Mail Boxes Etc. Defrauded Stockholder, Suit Claims
Mail Boxes Etc. fraudulently enticed the daughter of the company’s founder to sell her shares in the San Diego-based firm for less than market value three years before the company’s 1986 public offering, according to a lawsuit filed last month in U.S. District Court here.
The suit alleges that officers of the franchiser of postal and business service centers defrauded St. Louis resident Nancy Tash by “deceitfully inducing (her) to sell” 700,000 shares in the company at 50 cents per share in 1983. The company went public in 1986 at $11 per share and recently has traded at about $15 per share.
Tash’s father, Gerald Aul, founded the company in 1980. He died in August, 1982, according to a family spokesman.
Tash’s suit alleges that she sold the stock back to the company only after being assured that three other selling shareholders, including former Chief Executive Herbert Goffstein, would receive the same deal she received--a maximum of 50 cents per share.
Listed as Payment
The suit alleges that MBE President A. W. DeSio also gave Goffstein a company car, life insurance and the right to acquire two franchises in New York and Los Angeles at discounted prices in addition to a cash payment for his shares.
According to a footnote in MBE’s 1987 annual report, Mail Boxes Etc. gave Goffstein the car, insurance and the franchise rights as payment for consulting work to be completed between 1983 and 1988.
Mail Boxes Etc. officials on Monday had not seen a copy of the suit, but corporate counsel Michael C. Hill said the suit “sounds as if it has no merit.”
The suit alleges that DeSio made “oral threats” that Tash would suffer a “dire economic loss” if she did not sell her shares back to the company. The alleged threats included misleading information that the company “was not succeeding . . . (when) in truth, Mail Boxes Etc. was achieving a high rate of growth, sales were up (and) its financial condition was improving.”
The suit asks that Mail Boxes Etc. be forced to place $10 million in a trust that would benefit Tash, her two brothers and their mother. The sum is based in part on the current market value of the 700,000 shares that Tash sold. The suit also seeks $4 million in compensatory and punitive damages.
Identified by Venture magazine as the nation’s seventh-fastest growing company, Mail Boxes Etc. is the nation’s largest franchiser of neighborhood postal and business centers, with 407 locations. At the end of 1982, MBE had 27 locations, according to Morgan Olmstead Kennedy & Gardner, a Los Angeles-based securities firm.
Mail Boxes Etc.’s net income has increased to $1.5 million in fiscal 1987 from $373,000 in 1984. Sales rose to $8.7 million in fiscal 1987 from $2.1 million in 1984.
