Rauch, Radko Attempt Out-of-Court Settlement
By Staff -- Gifts & Decorative Accessories, 7/5/2007 8:18:00 AM
Charlotte, NC — On July 3, Rauch Industries, which is suing its employee Christopher Radko for alleged fraud, breach of contract and more told the court that “the parties are attempting to negotiate a resolution of their dispute.”
In a request for more time to reply to Radko’s motion to dismiss one count of the complaint, Rauch asked the court for a 30-day extension (until August 6) to give the parties more time to negotiate. The count concerns Rauch’s unfair trade practices claims, challenged 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. Radko’s attorney Michael G. Wimer consented to the extension request.
Rauch’s suit, filed in May, alleged fraud, breach of contract and fiduciary duty and unfair trade practices, among other things, and seeks $60 million in compensation.
Rauch bought Starad from Radko in March 2005, then 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 and affiliated companies. As a result, Rauch contends it was overcharged for the 80 percent of the Radko Division’s Christmas ornaments that the supplier 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.
