CHICAGO (CN) – A Chicago-based coffee chain claims Marcus Lemonis, star of CNBC’s “The Profit,” publicly bashed its business so that it would sell to his company at a rock-bottom price, before Lemonis reneged on the purchase agreement.
Bow & Truss LLC, which operates a string of Bow Truss luxury coffee shops in Chicago, filed a $26 million lawsuit against Lemonis and his company ML Food Group in Cook County Circuit Court on Wednesday after their deal fell through.
Lemonis, a well-known business investor, signed a letter of intent to purchase Bow & Truss in December, according to the complaint.
The company was doing poorly financially, the complaint states, and the funds from the purchase would be used to pay off the company’s debts.
Lemonis reportedly said he had paid “several million dollars” for a 90 percent stake in the business that owner Phil Tadros started in 2012.
But, Bow & Truss says in its complaint, “the defendants devised a fraudulent scheme to attempt to purchase the plaintiff at a rock bottom bargain basement giveaway price and failing to accomplish that to destroy the plaintiff.”
Lemonis immediately announced on Twitter and in the press that he had purchased Bow & Truss and was its new CEO, the lawsuit states, although that was false.
Without Bow & Truss knowing, it says Lemonis interviewed its employees and told them and its landlords that he was the new owner.
“The defendants then started disparaging the plaintiff in social media and to the press,” according to the complaint, which claims Lemonis questioned Tadros’ integrity and said he had uncovered financial irregularities and mismanagement of the company.
Bow & Truss claims Lemonis did this “to embarrass and harm the plaintiff and to depress the purchase price.”
Lemonis also knew it needed immediate funds, Bow & Truss says, and made one cash advance but then refused another request, demanding that it lower the purchase price, according to the lawsuit.
After the coffee shops could not pay their employees, they walked out on Jan. 12, closing nine stores for about a week.
Bow & Truss says “the defendants encouraged plaintiff’s employees to walk out while the stores were still owned by the plaintiff.”
One of the store managers told the Chicago Tribune that the employees made the decision to shut the shops down after their paychecks bounced. Lemonis announced the same day that he was no longer interested in partnering with Tadros.
Tadros is known among his partners and investors for being creative, according to a report from Crain’s Chicago Business last July, but also for being disorganized and angering his investors and partners.
Crain’s found that money often switched hands between his various business ventures, including tech development company Doejo, Budlong chicken restaurants and a brewery, even though they all have different investors. Many have eventually failed.
A former partner in Dollop cafes, Shaye Robeson, told Crain’s that Tadros “had no idea how to run or grow a business.” However, Robeson reportedly said in a Facebook post that he regrets being interviewed by Crain’s and asked for a retraction of his statement.
Tadros and his businesses have been sued at least 15 times for defaulting on contracts and not paying invoices, Crain’s reports.
But as far as Bow & Truss goes, its complaint places the blame on Lemonis.
“By undermining or destroying the plaintiff, the defendants could either purchase the plaintiff at a very cheap price or eliminate the plaintiff as a competitor of the defendants’ coffee business,” the lawsuit states.
Lemonis announced he would be bringing a California-based coffee shop to Chicago soon after his deal with Tadros fell through, and the complaint says he never paid the agreed upon “break-up” fee of $162,000.
Bow & Truss is seeking $6 million in compensatory damages plus $20 million in punitive damages from Lemonis and ML Food Group for breach of the letter of intent, fraud and breach of fiduciary duty, among other claims. The company is represented by Marty J. Schwartz of Schain Banks Kenny & Schwartz in Chicago.
ML Food Group did not respond Thursday to a request for comment from Courthouse News.