The Buzz on Mills: Candidate defrauded business partner out of millions

Posted by AzBlueMeanie:

I wonder whether these are the same millions Buzz Mills intends to spend on his campaign for governor?

Howard Fischer has the dirt on political neophyte and self-financed millionaire Republican candidate for governor, Buzz Mills. Court records: Gov candidate defrauded partner | eastvalleytribune.com:

Gubernatorial hopeful Owen Buz Mills defrauded a business partner out of millions of dollars in the sale of a company both owned, according to Florida court records.

In a 2001 ruling, Judge Paul Logan concluded that Mills purposely kept John G. Mortellite in the dark about an offer to sell the company. The result of that lack of knowledge, according to the judge, was that Mortellite accepted far less than the true value of his share in the company.

After an appeal — one that resulted in a ruling that Mortellite was entitled to an extra $3 million — the case was settled out of court.

Mills, one of four key Republicans running for governor, dismissed the lawsuit and judgment as meaningless — and irrelevant to his political campaign in Arizona.

“It’s really not news that a successful business owner got sued,” he said. Mills said he could not discuss specifics because the final settlement included a confidentiality agreement. “Everybody walked away satisfied.”

The fight involves OPM-USA Inc., which was set up in 1995 to acquire sites and build towers for cellular communications. According to court records, Mills and his wife contributed $900,000; Mortellite kicked in $100,000.

OPM, needing additional capital for its projects, went looking for cash. One of those involved an effort to solicit $15 million in loans.

That effort led other companies to take an interest in OPM. The judge said the evidence showed that American Tower in particular sought to buy all the shares.

During this time, Logan said, Mills told Mortellite to take several weeks of vacation. After talks became serious, the judge said Mills sent Mortellite on an additional unscheduled vacation and eventually fired him, saying he would buy out Mortellite’s interest.

Logan said Mills never told Mortellite of the discussions even though by that time he had received a bona fide offer from American Power to purchase its stock.

In fact, the judge, in his ruling, said when the owner of American Tower inquired about how Mills was going to buy out his partner, evidence presented showed Mills replied, "Don't worry, he has no idea what this is worth.''

Mills denies making that statement, which came from a deposition of the American Tower officer.

Eventually, Mills offered Mortellite a check for $1.5 million without disclosing the American Tower offer. The stock at that time had not been valued.

Mortellite eventually accepted the check and Mills became sole owner; the following week, American Power completed the paperwork and the deal ultimately was closed in January 1998.

Logan, ruling in the lawsuit, said that Mills, in sending Mortellite off for additional vacation, intended to keep Mortellite away from information about pending negotiations.

“By sending Mortellite off and by not disclosing anything about the American Tower offer, Mills, deceived Mortellite into thinking that there were no pending negotiations to purchase the OPM stock and with the further intent that Mortellite would act to his detriment,” the judge said. “Mortellite was, therefore, fraudulently inducted to sign the release and the stock repurchase offer.”

Originally, Logan concluded Mortellite’s stock was probably worth only the $1.5 million he was paid.

Subsequently, though, after an appeal, the judge said the cash payment to OPM, plus payment of $37 million in loans which Mills had no obligation to repay, showed that Mills received $45.47 million. Based on that, Logan said Mills should have paid $4,547,000 for Mortellite’s 10 percent interest.

Another Republican in the mold of J. Fife Symington III — ripping off his business partners and claiming everything was kosher. It goes to the honesty and character of the man, or lack thereof.

Funny how this subject never came up in The Arizona Republic's A chat with GOP governor candidate Buz Mills. Looks like you got scooped by Howie.