SEATTLE (CN) – The former CEO of an organic catering business slapped customers with unexpected credit card bills for more than 25,000 transactions that had taken place much earlier, but told the board of directors that the problem had affected only a “few customers,” Organic To Go claims in King County Court. The executive agreed to be interviewed about the matter, and then hid in his office while a television reporter waited for hours, a move that generated a firestorm of negative publicity, the company claims.
The late credit card charges stemmed from Jason Brown’s mismanagement of the business, according to the complaint. Organic To Go says Brown breached his fiduciary duty by downplaying the credit charges, which showed up on customers’ accounts as much as two years later due to a processing error. Master Card and Visa placed $300,000 in escrow because of the problem, the complaint says. Brown also told board members that he needed a $5 million loan to expand the business, and then used the money to pay off more than $4 million in outstanding debts, the company claims.
Organic To Go demands more than $5 million in damages, saying it can’t secure future financing because of Brown’s conduct.
Michael Gendler of Gendler & Mann filed the complaint in Seattle.