff Matthew Whitley.
34. In addition, plaintiff Matthew Whitley reported this
fraudulent scheme to defendant Heyer, defendant TCCC’s Chief
Operating Officer, on January 31, 2003 and again on February 4, 2003.
Seven weeks later, defendant TCCC fired plaintiff Matthew Whitley.
(Attached as Exhibit F and made a part of this complaint for all
purposes pursuant to OCGA § 9-11-10(c) are documents of defendant
TCCC that detail its fraudulent FUB “write-off” scheme, including its
secret admission that FUB contains metal residue.)
(2) The iFountain IS System
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35. A critical part of the iFountain concept – beverage
dispensers that use information technology - was its Information
System to manage resource planning. The iFountain IS system sits on
defendant TCCC’s balance sheet as a $30 million work-in-progress.
In fact, as the defendants well know, implementation for the IS
system was scheduled to occur in 2001. Every deadline associated
with its implementation has been missed because, on information and
belief, the system does not work. Defendant TCCC, on information and
belief, stopped trying to salvage the system in October 2002.
36. Under GAAP, the IS system is impaired and needs to be
written off as a $30 million expense.
37. And without the IS System, the entire iFountain project –
especially given the need for off-the-books slush funds to sustain
it, as discussed below in Part I(b) – should be written off. Such
a write-off would require defendant TCCC to recognize a loss of
approximately $70 million.
38. Plaintiff Matthew Whitley made the point about the IS
system’s impairment, and iFountain’s failure, to defendant Heyer,
defendant TCCC’s Chief Operating Officer, on January 31, 2003 and
again on February 4, 2003. Seven weeks later, defendant TCCC fired
plaintiff Matthew Whitley.
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b. Defendant TCCC creates Off-the-Books Slush Funds to ConcealiFountain’s Failure
(1) Background
39. Several years ago, senior management for defendant TCCC’s
North America Fountain Division (“CCNAF”) eliminated most of its
dispensing equipment suppliers, choosing instead to align itself with
two primary vendors. One vendor is IMI Cornelius, Inc., the American
subsidiary of a British-based international engineering company
called IMI plc, which also supplies PepsiCo. The other vendor is the
Lancer Corp., based in San Antonio, Texas, a company that trades on
the AMEX. Lancer supplies more than half of defendant TCCC’s
fountain dispensers, and substantially all its sales are derived from
or influenced by defendant TCCC.
40. Defendant TCCC chose Lancer to play a critical role in the
development of a computerized soft drink dispenser called iFountain.
Unfortunately, the project has proven a miserable bust.
41. iFountain broke its budget twice. Sales have lagged far
below projections for several reasons. The price is too high. The
technology -- on defendant TCCC’s books at $30 million – does not
work. Service events far outstrip the repair rate for legacy
dispensers. Installation costs are enormous compared to legacy
dispensers.
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42. iFountain dispensers have proven so bad that several
customers have demanded they be removed and replaced with legacy
dispensers. And two customers, Ryan’s Family Steakhouses Inc. and
Darden Restaurants, which initially agreed to purchase iFountain,
have refused any further installations after experiencing the
product’s poor performance. In fact, defendant Jack Wilson – the
Senior Vice President for Coca-Cola Fountain Operations – detailed
a long list of the serious problems with iFountain in an August 20,
2002 letter to a Ryan’s senior vice president, Allen Shaw.
(2) Creation of the Slush Funds
43. By at least on or about late 2000, senior management,
including defendants Moore, Wilson, Oertle, and Hannafey, realized
that the iFountain project was failing badly in the marketplace.
They knew one problem was the price: an iFountain dispenser cost too
much for CCNAF customers and delivered too little value.
44. Senior management, including defendants Moore, Wilson,
Oertle, and Hannafey needed a way to lower the wholesale price so
CCNAF’s sales force could aggressively negotiate a reduced retail
price with end-users.
45. Their answer was to create off-the-books “slush funds” –
which continue today. To execute the scheme, defendant TCCC has
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secretly diverted money to Lancer and IMI Cornelius to covertly
“buydown” the wholesale unit price of each iFountain dispenser.
46. This mirage of lower prices on defendant TCCC’s books let
senior management fulfill three critical objectives. Lower prices
have let the defendants sustain the illusion of iFountain’s potential
-- hence, the project’s emphasis in defendant TCCC’s last two annual
reports. Lower prices have given the sales force more flexibility
in the field (although sales remain pathetic). And defendants Heyer,
Moore, Wilson, Oertle, and Hannafey were able to keep their jobs by
hiding iFountain’s failure.
47. The slush funds have been generated two ways. First – and
this method may have involved only Lancer – the defendants directed
Lancer to fabricate at least one invoice to TCCC for a fictitious
asset totaling $400,000. (There was likely a second phony invoice
for $233,747.) Lancer received the cash, and TCCC began receiving
a lower price on the iFountain dispenser.
48. Second, the defendants willfully directed both vendors to
secretly overcharge defendant TCCC for the high volume legacy
dispensers – 2.13% for Lancer and 2.81% for IMI Cornelius. The
secret overcharges were then captured for the slush fund, tracked,
and applied as needed to substantially lower the vendors’ respective
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wholesale unit prices on the much lower volume iFountain dispensers.
49. The use of overcharges and fictitious assets has allowed
the defendants to conceal the scheme in a blizzard of invoices. What
is more, the defendants laundered the slush funds through TCCC's
books by hiding them in yearly depreciation entries. They knew that
by creating the false impression that defendant TCCC was purchasing
assets, the overstated price of each piece of legacy equipment and
the cost of the bogus asset – the slush funds themselves – would be
capitalized over 8.3 years. By tying the slush fund’s financing to
depreciable assets, senior management decreased the risk of detection
by spreading the cost of the fraud over time.
50. The masterminds of this scheme were: (a) defendant Jack
Wilson - Senior VP of Fountain Division Operations; (b) defendant
Mike Oertle - VP for Supply Management; (c) defendant Brian Hannafey
– Fountain Division Director of Finance; and other individuals.
51. But in a real fit of stupidity, defendants Wilson and
Oertle, along with TCCC employees Derrick Davis and Danny Lesser, and
Lancer’s management memorialized their agreement to create a slush
fund to reduce the cost of iFountain dispensers. The agreement took
the form of a cover letter and attachment, called “iFountain Price
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Buydown and Repayment Agreement,” from Lance M. Schroeder of Lancer
to Derik Davis at CCNAF. Schroeder’s letter, dated March 14, 2001,
was mailed from Texas to Georgia. Copied on the letter was, among
others, defendant Oertle, Gary Paisley - Vice President Engineering,
and Ron Sprouse of CCNAF and Chris Hughes, Lancer’s COO.
(a) The Phony Invoice and Bogus Asset
52. The iFountain slush fund was jump-started by Lancer’s
submission of at least one phony invoice paid by defendant TCCC. At
defendant TCCC’s direction, Lancer fabricated a $400,000 invoice for
a fictitious asset called “engineering, design, plumbing, electrical
of a complete manufacturing line for the production of iFountain
dispenser.” The Lancer invoice was numbered “MAR 30100792” and dated
March 8, 2001. The invoice was sent to the attention of Derik Davis
by, on information and belief, the U.S. mails.
53. Paul Phillips authorized payment of Lancer’s phony invoice
on April 27, 2001. Defendant TCCC paid the invoice under “PO# misc-
2665.” Carol Rush executed the PO. Lancer then booked TCCC’s
$400,000 in its own “off-the-books” financial records for May 2001
under the heading “Manufacturing Equip. Buydown Funding.” (CCNAF
likely directed Lancer to submit an earlier bogus invoice in April
2001 for $233,747, reputedly for iFountain Beta Units. Defendant
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TCCC apparently disbursed those funds as well because they also
appear in Lancer’s off-the-books financial records.)
54. Of course, Lancer mailed the false invoice at defendant
TCCC’s direction to cover up the true purpose of the $400,000
payment. There was never a manufacturing-line asset, only a slush
fund.
(b) CCNAF’s Legacy Overcharge Scam
55. The defendants’ second way to fill the slush funds held by
Lancer and IMI Cornelius was the “overcharge” scam on legacy
equipment. Lancer agreed to give CCNAF a $1,633,747 price reduction
(or “undercharge”) on the first 3,000 iFountain dispensers. But this
“price reduction” was not a real reduction in any true sense of that
phrase. In fact, as the defendants well knew (including defendants
TCCC, Moore, Wilson, Oertle, and Hannafey), defendant TCCC was
obligated to repay Lancer dollar for dollar in real time – only the
repayments would be made covertly.
56. The defendants agreed with Lancer that the first $633,747
of the “price reduction” would come from defendant TCCC’s payment of
the two phony invoices. Those two payments constituted the initial
buydown on the iFountain dispensers’ price. Lancer would recoup the
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remainder of its sham price reduction through a 2.13 percent
overcharge on all legacy and iFountain equipment purchases.
57. To track the slush fund in 2001, Lancer maintained a
detailed set of its own off-the-books financial records. Among the
entries on Lancer’s secret ledger were: (i) “iFountain Beta
Dispensers Buydown Funding,” which had $233,747 booked in April 2001;
(ii) “Manufacturing Equip. Buydown Funding,” which had $400,000
booked in May 2001; (iii) “Legacy & iFountain Overcharge @ 2.13%,”
with monthly amounts booked in 2001 ranging from $12,137 to $43,303;
(iv) “Current Interest Owed to KO @11% [which happens to be the
internal rate of return TCCC typically uses to assess its
investments]; and (v) “Outstanding Balance owed to (Lancer)/KO,”
which totaled $841,230 in defendant TCCC’s favor on December 31,
2001.
58. In January 2002, defendant TCCC and Lancer took steps to
conceal the slush fund from Lancer’s outside auditors. To hide their
scheme, defendant TCCC agreed in writing that: (i) Lancer would keep
the 2001 buydown funds it then held – which totaled about $1 million
of defendant TCCC’s money; (ii) Lancer would receive an additional
$500,000 of defendant TCCC’s money throughout 2002 via a legacy
overcharge; and (iii) Lancer would have no obligation to repay or
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issue credit to TCCC for the unused overcharge amounts, which thus
eliminated the need to continue the Buydown status reporting process
in early 2002. This illegal arrangement was memorialized in letter,
dated January 9, 2002, from defendant Oertle in Atlanta to George
Schroeder in San Antonio, Texas.
(c) Current Status of the Legacy Overcharge Scam
59. Even today, defendant TCCC still fills the iFountain slush
funds. Only now defendant TCCC’s senior management, including
defendant’s Moore, Wilson, and Hannafey (and defendant Oertle before
his March 2003 retirement), quaintly call the overcharge a “temporary
portfolio management strategy on all legacy equipment purchases.”
In fact, the only temporary strategy at work here is to keep hiding
iFountain’s failure.
60. Defendants TCCC, Heyer, Moore, Wilson, and Hannafey (and
others at the company) are willfully misusing defendant TCCC’s assets
and cheating defendant TCCC’s shareholders to conceal a fraudulent
scheme that involves off-the-books slush funds.
61. As of December 31, 2002, the net balance in defendant
TCCC’s iFountain slush funds totaled at least $3.2 million ($2.1
million to Lancer and $1.1 million to IMI Cornelius). The slush
funds probably approximate $3.5 million by now.
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62. On Lancer’s books, the slush fund is laundered through its
inflated revenues for legacy dispensers, making Lancer look
materially more profitable than in fact it is. IMI Cornelius
launders its share of the iFountain slush funds the same way.
63. On defendant TCCC’s books, the slush funds are laundered
through asset purchases. Every payment by defendant TCCC to the
slush funds is hidden in a legacy-dispenser purchase. Because
defendants TCCC, Heyer, Moore, Wilson and Hannafey (and defendant
Oertle before his March 2003 retirement) cause the payment of
inflated prices to conceal the scheme, defendant TCCC has
fraudulently overstated the value of its legacy equipment by at least
approximately $5 million. (The difference between TCCC’s overstated
inventory and the slush funds’ net balance represents the total
buydown on all iFountain dispensers purchased to date.)
(d) Internal Cover-up of the iFountain Slush Fund
64. On or about February 2002, plaintiff Matthew Whitley
learned about the iFountain slush funds. He reported these
staggeringly obvious Code of Conduct and GAAP violations to Chris
Hutchings, then the Vice President of Finance for CCNAF. Hutchings
and defendant Vonderhaar, Vice President and Chief of Internal
Audits, conducted a two-day sham investigation.
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65. The conclusions reached by Hutchings and defendant
Vonderhaar are no surprise given TCCC’s culture of dishonesty: (i)
no one violated TCCC’s Code of Conduct; (ii) Lancer would be allowed
to keep $1 million of defendant TCCC’s money; and (iii) CCNAF would
write-off the fictitious $400,000 asset.
66. Hutchings told plaintiff Matthew Whitley that the rationale
behind his and defendant Vonderhaar’s conclusions was two-fold.
First, they saw the slush funds as “creative price management.” More
soberly, Hutchings admitted, “we cannot let this get to the papers.”
(Attached as Exhibit B and made a part of this complaint for all
purposes pursuant to OCGA § 9-11-10(c) are documents of defendant
TCCC that detail the creation and management of the iFountain off-
the-books slush funds with Lancer Corp.)
(e) Plaintiff Reports the Fraud to Defendant Heyer
6 7 . Plaintiff plaintiff Matthew Whitley reported this
fraudulent scheme to defendant Heyer, defendant TCCC’s Chief
Operating Officer, on January 31, 2003 and again on February 4, 2003.
(Attached as Exhibit C and made a part of this complaint for all
purposes pursuant to OCGA § 9-11-10(c) are a series of e-mails
between defendant Heyer and plaintiff Matthew Whitley, including his
report to defendant Heyer about the iFountain Slush Fund, the Burger
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King Fraud, the Metal-Residue problem with frozen-uncarbonated
beverage that has been concealed from the public, and defendant
TCCC’s continuing willful discrimination against African-Americans
and Hispanics.)
68. One week later, defendant Hannafey gave plaintiff Matthew
Whitley his first “Substandard” performance review in 11 years with
defendant TCCC. In the draft review document he prepared, defendant
Hannafey rated plaintiff Matthew Whitley as “substandard” for
complaining that senior TCCC management refused to follow Generally
Accepted Accounting Principles (“GAAP”). But in the final review
document, defendant Hannafey deleted his self-incriminating reference
to senior management’s refusal to follow GAAP. (Attached as Exhibit
D and made a part of this complaint for all purposes pursuant to OCGA
§ 9-11-10(c) are the draft performance review and the final version
of the performance review manipulated and altered by defendant
Hannafey to conceal the defendants’ illegal activities.)
69. Six weeks later, on March 26, 2003, defendant TCCC fired
plaintiff Matthew Whitley, allegedly as part of a company-wide layoff
process. Defendant Hannafey’s decision to give plantiff Matthew
Whitley a substandard performance review counted 50 percent toward
the layoff decision under defendant TCCC’s formula. Notably, the
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purported layoff “decision” was made by defendants Oertle and
Hannafey.
c. The iFountain Capital-Funding Scam
70. Like all significant capital projects at defendant TCCC,
the funding for iFountain was approved by the Board of Directors.
As the project moved forward, the need for additional funding became
apparent. A supplementary request was made to and approved by the
Board.
71. But by 2002, on information and belief, senior management,
including defendants Moore, Wilson, Oertle, and Hannafey and others,
knew that the iFountain project could not be finished under the
Board-approved budget. More capital funding was needed. But, on
information and belief, those defendants, and others, believed the
Board would not be receptive to another supplementary funding request
in the tight economic times. And, on information and belief, those
defendants did not want to risk spotlighting the flagging iFountain
project.
72. Senior management, on information and belief, led by
Hutchings and defendants Moore, Wilson, Oertle, and Hannafey came up
with a creative – and fraudulent – accounting solution that rivals
the iFountain slush funds. Hutchings, on information and belief,
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decided to play a shell game with the Board members, only no one told
them.
73. What Hutchings and the defendants did, on information and
belief, was fraudulently to inflate the budget for a totally
unrelated Information-System project, called Project Discovery, from
$10 million to $14 million. The defendants’ scheme, on information
and belief, was to shift the extra $4 million to the iFountain
project before the Board spotted his slight of hand.
74. The Board approved the proposed $14 million budget. And,
on information and belief, defendants Moore and Wilson secretly
blessed Hutchings’s move of the extra $4 million of funding Project
Discovery to the iFountain project.
75. Plaintiff Matthew Whitley reported this fraudulent scheme
to defendant Heyer, defendant TCCC’s COO, on January 31, 2003 and
again on February 4, 2003. One week later, plaintiff Matthew Whitley
received his only “substandard” performance review in 11 years with
defendant TCCC. Six weeks later, defendant TCCC fired plaintiff
Matthew Whitley.
d. Defendant TCCC’s Miraculous Ability to Convert Expenses intoProfits
76. Another accounting trick used by defendant TCCC to inflate
profits in tough times is, on information and belief, to convert
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expenses into profits. The practice is creative. And the practice
is fraudulent.
77. From an accounting perspective, defendant TCCC’s conversion
scheme operates, on information and belief, much like the iFountain
slush funds. That is, defendant TCCC, on information and belief,
secretly wraps otherwise necessary expenditures to outside vendors,
which should be expensed on defendant TCCC’s income statement, into
the price of new equipment purchased from those vendors. This “wrap
in” is done, on information and belief, by having the vendor inflate
the mark-up on the newly-sold products to TCCC in an amount equal to
TCCC’s would-be expense.
78. Another way defendant TCCC converted expenses into profits
involved the complete fabrication of assets from accrued expenses.
Defendant would book as an asset on its balance sheet something
called “deferred payments,” which were moneys that had been paid to
customers as promotional allowances.
79. So instead of having “expenses” that decrease TCCC’s gross
profits, on information and belief, defendant TCCC creates either
higher priced “assets” on its books, which can then be depreciated
over 8.3 years, or completely fabricated assets that can be amortized
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over three years. The vendors, on information and belief, are
satisfied because they receive the money owed them.
80. And, on information and belief, defendant TCCC’s senior
management, including defendants Heyer and Moore, is pleased for two
reasons. Defendant TCCC’s bottom line is, on information and belief,
inflated by keeping large, one-time expenses off of the company’s
income statement. And the company’s then-current balance sheet, on
information and belief, is also inflated because inflated or totally
fictitous assets are booked.
81. With the stroke of a pen, defendant TCCC has invented a new
way to turn expenses into profits. The only hitch is this practice
violates GAAP – not to mention sound corporate governance and even
minimal internal controls -- because, on information and belief, it
misrepresents defendant TCCC’s actual financial performance.
82. Two examples are set forth below in ¶¶ 83-101.
(1) The SHURflo-iFountain Fix
83. As part of the iFountain initiative, defendant TCCC
contracted with a company called SHURflo Pump Manufacturing Company,
Inc. in 1999 to develop the water treatment system (“WMS”) for the
new dispensers. SHURflo is a supplier of other equipment to TCCC.
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84. Under the 1999 agreement, SHURflo was required to self-fund
the WMS’s development. Eventually, SHURflo invested $2.26 million
in the project. By December 2001, however, defendant TCCC advised
SHURflo that it had breached the 1999 contract due to a WMS design
problem – including its non-UL electrical status. But even the
equipment’s non-UL status, with its inherent danger of electrocution
to unwitting users, did not stop defendant TCCC from selling 100 of
these hazardous devices to customers.
85. SHURflo demanded in response that defendant TCCC reimburse
its development costs on the ground that defendant TCCC never clearly
outlined the project’s specifications. On or about March 2002,
defendant TCCC assumed the risk of failure and agreed to repay
SHURflo $1.81 million for its engineering development costs.
86. GAAP requires that such payments be expensed because the
payor receives nothing of long-term, amortizable value. But, on
information and belief, defendants TCCC, Moore, Wilson, and Oertle
had a different plan.
87. Defendant TCCC would pay SHURflo the $1.81 million for
engineering design costs associated with the original WMS. But the
method of repayment was a $25.86 markup above SHURflo’s regular price
for the iFountain Backroom Integration package. The pricing to
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defendant TCCC was set at a premium for SHURflo to recoup its R&D
costs. And defendant TCCC booked these premium payments not as
expenses but as depreciable assets – hence, the miraculous conversion
of expenses into profits.
88. On or about May 21, 2002, plaintiff Matthew Whitley
reported his grave concerns about this slick accounting gimmick to
his supervisor, defendant Hannafey. Plaintiff Matthew Whitley neatly
summarized the scheme this way: “CCF has asked Shurflo to over bill
us on backroom packages related to CD dispenser installs . . . to
offset the $1.8 mm liability created by our rejection of the WMS.”
Plaintiff Matthew Whitley continued:
This is not dissimilar to the “tooling purchase/buydownfund” scheme I found with iFtn dispenser pricing twomonths ago. I realize that Chris [Hutchings] determinedthat the accounting treatment developed by Mike/Jack/Garyet al. [Mike Oertle/Jack Wilson/Gary Paisley] for iFtndispensers was OK, but I have the same strong concernsabout this latest Shurflo “treatment” if my understandingis proved correct.
89. Plaintiff Matthew Whitley then concluded: “I believe the
$1.8 to be an expense. . . . By agreeing to overstate the cost of
‘backroom packages’ we will be in effect, capitalizing the failure
to perform penalty. This would result in inflated asset numbers, and
understated expenses.”
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90. The fallout from the SHURflo “expense-to-profit fraud” was
predictable. Defendant TCCC, on information and belief, wrongly
treated its penalty payments to SHURflo as assets in violation of
GAAP. (Attached as Exhibit E and made a part of this complaint for
all purposes pursuant to OCGA § 9-11-10(c) are documents of defendant
TCCC that detail its fraudulent SHURflo “expense-to-profit” scheme.)
91. And on or about June 2002, at plaintiff Matthew Whitley’s
mid-year review, defendant Hannafey severely chastised him for
questioning Chris Hutchings’s conclusion that the iFountain slush
fund was anything more than just “creative price management.” Of
course, defendant Hannafey never disclosed that he had approved the
iFountain slush fund at its inception.
92. Plaintiff Matthew Whitley reported this fraudulent scheme
to defendant Steven Heyer, defendant TCCC’s Chief Operating Officer,
on January 31, 2003 and again on February 4, 2003.
93. One week later, at plaintiff Matthew Whitley’s last annual
review on February 11, 2003, defendant Hannafey confirmed that
plaintiff Matthew Whitley’s overt challenge to senior management’s
accounting abuses directly contributed to his poor performance grade
for 2002. Defendant Hannafey was, on information and belief, acting
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at the direction of defendants Heyer, Moore, Wilson, and Oertle, or
some combination of them.
94. Notably, on or about early March 2003, as part of the
layoff process used by defendant TCCC when preparing to fire
employees in late March 2003, the defendants made sure that the poor
performance grade defendant Hannafey fraudulently and maliciously
gave plaintiff Matthew Whitley made up 50 percent of plaintiff
Matthew Whitley’s layoff assessment score. The defendants wanted to
be sure they falsely and fraudulently created a pretext for
maliciously mistreating plaintiff Matthew Whitley.
(2) Capitalized Marketing Allowances for Bottlers
95. Another example concerns plaintiff Matthew Whitley’s first
taste of defendant TCCC’s underhanded accounting tricks in 1998.
96. Defendant Tom Moore, President of the Fountain Division,
insisted that $27 million worth of marketing payments to Coca-Cola
bottlers – that were supposed to be paid-out in equal installments
over three years – be capitalized over 8.3 years.
97. Defendant Moore, on information and belief, wanted the $27
million capitalized because of mounting profit pressure. Falsely
spreading out those payments would inflate the Fountain Division’s
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performance by nearly $5.75 million in each of the first three years.
98. The messenger who delivered defendant Moore’s directive to
plaintiff Matthew Whitley was Mark Peterson, Moore’s executive
assistant. Plaintiff Matthew Whitley told Peterson that GAAP
prohibited such an outlandish approach.
99. Unhappy that plaintiff Matthew Whitley was against
falsifying TCCC’s financial records, defendant Moore, on information
and belief, sent Peterson and Drew Garner, Director of Field Sales,
to TCCC’s Accounting Research Department. They met with Bryan K.
Treadway.
100. After hearing Moore’s rationale, on information and belief,
Treadway agreed to book the $27 million as an amortizable asset to
be capitalized over 8.3 years. (Bryan K. Treadway left defendant
TCCC and landed at a company called Qwest in April 2001, where he
became its Assistant Controller. On February 25, 2003, a federal
grand jury indicted Treadway and others on charges of conspiracy,
securities fraud, and wire fraud for fraudulently inflating Qwest’s
profits by mischaracterizing and accelerating revenues on two
equipment sales in knowing violation of GAAP rules.)
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101. When plaintiff Matthew Whitley learned what Treadway did,
he insisted that Chris Hutchings, the division’s CFO, reverse the
entry and initiate a Code of Conduct inquiry. After a good deal of
hand-wringing, Hutchings relented on reversing the entry but refused
to permit an internal investigation into defendant Moore’s
misconduct.
e. Phantom Deliveries and Sales and Unneeded Shipments toFraudulently Inflate Volume Numbers in the Fountain Division
102. Defendant TCCC recognizes revenue in the Fountain Division
based on the volume of syrup shipped. Thus, volume is a critical
indicator of defendant TCCC’s financial performance.
103. Defendant TCCC has employed, on information and belief,
three primary mechanisms to fraudulently inflate its volume numbers,
that is, the amount of syrup shipped to distributors.
(1) Phantom Sales - “Sell To” versus “Sell Through”
104. On or about 2002, on information and belief, defendant TCCC
changed the method by which it measured volume. Defendant TCCC
changed from a “sell to” yardstick to a “sell through” yardstick.
105. “Sell to” measured volume – and hence revenue – based on
defendant TCCC’s sales to distributors. Under this standard of
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measure, defendant TCCC simply looked at its actual shipments to gage
volume.
106. “Sell through” measures volume – and hence revenue – based
on the distributors’ reported sales to its customers. In other
words, under this standard, defendant TCCC had to rely on the
distributors’ honest reporting of its sales.
107. Distributors, however, as defendant TCCC well knows, have
an incentive to inflate and fabricate its “sell through” numbers
because, with respect to the distributors’ syrup sales to certain
large customers, defendant TCCC pays the distributors a delivery fee.
This delivery fee compensates the distributors for the fact that
defendant TCCC forces them to sell the syrup to large customers at
cost with no mark-up.
108. Following defendant TCCC’s shift to the “sell through”
method of measuring volume, its reported volume increased on
information and belief by approximately 2 million gallons, which
equals about $18 million in additional revenue.
109. The problem was, as defendant TCCC well knew, the
distributors’ reported sales to its customers exceeded by about 2
million gallons defendant TCCC’s actual deliveries to the
distributors.
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110. In other words, defendant TCCC knew that its reported
volume numbers were falsely inflated by about 2 million gallons and
its revenues were fraudulently inflated by about $18 million.
(2) Unnecessary “Early” Deliveries of Syrup at End of FiscalQuarters
111. Defendant TCCC used to recognize sales, and thus revenue,
based on deliveries to distributors under the “sell to” method.
112. At the end of fiscal quarters, to inflate its sales
numbers, defendant TCCC would on information and belief ask its 10
largest distributors to accept “early” delivery of a substantial
quantity of additional syrup – much more than the distributor needed.
113. To induce the distributors to take the deal, defendant TCCC
would give the distributors special payment terms. That extended
payment as much as 90 days to the end of the next fiscal quarter
without any penalty. Normally, defendant TCCC required payment
within 30 days before imposing a penalty.
114. As a result of this scheme to inflate its volume shipped,
and hence its revenues, defendant TCCC on information and belief
overstated its revenues by approximately $10 million per year.
(3) “Phantom” Deliveries of Syrup at End of Fiscal Quarters
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115. Defendant TCCC treats a sale of syrup as occurring when a
delivery truck leaves the loading dock, not when the distributor
actually receives the product.
116. To further inflate its volume figures, defendant TCCC would
execute phantom truck deliveries at the end of quarters. Defendant
TCCC would fill its delivery trucks with containers of syrup. And
just before midnight on the last day of the quarter, the fully-loaded
trucks would be ordered to drive about two feet away from the loading
dock.
117. As a result of this scheme to inflate shipments, defendant
TCCC inflated its revenues by on information and belief approximately
$5 million.
2. Defendant TCCC’s Continuing Participation in a Conspiracy toFalsify Material Financial Information of the Lancer Corp.
118. As described above in ¶¶ 39-66, the Lancer Corp. kept a
detailed set of off-the-books records for its share of the iFountain
slush funds. In preparation of Lancer’s 2001 10-K, its outside
auditor, KPMG, reviewed those records and raised questions about the
nature of the “buydown” transactions between Lancer and defendant
TCCC.
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119. For KPMG, on information and belief, it was essential to
understand Lancer’s mysterious records because the nearly $1 million
slush fund represented about 54 percent of Lancer’s total cash
balance as of December 31, 2001. The problem was that Lancer had not
booked the slush fund as a “payable.” Doing so would have ruined
Lancer’s debt/equity ratio. To conceal the scheme, Lancer needed a
way to treat the slush fund as income.
120. When KPMG threatened to notify the S.E.C. about the $1
million, Lancer called defendant TCCC (through defendants Wilson and
Oertle). Both sides realized something needed to be done quickly to
keep the lid on what could be an ugly S.E.C. investigation.
121. So they struck a deal on January 9, 2002. With the
blessing of defendant Wilson and Chris Hutchings, defendant Oertle
agreed that (i) Lancer could keep the balance of the slush fund of
$1 million, (ii) Lancer would receive an additional $500,000 in 2002
via a legacy overcharge, and (iii) Lancer would no longer have any
obligation to repay the unused portion of the slush fund, so it no
longer would track the overcharges.
122. Defendant TCCC’s January 9 agreement knowingly aided and
abetted (a) Lancer’s fraudulent accounting treatment of the slush
fund as income, and (b) Lancer’s fraudulent representation in its 10-
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K that it had a “$1.0 million gain relating to the cancellation of
a project.”
123. In truth and in fact, as defendants TCCC, Wilson, and
Oertle and Lancer well knew, no project had been canceled – unless
Lancer’s earlier promise to track and repay the unused balance of a
secret off-the-books slush fund is a “project.” As a result,
Lancer’s recognition of the $1 million balance in the off-the-books
slush fund represented more than 71 percent of its net earnings for
fiscal 2001.
124. Defendants TCCC, Wilson and Oertle, and Hutchings, aided
and abetted Lancer’s completion of the accounting fraud cover-up on
February 27, 2002.
125. To further cover-up their accounting fraud, defendants
TCCC, Wilson, and Oertle agreed in writing with Lancer that defendant
TCCC would relinquish its rights to the fictitious production-line
equipment TCCC purportedly purchased on April 25, 2001. This bogus
waiver, on information and belief, placated KPMG’s concerns about
potential S.E.C. violations and stock fraud.
126. Defendant Oertle’s agreement, on behalf of defendant TCCC,
also gave Hutchings and defendant Vonderhaar what they needed to
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internally cover-up the slush fund by writing-off the $400,000
“purchase” from defendant TCCC’s books.
127. The slush-fund scheme continues today. Only now, with no
need for tracking, Lancer and defendant TCCC conceal the fraud in
Lancer’s operating revenues.
128. As a result, the defendants are knowingly and intentionally
causing Lancer’s revenues and earnings to be materially – and
fraudulently – inflated. The defendants are knowingly and
intentionally causing Lancer’s true financial situation to be
willfully misrepresented.
129. Lancer’s shareholders are getting a materially false view
of its actual performance because of the defendants’ fraud.
130. Defendant TCCC, Heyer, Moore, Wilson, Oertle, and Hannafey
are knowingly aiding, assisting, and counseling Lancer’s fraud.
131. When plaintiff Matthew Whitley protested the slush fund in
March 2001, he was rebuffed by Hutchings and defendant Vonderhaar.
They called it “creative price management” that needed to be kept
out of the newspapers.
132. And seven weeks after telling defendant Heyer about TCCC’s
participation in a scheme to defraud another company’s shareholders,
plaintiff Matthew Whitley was out of a job.
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3. Defendant TCCC’s Successful Marketing Fraud on the Burger KingCorp. and Its Franchisees to Knowingly Induce Their Investment ofMore Than $65 Million in the Failed Frozen Carbonated BeverageSnack Concept.
a. Defendant TCCC Makes a Bad Deal with Burger King
133. On or about April 14, 1999, defendant TCCC prepaid a $400
million 10-year marketing allowance to Burger King, the Fountain
Division’s second largest customer. Defendant TCCC, on information
and belief, typically pays marketing allowances to its customers at
year-end based on the volume of prior purchases, not in advance based
on expected purchases.
134. Defendant TCCC prepaid Burger King $400 million knowing
full well that its decision to give Burger King so much money in
advance of performance carried the risk that actual purchases would
not justify the prepayment. That is precisely what happened.
135. The people responsible for this $400 million prepayment
debacle included, among others, the then-Vice President of the Burger
King Account Team.
136. By on or about late 1999, sales to Burger King had not, on
information and belief, come close to justifying the $400 prepaid
marketing allowance.
137. Defendant TCCC needed a way to increase sales of Coca-Cola
products to Burger King. To increase sales, defendant TCCC needed
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to increase traffic at Burger King restaurants. More traffic would
translate into more product sales for Burger King. More sales would
mean more inventory purchases – and that would include Coca-Cola
products. More Coca-Cola purchases would help justify the $400
million prepayment.
138. On or about February 2000, defendant TCCC, through the
Burger King team, came up with a plan. The plan was to hype Frozen
Carbonated Beverages (“FCB”) as a kid’s snack item at Burger King,
which had already invested about $30 million in FCB equipment.
139. To promote the product and, more important, convince Burger
King corporate’s OPS-Tech committee that FCB would in fact increase
traffic, defendant TCCC persuaded Burger King to run a three-week
long test in the Richmond, Virginia market.
140. Burger King’s OPS-Tech committee agreed.
141. Defendant TCCC’s Burger King team knew that Burger King’s
senior management saw the marketing survey’s success as the critical
proof necessary to justify a substantially stepped-up investment in
FCB, not to mention Burger King’s already existing investment.
142. Defendant TCCC’s proposed promotion was that with the
purchase of a “value meal,” the Burger King customer would receive
a coupon for a free FCB. Presumably, if kids liked FCB, they would
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buy more “value meals” to get the coupon for the free drink. The
purchase of more kids’ value meals would mean traffic had increased.
143. The benchmark for success then would be the volume of
“value meals” sold in the Richmond, Virginia area.
144. If the test was successful, as defendant TCCC well knew,
Burger King planned to extend the promotion nationally. A national
promotion would mean more syrup sales for defendant TCCC.
b. Defendant TCCC Fraudulently Rigs the Marketing Test
145. Defendant TCCC’s marketing survey went very poorly. Kids
just did not like the product enough to raise traffic.
146. So defendant TCCC’s Vice President for the Burger King told
a TCCC marketing manager to hire a “marketing consultant” to falsify
the survey – rig the results to it appears as though FCB drives
traffic.
147. The marketing manager paid $10,000 of his own money to a
Virginia man so he could take hundreds of kids to Burger King to buy
“value meals” for the sole purpose of falsely inflating the survey
results. Remarkably, the TCCC Vice President for the Burger King
account became angry with the marketing manager for not spending
$20,000 - $30,000 to rig the outcome, instead of just $10,000.
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148. Overnight, the marketing results turned around. Defendant
TCCC’s promotion looked like a success. But defendant TCCC knew the
truth that the results were a fraud. Burger King and its franchisees
took the bait.
c. Burger King Spends $65 Million in Reliance on the Rigged TestResults
149. In reliance on the rigged marketing results, Burger King
and its franchisees, two of the largest of which are now in
bankruptcy, committed to (i) a national promotion of Frozen Coke in
over 7,600 restaurants around the country, which (ii) required a
sizeable equipment installation program and expanded syrup purchases.
150. Over the next two-plus years, Burger King and its largest
franchisees purchased approximately 3,800 frozen-carbonated-beverage
dispensers at an installed unit price of about $8,485. They put
nearly $10 million more into advertising and marketing. And they
bought about 4.25 million gallons of syrup from defendant TCCC at a
unit-price of approximately $7.50, to fill the new equipment.
151. All told, because of the fraud, Burger King and its
franchisees have unnecessarily spent more than $65 million on FCB
dispensers, marketing, and TCCC products.
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152. Unfortunately for Burger King and its discontented
franchisees, the Frozen Coke program has woefully under-performed
defendant TCCC’s volume forecast by 50 percent.
153. The program’s failure can be no surprise to defendant TCCC
because its forecast was based in large measure on its fraudulent
marketing survey.
154. Because of the program’s very poor results, Burger King has
dramatically de-emphasized its FCB snack promotion. But because of
defendant TCCC’s fraud, Burger King and its franchisees are stuck
with $64 million of over-valued equipment, not to mention being out
$65 million in cash.
c. Warren Buffett, and the Rest of Defendant TCCC’s AuditCommittee, Learn About the $65 Million Fraud, Let it Continueto Increase Revenue, and Allow the Perpetrator to be Promoted
155. On or about March 2001, the marketing fraud on Burger King
came to light in the Fountain Division.
156. Plaintiff Matthew Whitley led a preliminary Code-of-Conduct
investigation that recommended the Vice President’s termination. But
that recommendation was overruled by defendant TCCC’s senior
management, including defendants Moore and Vonderhaar.
157. Instead of firing the Vice President for directing a $65
million-plus fraud on one of defendant TCCC’s largest customers,
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those defendants only made the Vice President forfeit 50 percent of
his 2000 bonus and his 2001 stock-option award. And they put a
meaningless letter in his permanent file about the fraud.
158. In accord with TCCC policy, the Vice President’s Code-of-
Conduct violation – the fraud on Burger King – was reported the Audit
Committee of defendant TCCC’s Board of Directors.
159. The Audit Committee is composed of four members: Warren
Buffett, the largest shareholder in TCCC through his Berkshire
Hathaway Inc. with 200 million shares worth about $8 Billion; Peter
Ueberroth; Cathleen Black; and Ronald Allen.
160. Upon hearing the report, on information and belief, Peter
Ueberroth was extremely angry and demanded that the Vice President
of the Burger King team be fired immediately.
161. Warren Buffett, however, on information and belief,
convinced the Audit Committee to reject Ueberroth’s demand for an
immediate firing because such an incident would be potentially
embarrassing for defendant TCCC.
162. Buffett, instead, on information and belief, persuaded the
Audit Committee that defendant TCCC should go forward with its
proposed FCB sales and victimize Burger King and its franchisees,
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rather than tell them the truth about the fraudulent marketing
report.
163. Buffett knew, on information and belief, that not telling
the victims would accomplish several potentially profitable
objectives: (a) because defendant TCCC had made a bad business deal
with Burger King, the FCB fraud would help recover some of those
moneys; (b) because Buffett’s Berkshire Hathaway Inc. was the largest
shareholder of defendant TCCC, he would personally benefit from the
fraud scheme because defendant TCCC would be able to recover those
moneys; and (c) because Buffett’s Berkshire Hathaway Inc. owns the
Dairy Queen chain – a direct competitor of Burger King – and the FCB
fraud would cause serious financial injury to Burger King, a company
in serious financial trouble, Buffett’s Dairy Queen investment would
directly and substantially benefit.
164. In short, after hearing a report about how defendant TCCC
had victimized the Fountain Division’s second largest customer
through a $65 million fraud – but a fraud that would substantially
benefit TCCC and Warren Buffett – the Audit Committee did nothing,
thanks on information and belief to Warren Buffett.
165. The Audit Committee took no action against the Vice
President. It recommended no further action by management against
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the Vice President. And it took no steps to remediate the fraud
against Burger King.
166. Equally remarkable, after the Vice President cheated Burger
King and its franchisees for defendant TCCC’s benefit, defendant TCCC
promoted him to Senior Vice President for Marketing - Food Service
Division. And TCCC’s Board did nothing to stop it.
d. The Moral of the Story
167. Plaintiff Matthew Whitley reported the marketing fraud on
Burger King to defendant Heyer, the Chief Operating Officer of
defendant TCCC, on or about February 4, 2003. Then he got fired.
168. The Vice President for the Burger King team defrauded a
major customer out of tens of millions of dollars. Then he got
promoted.
169. Plaintiff Matthew Whitley’s report to the COO could hurt
TCCC’s earnings. But the Vice President’s fraud increased TCCC’s
earnings.
170. Plaintiff Matthew Whitley’s report to the COO could hurt
Warren Buffett’s $8 Billion investment in defendant TCCC. The Vice
President’s fraud on Burger King would benefit not only Buffett’s
investment in TCCC, but also his investment in Dairy Queen.
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171. Plaintiff Matthew Whitley was honest. The Vice President
was a fraudster.
172. The moral of this sordid story is that defendant TCCC helps
employees who help earnings – “profits make perfect.” Employees who
are not helping earnings are hurting earnings – and TCCC will punish
them. (Attached as Exhibit G and made a part of this complaint for
all purposes pursuant to OCGA § 9-11-10(c) are documents of defendant
TCCC that admit and detail its fraudulent marketing scheme against
Burger King.)
4. Defendant TCCC’s Use of “Payola” Annually Totaling $750 Millionin Unsubstantiated and Disproportionate “Marketing Allowances” toOverstate Net Operating Revenues and Gross Profits and to BribeFountain Division Customers to Stay with TCCC.
173. A critical customer-relations tool at CCNAF is “marketing
allowances.” Suppliers in many industries use marketing allowances
to help customers pay the costs of promoting the supplier’s product,
for example.
174. A customer’s failure to use all or some of the allowance
on advertising as promised requires disgorgement or forfeiture of the
unapplied amount. Marketing allowances are granted to customers
based on some measure of past performance, such as volume.
175. The correct accounting for marketing allowances is
prescribed by S.E.C. Staff Accounting Bulleting No. 101, EITF 01-9,
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which give dispositive guidance on recognition of income, and
presentation and disclosure of revenue in financial statements, and
the proper treatment of marketing allowances to customers.
176. The marketing allowance itself is calculated using a
predetermined formula that generally applies to all customers. Equal
application of a standardized formula and a disgorgement penalty
ensure proportional treatment for the customers in accordance with
the Robinson-Patman Act’s prohibition against unfair competition and
unlawful price discrimination under 15 U.S.C. § 13. The Federal
Trade Commission has issued detailed regulations governing
promotional allowances, at 16 C.F.R. § 240.1 et seq., to prevent such
unlawful price discrimination and unfair competition, which are
attached as Exhibit G and made a part of this complaint for all
purposes pursuant to OCGA § 9-11-10(c).
177. The TCCC’s Fountain Division annually awards customers
approximately $1 Billion in purported marketing allowances – and that
number has been growing by about 8 percent per year. Three problems
plague this $1 Billion disbursement.
a. Defendant TCCC Improperly Overstated Net Operating Revenuesand Gross Profits Because No Marketing is Required
178. As defendant TCCC known for at least the past five years,
customers have routinely spent only about 25 percent of their $1
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Billion “marketing allowances” on marketing. The remaining $750
million has been pocketed by the customers with TCCC’s blessing.
179. Plaintiff Matthew Whitley repeatedly sent documented
directives to senior CCNAF management that validation of the
payments’ use to market Coca-Cola products was essential.
180. But defendant TCCC’s senior management, including defendant
Moore, President of the Fountain Division, has refused to require
proof that defendant TCCC’s customers use the “marketing allowances”
as required. Defendant TCCC has been getting nothing of legally
recognizable value in return for these payments.
181. Defendant TCCC’s excuse for refusing to require compliance,
according to defendant Tom Moore, is that “the customers are happy.”
And why would the customers be anything else after getting annual
unrestricted payoffs of $750 million.
182. In fact, approximately two years ago, defendant Moore
ordered plaintiff Matthew Whitley to stop auditing the customers’
nonuse of the marketing-allowance payments. Moore’s rationale was,
“we know all about it.”
183. Clear and simple, as defendant TCCC well knew, $750 million
of defendant TCCC’s annual marketing allowances were “rebates.” The
payments went directly into the customers’ cash accounts. Defendant
- 53 -
TCCC booked the payoffs as though the customers spent that money on
marketing TCCC products.
184. But defendant TCCC knew it would not seek evidence of the
critical compliance requirements when the payoffs were made. And
defendant TCCC knew the customers were not using the money to promote
Coca-Cola products. The customers simply kept the money. Defendant
TCCC gets no measurable legal value in return.
185. The payments, from an accounting perspective, subsidized
the customers’ gross unit costs for defendant TCCC syrup. That meant
– as defendant TCCC well knew – the annual $750 million payments were
“rebates” under GAAP.
186. GAAP requires that rebates be booked in a contra-revenue
account. In lay terms, a contra-revenue account offsets, or reduces,
a company’s gross operating revenues. That reduction yields a
company’s net operating revenues. Net operating revenues are then
reduced by the company’s cost of goods sold to determine gross
profits. Consequently, if a company’s net operating revenues shrink,
then its gross profits shrink. Shrinking revenues suggest lost
market share and slower growth. Shrinking gross profits suggest lost
efficiencies.
- 54 -
187. A marketing allowance to reimburse a customer’s advertising
expense, on the other hand, was supposed to be included in general
administrative expenses under GAAP (until on or about January 1, 2002
pursuant to EITF 01-9). Those kinds of expenses are deducted from
a company’s gross profits to calculate its operating income.
Advertising expenses, unlike rebates, reflect nothing about market
share and cost efficiencies.
188. The distinction between a “rebate” and a “marketing-
allowance expense” is vital to investors. A rebate reduces revenues.
Lower revenues suggest a weakness in a company’s product line –
hence, the need to cut prices with a rebate. And by improperly
accounting for a rebate as an expense, thereby inflating gross
profits, the guilty company falsely appears more cost efficient than
is in fact the case. Important valuation ratios used by investors
are distorted. In a word, inflated gross profits mislead investors
about market penetration and productivity.
189. Defendant TCCC, by willfully mischaracterizing the rebate
payments as “marketing allowances,” had been intentionally misstating
– and inflating – its net operating revenues and gross profits by
$750 million per year through 2001, for a total of at least
approximately $2 Billion.
- 55 -
190. While defendant TCCC’s operating income may have remained
unchanged if the defendant had honestly applied GAAP, two of the key
factors in that calculation – net operating revenues and operating
expenses – would have been materially different.
191. Defendant TCCC has knowingly and intentionally violated
GAAP and S.E.C. Staff Accounting Bulleting No. 101 by materially
misstating its net operating revenues, gross profits, and operating
expenses until January 1, 2002, in regard to its customers’ unused
marketing allowances.
192. Defendant TCCC’s violation of SAB No. 101 was material and
significant. Defendant TCCC’s investors should have been seeing a
company whose revenues and general expenses were substantially lower
than reported, on the order of about $750 million annually.
Investors should have been seeing a company with a lower market share
and lower gross profit margins. Investors should have been seeing
a lower sales/fixed assets ratio, lower sales/total assets ratio, and
lower price/sales ratio. What defendant TCCC investors should have
been seeing is a company in deeper financial trouble than it has
admitted.
b. Defendant TCCC‘s Rebate Payments Constitute Unfair Competitionand Commercial Bribery
- 56 -
193. For defendant TCCC’s customers, rebates – that is, the
unspent allowances – inflated their own profits by decreasing their
costs of goods sold. True marketing allowances are profit-neutral
because the payments merely reimburse the customer for actual
marketing expenses already recognized on its books. Such an
accounting treatment is prescribed by SAB No. 101.
194. But defendant TCCC’s lax approach to compliance lets
customers report larger profits. Both defendant TCCC’s customers and
TCCC knew that the customers were pocketing the payments rather than
spending money on Coca-Cola advertising. Defendant TCCC’s willful
inaction turned the allowances into rebates.
195. As defendant Moore said, “the customers are happy” with
this approach. The reason was, on information and belief, because
defendant TCCC’s payoffs result in increased earnings for the
customers.
196. But defendant TCCC knowingly used deception to conceal its
rebates from public and regulatory scrutiny. Defendant TCCC’s
dishonesty suggests an unlawful intent to influence the customers’
choice of suppliers by secretly offering the customers profits, not
just money. These payments then are nothing less than “payola,” or
bribes, to keep the customers using Coca-Cola products.
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197. Bribes are not tax deductible under the Internal Revenue
Code. Nor may the fact of their payment, especially on the scale of
$750 million, be withheld from shareholders.
c. The Payments Are Grossly Disproportional in Amount
198. The other problem with defendant TCCC’s marketing
allowances is their disproportionality, in violation of federal law.
199. An essential characteristic of lawful marketing allowances
is that they be proportional among customers. Proportional payments
protect against customers and competitors from unfair competition and
price discrimination in violation of the Robinson-Patman Act and the
Federal Trade Commission’s regulations.
200. Defendant TCCC regularly disobeys this requirement.
201. Instead, defendant TCCC’s approach is to negotiate
individualized arrangements with its customers with no regard for
proportional consistency.
202. For example, on information and belief, McDonald’s – which
has a “most favored nation” clause with TCCC on all pricing issues
– receives one level of marketing allowances based its individual
formula. But Burger King, one of McDonald’s competitors, receives
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a different level of marketing allowances based on another formula.
Either McDonald’s or Burger King – just to name two -- is wrongly
receiving a lesser allowance from the standpoint of proportionality.
d. Conclusion: Defendant TCCC Cheated Again
203. Plaintiff plaintiff Matthew Whitley tried to enforce the
requisite standards of lawful conduct by defendant TCCC. Defendants
TCCC and Moore ordered him to stop.
204. By doing so, the defendants – in violation of their
fiduciary duty to TCCC shareholders – fraudulently kept defendant
TCCC’s revenues and gross profits inflated. The defendants’ conduct
also kept TCCC’s customers more profitable, but cheated them
nevertheless with disproportional payments. Thus, the defendants
have been able to continue to engage in unfair competition and
unlawful price discrimation.
5. Defendant TCCC’s Ongoing Disparate Treatment of Minorities andWomen in the Fountain Division, Compared to White Males, Accusedof Code of Conduct Violations.
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205. In a landmark settlement for race-discrimination class-
actions, defendant TCCC agreed to pay $192.5 million to a class of
black employees and to fund numerous steps that would prevent future
unlawful discrimination at Coca-Cola.
206. However, as plaintiff Matthew Whitley reported to defendant
Heyer on January 31, 2003, race discrimination continues unfettered
at defendant TCCC.
207. Here are a few examples of how defendant TCCC has handled
different Code of Conduct violations in the Fountain Division since
the landmark settlement.
White Males & Females
(a) Derik Davis (iFountain project manager) – white male
– participated in the creation of the iFountain Slush Fund,
which includes the intentional overcharge of defendant TCCC and
the acquisition of fictitious assets to conceal the scheme, the
inflation of defendant TCCC’s income and assets, and the
material misstatement of another publicly-traded company’s 10-K.
No Code-of-Conduct violation is found on grounds of “creative
price management.”
(b) Shelly Callahan (administrative assistant to Jack
Wilson, Sr. Vice President for Fountain Operations) – white
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female – pressured hotels to give her free travel and rewards
points in exchange for booking reservations for her department.
The issue was deemed too “sensitive” by Chris Hutchings for a
Fountain Division audit, so the Corporate Audit Department under
Steven Vonderhaar conducted the investigation. No action was
taken.
(c) John Fisher (Vice President, Fountain Division
Marketing, formerly Vice President of the Burger King Account)
– white male –
i. defrauded Burger King (but made money for
defendant TCCC). He lost part of his bonus and
some stock options. But he lands a promotion
to Senior Vice President of Food Service
Division Marketing.
ii. made a donation to his children’s private school
using TCCC’s funds. He lost 25 percent of his
bonus, but only days later received his
promotion to Senior Vice President.
iii repeatedly billed duplicate expenses on his TCCC
expense reports totaling about $9,500. Tom
Moore and Chris Hutchings overruled plaintiff
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Matthew Whitley’s determination that Fisher had
violated the Code of Conduct.
iv. approved a $10,145 expenditure by the Finance
Director of the Burger King Account Team to pay
for a plane ticket to take his sister (not a
TCCC employee or customer) to a World Cup match
in Japan, where the Finance Director
purportedly would entertain Burger King
franchisees. Tom Moore and Chris Hutchings
determined that no Code of Conduct occurred.
v. misappropriated Disney World passes with TCCC
money and traded them for Notre Dame football
tickets for personal use. Fisher is finally
fired – but that was because he stole TCCC’s
money, not a customer’s.
(d) William McCrary (Finance Director, Burger King
Account Team) – white male – with the advance approval of John
Fisher is reimbursed $10,145 for the cost of a plane ticket to
take his sister (not a TCCC employee or customer) to a World Cup
match in Japan, where McCrary purportedly would entertain Burger
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King franchisees. Tom Moore and Chris Hutchings determined that
neither McCrary nor Fisher violated the Code of Conduct.
(e) Staci McMillian (Fisher’s executive assistant) --
white female – approved her son’s hiring as a temporary worker
by an administrative assistant, and related wage payments, to
book travel arrangements for Fisher and a subordinate in
violation of anti-nepotism rules. No action was taken.
(f) Defendant Tom Moore (President and General Manager,
Fountain Division) – white male –
i. Diverted $250,000 of defendant TCCC’s money to
a charitable organization he personally favored.
No action taken.
ii. authorized an associate to take an all expense-
paid, non-business trip to Paris, France, with
her spouse. Moore signed off on the expense
report that reported the trip as a “bonus.”
Despite the trip’s nature and Moore’s
intentional failure to report this “bonus” as
taxable income, no Code of Conduct violation was
found.
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(g) Defendant Mike Oertle (Vice President for Supply
Management) – white male – participated in the creation of the
iFountain Slush Fund, which includes the intentional overcharge
of defendant TCCC and the acquisition of fictitious assets to
conceal the scheme, the inflation of defendant TCCC’s income and
assets, and the material misstatement of another publicly-traded
company’s 10-K. No Code-of-Conduct violation is found on
grounds of “creative price management.”
(h) Mark Peterson (executive assistant to defendant Tom
Moore) – white male – accepted an all expense-paid fishing trip
to Canada from a TCCC supplier and requested reimbursement for
airfare from defendant TCCC. Despite the Code of Conduct’s
express prohibition on lavish trips absent advance
authorization, no violation is found because Tom Moore approved
the trip after the fact to cover up the problem.
(i) Defendant Jack Wilson (Senior Vice President,
Fountain Operations) – white male – participated in the creation
of the iFountain Slush Fund, which includes the intentional
overcharge of defendant TCCC and the acquisition of fictitious
assets to conceal the scheme, the inflation of defendant TCCC’s
income and assets, and the material misstatement of another
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publicly-traded company’s 10-K. No Code-of-Conduct violation
is found on grounds of “creative price management.”
Black and Hispanic Employees
(a) Ms. Reyes (first name unknown) – Hispanic female –
falsified her exception time card. She was promptly terminated.
Her Code violation neither made money for defendant TCCC, nor
was she part of the clubby white-male Fountain Division group
of executives).
(b) Issac Wilkerson – black male – wrote off 44
delinquent receivables without his manager’s approval to improve
the appearance of Wilkerson’s performance. He was terminated
because he had engaged in similar conduct in the past.
(c) Numerous other former employees – black males and
females – billed duplicate expenses on defendant TCCC expense
reports. These employees were terminated for amounts much
smaller than the $9,500 that John Fisher falsified.
6. Defendants Use Intimidation, Threats, and Fear to Coerce andExtort Employees to Participate in Illegal RacketeeringActivities
208. The defendants, including Moore, Wilson, Oertle, and
Hannafey, regularly used on information and belief intimidation and
extortionate threats of economic punishment and job loss to instill
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fear in the Fountain Division employees. The defendants were
successful – especially with the looming company-wide layoffs in 2000
and again in 2003.
209. The defendants’ intent and purpose was on information and
belief to coerce the employees to perform the necessary functions to
carryout the illegal racketeering activities outlined above in
Paragraphs 24 – 207, where simple criminal solicitation failed.
210. The defendants on information and belief responded swiftly
to employees’ objections or complaints about the Fountain Division’s
illegal racketeering activities. The defendants would and did on
information and belief make illegal and coercive threats of poor
reviews, bad performance grades, and termination if an employee
refused to buckle to their threats.
211. The defendants would and did carry out such threats,
including firing honest employees, in order to demonstrate to other
employees that “whistleblowing” would result in economic harm to
anyone who tried.
212. The defendants warned plaintiff Matthew Whitley to cease
complaining about their illegal activities in September 2002. The
defendants issued another veiled threat in December 2002. The
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defendants’ message was that plaintiff Matthew Whitley should just
cooperate and participate in the illegal schemes when necessary.
213. When plaintiff Matthew Whitley “blew the whistle” to
defendant Heyer on February 4, 2003, after refusing the defendants’
criminal solicitations and extortionate warnings, the result was a
bogus and coercive substandard performance review. That review led
to plaintiff Matthew Whitley’s illegal and extortionate firing on
March 26, 2003.
214. The defendants used the firing of plaintiff Matthew Whitley
to make clear to other employees on information and belief that
“blowing the whistle” was a fatal offense at defendant TCCC.
215. Moreover, defendant TCCC continued its use of threats and
intimidation to illegally influence and coerce employees after
plaintiff Matthew Whitley made a settlement demand on defendant TCCC
for his illegal and extortionate firing, on or about April 2003.
216. Defendant TCCC notified numerous employees with relevant
information about the defendants’ racketeering activities that
plaintiff Matthew Whitley had made many of the foregoing allegations
of illegal conduct in the Fountain Division described above in Part
I. Defendant TCCC’s purpose was on information and belief two-fold:
(a) to subtly intimidate a number of these witnesses that employees
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who “blow the whistle” will be considered traitors and turncoats
whose reputations and lives will be destroyed to protect defendant
TCCC; and (b) to subtly influence other witnesses to alter and
withhold honest and truthful testimony from federal authorities and
to prevent the communication of information to law enforcement.
217. Defendant TCCC specifically identified the “whistleblower”
and his allegations to the wrongdoers (such as defendants Vonderhaar,
Moore, Wilson, and Hannafey) on information and belief for the
purpose of influencing the witnesses’ testimony in several ways.
218. First, defendant TCCC tipped off the culpable participants
in the illegal schemes so, on information and belief, they could
review relevant materials and alter or eliminate their testimonial
and documentary evidence in a way that would protect defendant TCCC.
219. Second, defendant TCCC corruptly communicated this
information to the culpable participants so, on information and
belief, they could have time to plan their statements among
themselves in the light most favorable to defendant TCCC.
220. Third, defendant TCCC tipped off the culpable participants
to send the message that on information and belief testifying against
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defendant TCCC would turn the company against those individual
defendants.
II. SENIOR MANAGEMENT’S MALICIOUS RESPONSE TO ITS OWN MISCONDUCT
A. Plaintiff Matthew WhitleyReported the Misconduct in Writing
221. Plaintiff Matthew Whitley raised all the issues listed
above in Part I in writing to management during the past five years.
222. As a man who “is all about integrity” (as stated in his
last review), he wanted to protect defendant TCCC’s purse, preserve
its reputation, and repair its dysfunctional culture. Plaintiff
Matthew Whitley wanted to be faithful to the call for integrity and
honesty in the Code of Conduct. But the defendants could care less.
223. On December 30, 2002, he began a month-long e-mail
correspondence with defendant TCCC’s new COO, defendant Steven Heyer,
in hopes of having many of these problems fixed. (Attached as
Exhibit C and made a part of the complaint for all purposes pursuant
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to OCGA § 9-11-10(c) are the e-mails between plaintiff and defendant
Heyer and others.)
224. Plaintiff Matthew Whitley told defendant Heyer about the
fraud and malfeasance in the Fountain Division and shared a detailed
account of much of the misconduct.
225. When plaintiff Matthew Whitley shared this highly sensitive
information with defendant Heyer, the plaintiff did so – and made
explicitly clear - that he was entrusting not only the information
but his career to defendant Heyer. Plaintiff Matthew Whitley reposed
his trust and confidence in defendant Heyer and in defendant TCCC,
as a fiduciary, to take the steps necessary to protect the plaintiff
from illegal and extortionate retaliation. Defendant Heyer said
nothing to plaintiff Matthew Whitley to disavow these fiduciary
duties.
226. By being a whistleblower among thieves, plaintiff Matthew
Whitley put defendant Heyer and defendant TCCC‘s senior management
and Board of Directors squarely in the proverbial hot seat.
227. And plaintiff Matthew Whitley trusted that defendant Heyer,
as defendant TCCC’s COO, would resist the temptation to fire him for
being the messenger of very bad news. Plaintiff Matthew Whitley
guessed wrong.
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228. Defendant Heyer breached the trust that the plaintiff had
placed in him by sharing directly and indirectly the plaintiff’s
disclosure of racketeering conduct with all the people identified in
the plaintiff’s memorandum – including defendants Vonderhaar, Wilson,
Oertle, and Hannafey.
229. And the defendants’ response was swift, malicious, and
painful. The defendants treated plaintiff Matthew Whitley and the
TCCC Code of Conduct, not to mention TCCC’s shareholders and
customers, like yesterday’s garbage.
B. Plaintiff Matthew Whitley’s E-Mails todefendant COO Steven Heyer Post-Sarbanes-Oxley
230. Plaintiff Matthew Whitley’s e-mail correspondence with
defendant Heyer reveals a disturbing pattern that foreshadowed what
was to come.
231. Their exchange went as follows:
- 12/30/02 -
8:08 a.m. Plaintiff plaintiff Matthew Whitleycongratulates Heyer on his promotion toCOO and asks about the direction ofdefendant TCCC.
* * * 63 minutes pass * * *
9:11 a.m. Heyer responds with a thank you note butcautions, “Those who chose [sic] not to
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work in a respectful, trusting, andcollaborative manner focused on theprofitable growth of our total beverageportfolio, probably won’t like it atdefendant TCCC next year.”
- 12/31/02 -
7:38a.m. Plaintiff plaintiff Matthew Whitley tellsHeyer that he answered the question aboutTCCC’s direction and then, fatefully, sayshe has seen many unresolved actions anddecisions that have put TCCC at risk. “Ifthere is anything I can provide to you oraction to take, that will help you, pleaselet me know.”
* * * 73 minutes pass * * *
8:51 a.m. Heyer responds by asking for a list of theissues that he will share with TCCC CFOGary Fayard. But Heyer craftily cautionshe will only address “the ones that webelieve in with all deliberate speed”(which history proved is another way ofsaying “never”).
- 1/02/03 -
8:03 a.m. Plaintiff plaintiff Matthew Whitleyoutlines four basic categories into whichhis concerns with corporate governance,internal controls, and accounting fall: (i) leadership’s lack of integrity; (ii)the Code of Conduct is not being properlyor consistently applied; (iii) capital-management controls are ignored andsubverted; and (iv) accounting rules aredistorted.
* * * 54 minutes pass when Heyer opens the e-mail * * *
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* * * 96 more minutes pass * * *
10:33 a.m.Heyer responds by asking for more specificsabout the issues, policies, and proceduresthat concern plaintiff Matthew Whitley.
- 1/03/03 -
8:50 a.m. Concerned about confidentiality, plaintiffMatthew Whitley tells Heyer that based onthe sensitive nature of the issues, e-mailmay not be the best way to layout theproblems.
* * * some time passes * * *
**** a.m. Heyer responds that an e-mail should be used.
- 1/16/03 -
**** a.m. Plaintiff plaintiff Matthew Whitley tellsHeyer that he is preparing a detaileddescription of the issues previouslydiscussed.
* * * some time passes * * *
10:36 a.m.Heyer responds via his hand-held Blackberry thathe looks forward to reviewing plaintiffMatthew Whitley’s materials with GaryFayard.
- 1/31/03 -
3:57 p.m. Plaintiff plaintiff Matthew Whitley e-mails toHeyer an attached memorandum describingmany of the issues discussed above in PartI. Plaintiff Matthew Whitley specificallymentions the trust he has placed in Heyerby taking the risk of challenging seniormanagement’s repeated misconduct: “I
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believe that the risk I have taken is intrustworthy hands.”
* * *
**** _.m. HEYER NEVER RESPONDS
- 2/04/03 -
10:48 a.m. Plaintiff plaintiff Matthew Whitleyretransmits to Heyer his 1/31/03 e-mailwith the attached memorandum because hereceived a “failed to route” message.
* * *
**** _.m. HEYER NEVER RESPONDS
- 2/12/03 -
8:20 a.m. Plaintiff plaintiff Matthew Whitley asks ifHeyer has reviewed the 1/31/03 e-mail withthe attached memorandum and whether Heyerwould like it sent to Gary Fayard.
* * * 18 minutes pass when Heyer opens the e-mail * * *
8:38 a.m. HEYER NEVER RESPONDS
- 3/11/03 -
12:59 p.m. Plaintiff plaintiff Matthew Whitley renewshis e-mail exchange with Heyer to solicitdirection on whether he should share theissues raised in his 1/31/03 memorandumwith his new Vice President responsiblefor several of those problems. PlaintiffMatthew Whitley also states his concernabout the fact that he knows Heyer hasdisclosed the contents of his memorandumto the very people directly implicated in
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wrongdoing. Plaintiff Matthew Whitleyfinally asks whether he should take hisconcerns to Deval Patrick, Esq., defendantTCCC’s General Counsel.
* * *
**** _.m. HEYER NEVER RESPONDS
232. A look at the correspondence initially shows defendant
Heyer to be unusually responsive for a busy COO to a mid-level
manager. But once defendant Heyer learned the gravity and wide-
ranging nature of the racketeering activity at defendant TCCC, he
stopped communicating with plaintiff Matthew Whitley.
233. Indeed, defendant Heyer’s first e-mail response, on
December 30, is revealing in retrospect. He warned plaintiff Matthew
Whitley to conform to TCCC’s degenerating culture or face
retaliation. Heyer said: “Those who chose [sic] not to work in a
respectful, trusting, and collaborative manner focused on the
profitable growth of our total beverage portfolio, probably won’t
like it at defendant TCCC next year.”
234. In other words, anyone whose actions may decrease profits
better watch his step. But plaintiff Matthew Whitley’s integrity and
naïve belief in the Code of Conduct blinded him to defendant Heyer’s
extortionate threat.
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235. In fact, to carry out his threat of malicious and
unwarranted punitive and extortionate action against “disloyal”
employees, defendant Heyer shared the malfeasance memorandum with the
offenders, directly and indirectly.
236. And then, on information and belief, they – and the other
individual defendants – conspired to and did punish plaintiff Matthew
Whitley for simply being honest and trying to protect defendant
TCCC’s shareholders, customers, and employees.
C. Defendant TCCC Secret Plan to EliminatePlaintiff Matthew Whitley For Blowing the Whistle
237. In preparation for illegally firing plaintiff Matthew
Whitley under the guise of a company-wide money-saving “layoff,” TCCC
secretly created a new Director position in the Fountain Division
with responsibilities substantially identical to plaintiff Matthew
Whitley’s.
238. What that says is TCCC planned to fire plaintiff Matthew
Whitley regardless of the layoff to protect management and terrorize
the Fountain Division employees into supporting the defendants’
racketeering scheme. The layoff was a perfect pretext.
239. Then, on February 11, 2003, one week after plaintiff
Matthew Whitley alerted defendant Heyer to the racketeering,
malfeasance, fraud, accounting misconduct, and discrimination
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problems at defendant TCCC, plaintiff Matthew Whitley had his year-
end performance review with his manager, defendant Hannafey.
240. Amazingly, plaintiff Matthew Whitley was reprimanded by his
manager Brian Hannafey during his review for questioning senior
management’s decision not to follow Generally Accepted Accounting
Principles and their demonstrated lack of integrity.
241. Defendant Hannafey punished the plaintiff for fulfilling
his fiduciary duty to TCCC shareholders by trying to stop the illegal
racketeering activity. This was done, on information and belief, in
agreement with and at the directions of defendants Heyer, Moore,
Wilson, Oertle, and Vonderhaar.
242. Defendant Hannafey’s groundless censure echoed defendant
Heyer’s December 30 threat that he wanted collaboration with the
marketers, not confrontation. As a result – just as the individual
defendants planned – plaintiff Matthew Whitley suffered the worst
review of his career at defendant TCCC for being honest.
243. Defendant Hannafey even admitted that plaintiff Matthew
Whitley’s decision to confront senior management’s outrageous and
improper conduct directly contributed to his first negative rating
in 11 years with TCCC. And defendant Hannafey threatened plaintiff
Matthew Whitley by warning, “don’t do anything stupid.”
- 77 -
244. But after delivering the bad review to plaintiff Matthew
Whitley, defendant Hannafey quickly returned to his office where he
deleted from the draft version of the review those incriminating
portions of his analysis that discussed senior management’s
misconduct. Defendant Hannafey was trying to cover-up the
defendant’s malicious and unlawful extortion and to create
“deniability.”
245. Significantly, well before February 11, 2003, from
defendant Heyer on down, all TCCC employees knew that defendant TCCC
planned to layoff hundreds of employees in late March 2003.
246. And all TCCC employees, including the individual
defendants, knew that intervening performance reviews, like plaintiff
Matthew Whitley’s, would play a crucial role in the layoff assessment
process. In fact, the individual defendants knew that the
intervening performance reviews would constitute 50 percent of the
decision to layoff employees.
247. Thus, by maliciously manufacturing a bad review for
plaintiff Matthew Whitley on grounds of showing too much integrity
and being too honest, the defendants laid the cornerstone for his
dismissal. And in the process, violated their fiduciary duty to
protect corporate assets and the shareholders.
- 78 -
D. The Defendants Illegal and Unlawful MeansFor Terminating Plaintiff Matthew Whitley
248. On or about January 2003, defendant TCCC determined that
until on or about March 27, 2003, the only means by which TCCC
employees would be terminated – other than for gross violations of
the Code of Conduct after an appropriate investigation – was pursuant
to the “layoff assessment” process. Defendant TCCC prescribed
specific criteria to be used in making individual layoff decisions.
249. On or about early 2003, defendant TCCC further represented
to its employees, including plaintiff Matthew Whitley, that the
layoff assessment process would be fair and equally applied to all
employees.
250. On or about early 2003, defendant TCCC also represented to
all its employees, including plaintiff Matthew Whitley, that the
company’s rights and the plaintiff’s rights concerning continued
employment would be governed exclusively by the “layoff assessment”
process (exclusive of Code-of-Conduct violations).
251. Nevertheless, in carrying out their conspiracy to punish
the plaintiff, the defendants chose defendants Oertle and Hannafey
to perform the purported layoff review on plaintiff Matthew Whitley.
By that time, on or about early March 2003, the defendants had
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already decided to fire plaintiff Matthew Whitley as punishment for
“blowing the whistle” by using the layoff process as a cover-up.
252. Defendant Oertle, of course, had been fingered by plaintiff
Matthew Whitley in his memorandum to defendant Heyer as having been
directly involved in engineering the iFountain slush funds.
Plaintiff Matthew Whitley had also branded defendant Oertle’s
supervisor, defendant Jack Wilson, as a willful participant in the
iFountain slush fund’s creation in the memorandum to defendant Heyer.
The head of defendant TCCC Internal Audit, defendant Steven
Vonderhaar, was even implicated in a cover-up of the iFountain slush-
funds by plaintiff Matthew Whitley’s memorandum. And defendant
Hannafey had endorsed the illegal scheme when it first started in
2001.
253. The defendants’ choice of defendants Oertle and Hannafey
to assess plaintiff Matthew Whitley defied the most basic,
commonsense rule that protects against unlawful retaliation: Never
let a supervisor with a motive to retaliate review his accuser. That
rule is even more obvious when the reviewer’s supervisor, and the
supervisor’s supervisor, is likewise accused of wrongdoing – unless
a cover-up is in the works, as it was here.
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254. The defendants, on information and belief, selected
defendant Oertle to assess plaintiff Matthew Whitley for several
reasons. Defendant Oertle had an ax to grind the size of Paul
Bunyan’s. But because he was retiring from defendant TCCC anyway,
defendant Oertle could do the “get-even” dirty work for himself and
defendants Moore, Wilson, and Vonderhaar with little personal
consequence. And defendant Oertle could help defendant Heyer to wash
TCCC’s hands of the S.E.C., D.O.J., and E.E.O. problems raised by
plaintiff Matthew Whitley for the same reason. Defendant Hannafey
was selected, on information and belief, to make the process appear
legitimate because he was the plaintiff’s supervisor.
255. The defendant’s choice of defendants Oertle and Hannafey
let defendants Heyer, Moore, Wilson, and Vonderhaar keep their
fingerprints directly off the firing decision.
256. Firing plaintiff Matthew Whitley also set the stage for the
defendants’ use of the age-old moniker of “disgruntled employee” to
intentionally disparage plaintiff Matthew Whitley’s reputation and
his well-documented descriptions of corporate malfeasance.
257. Defendant Vonderhaar, and on information and belief other
representatives and agents of defendant TCCC, has already begun a
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campaign of defamation against plaintiff Matthew Whitley at defendant
TCCC and elsewhere.
258. And in his job search, plaintiff Matthew Whitley has had
to deal with the false appearance of incompetence created by the sham
layoff decision by the defendants.
CAUSES OF ACTION
Count I: RICO Conspiracy(All Defendants)
259. Plaintiff re-alleges and incorporates by reference
paragraphs 1 - 258 with the same force and effect as if fully set out
in specific detail herein.
260. The defendants have conspired and endeavored to violate the
Georgia RICO statute, OCGA § 16-14-4(a), by conspiring and
endeavoring, through a pattern of racketeering activity or proceeds
derived therefrom, to acquire or maintain, directly or indirectly,
any interest in or control of any enterprise, real property, and
personal property of any nature, including money, all in violation
of OCGA § 16-14-4(c).
261. The defendants have conspired and endeavored to violate the
Georgia RICO statute, OCGA § 16-14-4(b), as persons employed by or
associated with any enterprise, that is, an association-in-fact of
the defendants, to conduct or participate in, directly or indirectly,
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such enterprise through a pattern of racketeering activity, all in
violation of OCGA § 16-14-4(c).
262. Specifically, the defendants have conspired to and
endeavored to engage in, and have repeatedly committed, the following
criminal activities under Georgia and federal law, which constitute
a pattern of racketeering activity under OCGA § 16-14-3(8 & 9):
theft in violation of OCGA § 16-8-1 et seq.; securities fraud in
violation of OCGA § 10-5-24; mail fraud in violation of 18 U.S.C. §
1341; obstruction of justice in violation of 18 U.S.C. § 1512;
influencing witnesses in violation of OCGA § 16-10-93; tampering with
evidence in violation of 16-10-94; and extortion in violation of 18
U.S.C. § 1951.
263. In furtherance of such conspiracy to violate the Georgia
RICO statute, in violation of OCGA § 16-14-4(c), the defendants
knowingly and willfully committed extortion against plaintiff Matthew
Whitley by illegally taking his job away in order to continue to
conduct the defendants’ racketeering enterprise.
264. And in furtherance of such conspiracy to violate the
Georgia RICO statute, in violation of OCGA § 16-14-4(c), the
defendants knowingly and willfully committed obstruction of justice
under federal law and influencing witnesses and tampering with
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evidence in violation of Georgia law against plaintiff Matthew
Whitley by illegally influencing and attempting to influence
witnesses and to alter evidence to continue to conduct the
defendants’ racketeering enterprise and to deprive plaintiff Matthew
Whitley of his rights to a fair and just hearing on his complaint.
265. Plaintiff Matthew Whitley has suffered extreme emotional
distress as the result of the extortionate, willful, malicious, and
intentional acts of the defendants.
266. As a result of the defendants’ actions, plaintiff has
suffered and is continuing to suffer injury including, but not
limited to, substantial loss of income, and loss of benefits.
267. As a result of the defendants’ actions, plaintiff has
suffered and is continuing to suffer injury including emotional pain,
suffering, humiliation, inconvenience, mental anguish, loss of
enjoyment of life, and other non-pecuniary losses.
268. Plaintiff seeks to redress the wrongs alleged herein, and
this suit for equitable, compensatory, and punitive damages, is
plaintiff’s only means of securing adequate relief.
269. Plaintiff Matthew Whitley has been injured by reason of
such violations of OCGA § 16-14-4 and therefore is entitled to three
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times his actual damages sustained, punitive damages, plus all
attorneys' fees in the trial and appellate courts and costs of
investigation and litigation reasonably incurred, pursuant to OCGA
§ 16-14-6(b).
Count II: Intentional Infliction of Emotional Distress(All Defendants)
270. Plaintiff re-alleges and incorporates by reference
paragraphs 1 - 258 with the same force and effect as if fully set out
in specific detail herein.
271. The defendants have maliciously and intentionally engaged
in outrageous conduct against the plaintiff.
272. Plaintiff Matthew Whitley has suffered extreme emotional
distress as the result of the extortionate, willful, malicious, and
intentional acts of the defendants. The defendants first tried to
require the plaintiff to become a criminal in order to perform his
job. Then the defendants extortionately threatened and finally
punished the plaintiff for being honest and blowing the whistle on
their racketeering scheme.
273. In short, the plaintiff was extorted by members of a RICO
enterprise for trying to protect the economic interests of
shareholders, customers, and employees of defendant TCCC. Such
conduct by the defendants is so outrageous and extreme as to go
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beyond all possible bounds of decency, and to be regarded as
atrocious, and utterly intolerable in a civilized community.
274. As a direct and proximate result of the acts identified in
this Complaint and such other acts to be shown by evidence, including
the conspiracy to violate the Georgia RICO statute and commit other
illegal acts, including obstruction of justice, and to cover up those
illegal acts, plaintiff Matthew Whitley has suffered injuries to
person and property, including emotional distress that defies
description.
275. As a result of the defendants’ actions, plaintiff has
suffered and is continuing to suffer injury including, but not
limited to, substantial loss of income, and loss of benefits.
276. As a result of the defendants’ actions, plaintiff has
suffered and is continuing to suffer injury including emotional pain,
suffering, humiliation, inconvenience, mental anguish, loss of
enjoyment of life, and other non-pecuniary losses.
277. Plaintiff seeks to redress the wrongs alleged herein, and
this suit for equitable, compensatory, and punitive damages, is
plaintiff’s only means of securing adequate relief.
Count III: Wrongful Terminationr(All Defendants)
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278. Plaintiff re-alleges and incorporates by reference
paragraphs 1 - 258 with the same force and effect as if fully set out
in specific detail herein.
279. The defendants have wrongfully terminated plaintiff by
maliciously manufacturing a false and fraudulent performance review
to avoid compliance with defendant TCCC’s stated criteria to ensure
a fair and equally-applied layoff assessment process, which thereby
limited defendant TCCC’s common-law right to fire plaintiff for any
reason of its choosing.
280. As a result of the defendants’ actions, plaintiff has
suffered and is continuing to suffer injury including, but not
limited to, substantial loss of income, and loss of benefits.
281. As a result of the defendants’ actions, plaintiff has
suffered and is continuing to suffer injury including emotional pain,
suffering, humiliation, inconvenience, mental anguish, loss of
enjoyment of life, and other non-pecuniary losses.
282. Plaintiff seeks to redress the wrongs alleged herein, and
this suit for equitable, compensatory, and punitive damages, is
plaintiff’s only means of securing adequate relief.
Count IV: Tortious Interference(All Defendants)
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283. Plaintiff re-alleges and incorporates by reference
paragraphs 1 - 258 with the same force and effect as if fully set out
in specific detail herein.
284. Defendants Heyer, Moore, Wilson, Vonderhaar, Oertle, and
Hannafey intentionally interfered with plaintiff’s employment
relationship with TCCC, including his termination rights as
exclusively prescribed by defendant TCCC’s layoff-assessment process,
by making false and malicious statements about plaintiff and acting
in bad faith which caused plaintiff’s termination. The reason is
none of these individual defendants had the individual or unilateral
authority to terminate plaintiff Matthew Whitley during the period
of the layoff assessment process.
285. Also, the layoff-assessment process removed from all
decision makers at the company the authority to terminate plaintiff
Matthew Whitley at will. Consequently, defendant TCCC is vicariously
liable for the actions of the individual defendants under the
doctrine of respondeat superior.
286. As a result of the defendants’ actions, plaintiff has
suffered and is continuing to suffer injury including, but not
limited to, substantial loss of income, and loss of benefits.
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287. As a result of these defendants’ actions, plaintiff has
suffered and is continuing to suffer injury including emotional pain,
suffering, humiliation, inconvenience, mental anguish, loss of
enjoyment of life, and other non-pecuniary losses.
288. Plaintiff seeks to redress the wrongs alleged herein, and
this suit for equitable, compensatory, and punitive damages, is
plaintiff’s only means of securing adequate relief.
Count V: Conspiracy to Commit Tortious Interference(All Defendants)
289. Plaintiff re-alleges and incorporates by reference
paragraphs 1 - 258 with the same force and effect as if fully set out
in specific detail herein.
290. Defendants Heyer, Moore, Wilson, Vonderhaar, Oertle, and
Hannafey conspired to intentionally interfere with plaintiff’s
employment relationship with TCCC, including his termination rights
as exclusively prescribed by defendant TCCC, causing plaintiff’s
termination.
291. Because the layoff-assessment process removed from all
decision makers at the company the authority to terminate plaintiff
Matthew Whitley at will, defendant TCCC is vicariously liable for the
actions of the individual defendants under the doctrine of respondeat
superior.
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292. As a result of these defendants’ actions, plaintiff has
suffered and is continuing to suffer injury including, but not
limited to, substantial loss of income, and loss of benefits.
293. As a result of Thorne’s and William’s actions, plaintiff
has suffered and is continuing to suffer injury including emotional
pain, suffering, humiliation, inconvenience, mental anguish, loss of
enjoyment of life, and other non-pecuniary losses.
294. Plaintiff seeks to redress the wrongs alleged herein, and
this suit for equitable, compensatory, and punitive damages is
plaintiff’s only means of securing adequate relief.
Count VI: Breach of Fiduciary Duty(Defendants TCCC and Heyer)
295. Plaintiff re-alleges and incorporates by reference
paragraphs 1 - 258 with the same force and effect as if fully set out
in specific detail herein.
296. Defendants TCCC and Heyer owed plaintiff Matthew Whitley
a fiduciary duty to maintain the trust and confidence he reposed in
them when he shared the incriminating information about the illegal
racketeering activities engaged in by defendants Vonderhaar, Moore,
Wilson, Oertle, and Hannafey. But defendants TCCC and Heyer breached
their fiduciary duties to the plaintiff in connection with such
information.
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297. As a result of the defendants’ actions, plaintiff has
suffered and is continuing to suffer injury including, but not
limited to, substantial loss of income, and loss of benefits.
298. As a result of these defendants’ actions, plaintiff has
suffered and is continuing to suffer injury including emotional pain,
suffering, humiliation, inconvenience, mental anguish, loss of
enjoyment of life, and other non-pecuniary losses.
299. Plaintiff seeks to redress the wrongs alleged herein, and
this suit for equitable, compensatory, and punitive damages, is
plaintiff’s only means of securing adequate relief.
Count VII: Slander(All Defendants)
300. Plaintiff re-alleges and incorporates by reference
paragraphs 1 - 258 with the same force and effect as if fully set out
in specific detail herein.
301. The defendants have slandered plaintiff in making false,
malicious, defamatory and derogatory statements about plaintiff to
other employees of defendant TCCC and through plaintiff’s forced re-
publication of such statements.
302. As a result of the defendants’ actions, plaintiff has
suffered and is continuing to suffer injury including, but not
limited to, substantial loss of income, and loss of benefits.
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303. As a result of the defendants’ actions, plaintiff has
suffered and is continuing to suffer injury including emotional pain,
suffering, humiliation, inconvenience, mental anguish, loss of
enjoyment of life, and other non-pecuniary losses.
304. Plaintiff seeks to redress the wrongs alleged herein, and
this suit for equitable, compensatory, and punitive damages, is
plaintiff’s only means of securing adequate relief.
Count VIII: Attorney’s Fees and Costs(All Defendants)
305. Plaintiff re-alleges and incorporate by reference
paragraphs 1-263 with the same force and effect as if fully set out
in specific detail herein below.
306. All defendants have acted in bad faith and have caused
plaintiff unnecessary trouble and expense.
307. As a result of the defendants’ conduct, plaintiff is
entitled to attorney’s fees and costs related to this litigation
pursuant to OCGA § 13-6-11.
PRAYER FOR RELIEF
WHEREFORE, Plaintiff respectfully prays that this Court assume
jurisdiction of this action and after trial:
a. Issue a declaratory judgment holding that the actions
of the defendants violated the rights of plaintiff under Georgia law.
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b. Enter an order requiring the defendants to make
plaintiff whole by awarding plaintiff equitable (including back pay
and front pay) damages, compensatory damages, treble damages, and
punitive damages, costs to include costs of investigation, attorney's
fees, expenses, and pre-judgment and post-judgment interest.
c. Plaintiff further prays for such other relief and
benefits as the cause of justice may require.
JURY DEMAND
PLAINTIFF DEMANDS A TRIAL BY A STRUCK JURY.
Respectfully submitted,
________________________________Marc N. GarberGeorgia Bar No. 283847Attorney for the Plaintiff
THE GARBER LAW FIRM, P.C.3939 Roswell Road NESuite 265Marietta, Georgia 30062-6226678-560-5066 (phone)678-560-5067 (facsimile)