Radko to Respond to $60 Million Suit
By Staff -- Gifts & Decorative Accessories, 6/20/2007 11:28:00 AM
Charlotte, NC — Today is the deadline for Christopher Radko to respond to allegations made against him in a lawsuit brought by Rauch Industries, vendor of the Radko brand of holiday decor. The suit, filed in May, alleged fraud, breach of contract and fiduciary duty and unfair trade practices, among other things, and seeks some $60 million in compensation.
Yesterday Radko filed a motion to dismiss one count of the complaint, Rauch’s unfair trade practices claims, on the grounds that the law Rauch cited doesn’t apply to securities transactions such as Rauch’s purchase of stock in Radko’s previous company Starad Inc., or to the employee-employer relationship.
At press time, no other response had yet appeared on the court’s docket, but Radko’s attorneys Epstein & Weil, New York, told Gifts & Decorative Accessories that Radko denies the allegations and intends to seek damages against Rauch.
Rauch bought Starad in March 2005 and hired Radko to run his former business as the Christopher Radko Division of Rauch. In addition to serving as division president, Radko bought a 5 percent interest in Rauch and became a member of its board of directors.
Rauch’s complaint alleges that Radko secretly owned his division’s primary supplier, Polish company Northstar Sp. z.o.o., as well as affiliated companies. As a result, Rauch contends it was overcharged for the 80 percent of the Christopher Radko Division’s glass Christmas ornaments that Northstar produces, to the tune of more than $5 million.
The complaint further charges that Radko scuttled a potential acquisition of the division from Rauch in February 2006, putting Rauch at risk of bankruptcy and costing the company $15 million. Other allegations in the suit include misrepresentation, constructive fraud, unjust enrichment and imposition of a constructive trust.
This is not Radko’s first day in court: In 2003, he and Starad became involved in a legal wrangle with home shopping network QVC, in which the two accused each other of breach of contact and fraud, among other charges. The dispute was eventually settled with the participation of Rauch, which had acquired Starad in the meantime. Rauch agreed to pay QVC $1,350,000 and accept the return of about $820,000 in merchandise.
