The June exit of Dumont Aviation Group co-founder and chief executive Kevin Wargo has resulted in an exchange of lawsuits and accusations which now includes Alliance Aviation
Dumont alleges Alliance, launched by a former Dumont executive, is using confidential information and its website is registered to Wargo’s sister
Last year during the National Business Aviation Association’s annual conference in Orlando, former Dumont Aviation Group CEO Kevin Wargo seemed to be guiding the Delaware-based charter operator to a prominent position in the industry.
The company was monthly taking delivery of one to two former NetJets’ Dassault Falcon 2000 large-cabin jets. After refurbishing the cabins and upgrading avionics, Dumont looked poised to be a key player in the heavy jet market with what would be a floating fleet of two dozen of the 10-seaters.
A new partner enters
However, court documents reviewed by Private Jet Card Comparisons show that entry of a third partner months before alongside co-founders Wargo and Daniel Piraino may have been the first signs of a fissure in the relationship.
In June 2018 the third partner – Arkadi Kuhlmann and his Deak Companies, LLC – came in making each equal one-third shareowners. Less than a year later, according to the lawsuit Wargo filed against his former company, he was terminated with no reasons given.
In an amended filing, made yesterday, the former CEO alleges, “This case arises from a slew of egregious misconduct and harassing acts perpetrated against Kevin M. Wargo by Defendants in connection with their attempt to fraudulently push him out of Dumont Aviation Group, Inc.—a company that he founded, grew, and ran.”
From LLC to C-Corporation
With the new partner, there was a decision to move from an LLC to a C-Corporation, however, Wargo contends he was mainly left out of the process.
Although such a transformation (from LLC to C-Corporation) is typically a very involved process requiring considerable consultation with the corporate leadership and shareholders, Mr. Wargo was afforded very little opportunity to participate in the decisionmaking,– Former CEO Kevin Wargo in his lawsuit against Dumont Aviation
“Although such a transformation is typically a very involved process requiring considerable consultation with the corporate leadership and shareholders, Mr. Wargo was afforded very little opportunity to participate in the decisionmaking,” the filing states.
Wargo says he wanted to see the documents in advance of a May meeting, but was instead told he would have to wait. In the Wargo’s lawsuit, it states, “When Mr. Wargo arrived for the May 9 meeting, he was presented with a large stack of legal papers for execution, none of which he had been able to review prior to the meeting.”
It continues Mr. Kuhlmann informed Mr. Wargo that no one was to leave the meeting room until all the documents in the stack had been executed. Wargo says he signed the agreements provisionally requesting several changes and demanding a right to further review. He says he was blindsided to find out the conversion had been executed.
Mr. Kuhlmann informed Mr. Wargo that no one was to leave the meeting room until all the documents in the stack had been executed.Former CEO Wargo in his lawsuit vs. Dumont Aviation Group
He was terminated at a June 11 meeting, which the filing alleges was scheduled the day before to discuss Honeywell engine lease issues. It states, “To this day, no Defendant has offered any valid cause for Mr. Wargo’s termination, even after multiple requests.”
However, in its countersuit, filed two days ago, Dumont provides a litany of reasons for parting ways with its co-founder.
Wargo alleges under his previous employment agreement he could only be removed for cause and disputes any of his actions provided a legitimate reason to terminate him under that contract.
Missing interest payments
The lawsuit also says that on Dec. 18, 2018, Dumont LLC borrowed $2 million via a promissory note from Wargo’s Wargo LLC at an annual interest rate of 5%, however, payments due on March 31, and June 30, 2019, were never made.
The revised filing also alleges after leaving, the company continued to use his American Express business card to buy Google ads and has refused to pay $54,427.08 related to Dumont business expenses. He says in order not to impair his credit rating, he was “forced” to pay off the balance himself.
Wargo also represents the company has refused to make relative business documents available to him.
For its part, Dumont on Aug. 20 filed a complaint in Delaware against Wargo; Christopher Tasca – formerly head of Dumont’s jet card sales arm ProspAir; Alliance Aviation Group, LLC, a new jet card provider he launched; Wing Aviation Group, LLC; Gulfstream Team Jet, LLC; and Encore Plane Parts, LLC. The filing also alleges that Amber Martin, a former Dumont executive is the registered agent of Wing Aviation.
The Dumont suit states “Even though Wargo’s employment with Dumont has ended, Wargo LLC continues to be a shareholder of Dumont. The Wargo Defendants also continue to be subject to a Dumont Shareholders Agreement which prohibits them from directly or indirectly owning, managing, controlling, engaging in, being employed by, acting as a consultant to, maintaining an interest in, and/or providing or arranging financing for the for a competing business.”
“A facade of multiple shell companies”
It alleges, “The Wargo Defendants are attempting to circumvent their restrictive covenants by creating a façade of multiple shell companies and hiding their involvement by installing a sham leadership structure at Alliance, Wing, Gulfstream Team Jet, and Encore in a coordinated effort to siphon off Dumont’s customers in the very same aviation markets in which Dumont operates.”
In a sign that the dispute will get nasty, Dumont states, “Wargo installed Amber Martin who upon information and belief is Wargo’s longtime mistress, as a nominal head at numerous other newfound aviation competitors, while Wargo acts as puppet-master behind the scenes.”
It also alleges, “Wargo’s brazenness did not stop there, as he also employed his sister and nanny in key positions at these competitors. None of these women have any meaningful experience in the aviation industry, however.”
The filing reads, “Having these women operate the competitor enterprises in name only is a futile attempt to conceal Wargo’s influence and involvement, which constitutes a violation of the Shareholders Agreement.”
Having these women operate the competitor enterprises in name only is a futile attempt to conceal Wargo’s influence and involvement, which constitutes a violation of the Shareholders Agreement.Dumont lawsuit against Wargo
Dumont alleges, “Wargo abused his position of authority, placed his personal interests ahead of Dumont’s, used his position to obtain payments and services to which he was not entitled, engaged in behavior that threatened the business strategy of the company, disregarded directives of the Chairman of the Board of Directors, and otherwise breached his obligations to Dumont under the Shareholders Agreement.”
It also calls into question who Martin was working for. While at one time she was listed on Dumont’s website as an executive with the company, it says Wargo was employing her via his Wargo LLC, including charging Dumont for business expenses and allowing her to sign agreements for Dumont.
An engine leasing deal gone wrong
Dumont also alleges that Wargo continued to pursue an engine leasing deal in defiance of the company chairman. The suit says when Kuhlman, the chairman, learned that Wargo had flown to Phoenix with Martin on June 9 to continue negotiating the lease deal, the June 11 meeting was arranged and Wargo was fired.
It also says after termination Wargo changed the credit card on file for a Dropbox account containing confidential Dumont documents. It states after filing a complaint on July 11 the defendants returned over 600,000 documents, but retained possession of the Dropbox account and “wiped the storage on the devices, thereby making it impossible for Dumont to determine what materials were on the devices and whether any of the materials were transferred to other storage devices.”
During that period, Dumont alleges it did not have access to “corporate documents, including operating agreements, aircraft purchase agreements, engine lease agreements, letters of intent, term sheets, analysis of transactions, financial records, general ledger files, and investor and customer lists.”
Jet card competitor
Regarding Tasca and Alliance, Dumont says after he resigned on June 30, Dumont sent him a letter on July 10 reminding him of his confidentiality agreement.
It states Dumont offers “these very same services” as Alliance has been marketing and alleges the web domain, www.flyalliance.us, is registered to Kristen Kiekel, Wargo’s sister and a former employee of Dumont.
The lawsuit alleges Tasca has been soliciting Dumont customers and that he has interfered with its contracts. It alleges he misappropriated confidential information.
Dumont is seeking injunctive relief and compensatory damages, while Wargo is seeking damages to be determined at a trial. He asserts he is not bound by the terms of the new C-Corporation.
Just last week Alliance announced what we believe is an industry-first – the ability turn in your used jet and take jet card hours instead of cash.
Wargo, Piraino, and Tasca each declined to comment when reached by Private Jet Card Comparisons.
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