ST. PAUL, Minn. (CN) — Glen Taylor is best known in Minnesota for owning basketball teams, but he may soon be seen at a different kind of court. Stockholders in Envoy Medical Corporation say that the billionaire went for the steal to acquire their biotech firm.
In a lawsuit filed Wednesday in Ramsey County District Court, shareholders and former executives of Envoy, including former Minnesota Timberwolves general manager Kevin McHale, alleged that Taylor embarked on a campaign of revenge against the hearing implant maker’s leadership and began a takeover of the company after former Envoy president Rochelle Amann fired Taylor’s daughter Kendahl Prokop for not showing up to work.
Envoy designed and manufactured Esteem hearing implants, which enjoyed primetime publicity in the early 2010s through a series of features on TV news and endorsements from right-wing radio personality Rush Limbaugh and bodybuilder and actor Lou Ferrigno.
The company sold 600 implants at $30,000 each from 2010 to 2012, according to a complaint by Amman, Envoy CEO Patrick Spearman, Spearman’s brother-in-law McHale and seven other Envoy shareholders against Taylor, his financing company and nine past and present Envoy executives.
Taylor owns the Minnesota Timberwolves NBA team, the Minnesota Lynx WNBA team and the Minneapolis Star Tribune. He was also a Republican state senator from 1981 to 1990, serving as minority leader from 1985 to 1987. Forbes estimates his net worth at $2.8 billion. He initially made his money through a Mankato, Minnesota-based printing business, and acquired Envoy in 2015 for $20 million, according to the complaint.
That acquisition was not a slam dunk for Envoy, the complaint said. Taylor was a member of Envoy’s board in 2012 and told Spearman that he planned on “taking [Spearman] out” after Prokop’s firing, the complaint says.
Spearman and Amman were fired shortly afterward, and Taylor removed Envoy board chairman Roger Lucas, according to the complaint. These firings, Taylor said, were his way of “protecting his daughter,” the complaint claims. Taylor told one employee, the plaintiffs add, that he had been spared from firing “because Taylor’s daughter enjoyed working with him.”
From there, Spearman and his fellows allege, Taylor “immediately began pushing forward a plan to freeze the Company’s progress, position himself to loot its assets, and divest Envoy’s shareholders of their ownership and voting rights.”
Through provisions in a series of loans, the plaintiffs claim, Taylor effectively prevented the sale of Envoy to any other parties and gave himself an easy back door to take full control of the company. To do so, they claim, he frequently removed himself from the board only to return as soon as he legally could, effectively maintaining control of Envoy the whole time.
In doing so, the shareholders claim, Taylor and the executives he installed effectively tanked the Envoy shares held by those on the outside of his plan.
Attorney Cortney Sylvester of Minneapolis law firm Nilan Johnson Lewis wrote that the suit “seeks to remedy a billionaire’s underhanded betrayal of his fellow shareholders in a company which developed a groundbreaking and commercially valuable medical implant.”
The plaintiffs seek damages and equitable relief up to the dissolution of the company. The case has been assigned to Ramsey County Judge Leonardo Castro.
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