Tuesday, January 31, 2017

Foremost Homes Lawsuit Update

Appalachian Bible College sues Pennsylvania company for failing to make donor payment

By Wendy Holdren Register-Herald Reporter Aug 2, 2016

Appalachian Bible College has filed suit against a Pennsylvania company, alleging it has failed to make the first payment of a $4 million gift agreement.
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The Mount Hope non-profit educational institution said in the suit, filed July 28 in U.S. District Court, that Ralph C. Michael, co-founder of Foremost Industries Inc., entered a donor commitment agreement to pay the school five payments of $800,000 annually between 2016 and 2020.

The exact date of the agreement was not documented in court files, but the file did indicate the agreement was made in 2015.

Michael retired and decided to sell the company in 2012; Daniel Gordon, owner of GLD Foremost Holdings LLC, entered a Stock Purchase Agreement May 29, 2015, to purchase the company.

Although the asking price for Foremost Industries was $10 million, Michael agreed to sell the company to Gordon for $3 million. Gordon also allegedly agreed to satisfy the $4 million gift agreement to Appalachian Bible College.

"Upon information and belief, Daniel Gordon led Mr. Michael to believe that he intended to continue to operate Foremost Industries Inc., keep the employees working, and to satisfy the Gift Agreement, when he really had no such intention," the suit said.

Foremost Industries was required to make a payment of $800,000 on April 1, as per the agreement; however, through the company's new owner, the payment has yet to be made.

"Foremost Industries Inc., through its counsel, has advised Appalachian Bible College, Inc. that the additional payments owed to Appalachian Bible College Inc. pursuant to the Gift Agreement will not be paid in the future," the suit said.

Despite representations to Michael, Gordon scheduled an auction of the company's asses July 11, 2015, and has already sold its panel division, which was a substantial asset of the company. This month, another public auction was held in which additional equipment was sold.

Employee checks have reportedly been returned for "non-sufficient funds" and 401K contributions have not been paid since April.

The suit also pointed to Gordon's previous conviction — in 2005, he was sentenced in federal court to 42 months in prison after pleading guilty to wire fraud, money laundering and conspiracy to falsify books and records.

"It is clear from Daniel Gordon's past and present actions and the actions and representations of Foremost Industries Inc. has no intention of complying with the Gift Agreement."

Appalachian Bible College, through counsel J. Victor Flanagan, Ashley L. Justice and Pullin, Fowler, Flanagan, Brown and Poe LLC, is requesting the court to issue a temporary restraining order prohibiting the company from selling any additional assets until the $4 million gift is fully satisfied.

The case has been assigned to U.S. District Judge Irene C. Berger.

1 comment:

Anonymous said...

I would seem that these guys deserve each other. Foremost was always a retail factory selling direct to the buyer. It looks like they are gone forever.