Hoffman’s Business Savvy Is Tested

Ventura County supervisorial candidate Randy Hoffman makes a point of playing up his business credentials at every stop on the campaign trail.

He tells how he built an unknown company with five employees into a satellite technology powerhouse with a payroll of 500. And he promises to use that business experience to whip the county’s budget into shape.

What he doesn’t mention, Hoffman’s critics say, is that one of his more recent business ventures is teetering near financial collapse. Or that a lawsuit filed Feb. 5 contends the millionaire businessman and his company, Outdoor Marketplace, owe $171,000 in back rent on Thousand Oaks office space.

Outdoor Marketplace, which Hoffman helped start and ran until recently, abruptly closed its Web site last month and stopped paying suppliers.

The lawsuit filed in Ventura County Superior Court alleges the company was two years behind in rent when it vacated the premises on Jan. 7.

Salvage Plan Is in Place, Hoffman Says

Although the candidate insists a salvage plan is in place, critics say the firm’s problems show Hoffman is not the capitalist wunderkind he makes himself out to be--and that he can’t be trusted to tell voters the truth.

Debbie Gregory, who owns a small advertising agency in Thousand Oaks, said Hoffman should pledge to repay every creditor the company owes.

And he should be more up front in his campaign speeches and literature concerning the Internet company’s debts, said Gregory, who is supporting Hoffman’s rival, Thousand Oaks City Councilwoman Linda Parks, in the March 5 primary.

“When you have a candidate who says he has the business acumen to run the county, the public has a right to know what’s really going on,” Gregory said.

Hoffman dismisses the criticism as naive.

Getting a new company off the ground is always risky, Hoffman said. He said this is especially true for high-flying Internet start-ups.

“If you’re going to play in the world of start-ups and venture capital, you’re going to see these things happen,” Hoffman said. “My opponent has decided to stir this up 14 days before the election so she can generate some negative headlines.”

Outdoor Marketplace sold outdoor recreation equipment through a Web site called Beoutdoors.com until last month, Hoffman said.

Sales at the company, which was created three years ago, began foundering in late 2000 and took another dive after the Sept. 11 terrorist attacks, he said.

By January, a decision had been made to shut down the site and start looking for other partners, Hoffman said.

Role in Company’s Operation Diminishes

Although he is listed on incorporation papers as the firm’s president, Hoffman said he has not been involved in its daily operations for four or five months.

He said he owns less than 5% of the firm’s stock and that three investors who hold the majority have taken over decision-making.

He declined to identify them, calling the information private. But he said shareholders recently struck an agreement with Gear-Out, another Internet company that sells outdoor goods, to redirect Internet users to its site and share any revenue generated.

That money will be used to pay off creditors, he said. “It hasn’t failed yet. It’s struggling,” he said. “But so do seven out of 10 start-ups.”

The lawsuit seeking back rent is a “legitimate dispute” the courts will sort through, Hoffman said. He maintains he is individually named in the suit only because his candidacy has made him a high-profile target.

“When you are in the venture capital world, you set up corporations to make sure you are not exposing individuals to liability. That’s just standard practice,” he said. “What they are doing is attempting to embarrass me and coerce me into somehow creating a settlement because I am running for office.”

The company’s problems may be enough to give Parks and her supporters a wedge with which to attack Hoffman’s business credentials in the final days of the 2nd District race.

Parks so far has declined to weigh in on the problems at Outdoor Marketplace.

Taking Full Responsibility

But others say Hoffman should step to the plate and take full responsibility for the company’s woes.

Cheryl Barrickman, a credit manager at an Artesia fishing equipment manufacturing firm, said her company is owed money by Beoutdoors.com. She declined to say how much.

“They didn’t leave us in good standing,” Barrickman said. “And whether you have 5% or 80% [share of stock], you should do the right thing.”

Hoffman counters that the Outdoor Marketplace venture is just one of about a dozen he has been associated with since he sold his stake in Magellan, the technology company he co-founded in 1987.

Magellan, purchased by Thales Navigation, produces satellite tracking equipment used by motorists, sailors, hikers and law enforcement and was posting $100 million in annual sales when Hoffman sold his stake in 1997.

Hoffman said he brings investors together and offers help in getting companies off the ground. He said sometimes it pays off and sometimes it doesn’t.

Successful ventures include Escend Technologies, a software company based in Silicon Valley, and Space Data Corp., a technology firm in Arizona, he said.

“To attack me for participating in helping entrepreneurs reach their dreams is outrageous,” he said. “Investors know about the risk.”