The Denver document firm Vinyl Me, Please has ousted its prime executives and sued them for allegedly funneling firm funds to their pricy pet undertaking in RiNo.
Vinyl Me, Please was based in 2012 and has change into a preferred record-of-the-month subscription service within the dozen years since, with 20,000 subscribers in the present day, it mentioned. CEO Cameron Schaefer and Chief Monetary Officer Adam Block led the corporate in recent times.
However the firm’s board fired them, together with Chief Technique Officer Wealthy Kylberg, in March. And on Wednesday, all three have been sued by the corporate they led.
The said trigger for his or her ouster is a brand new 14,000-square-foot vinyl document manufacturing plant at 4201 N. Brighton Blvd. That plant, which began urgent information this yr, has been hyped by nationwide and native media, in addition to Schaefer, Block and Kylberg, since 2022.
“It’s purely as a result of we love Denver,” Schaefer mentioned that yr of the choice to press information in RiNo. “Individuals would possibly snicker at that, however it’s actually true. We undoubtedly had individuals pushing us like, ‘There are cheaper locations you could possibly construct this.’ However that wouldn’t be as enjoyable.”
Behind the closed doorways of Vinyl Me, Please, the plant just isn’t seen as such a enjoyable success.
“Up to now, the urgent plant has not demonstrated the power to press vinyl information in a well timed or skilled method,” in keeping with the corporate’s lawsuit in Denver District Court docket.
In 2020, because the pandemic pinched international provide chains, VMP’s suppliers positioned limits on the variety of vinyl information it might purchase. That’s when Schaefer, Block and Kylberg “seized on the order cap and the concern of potential additional disruptions in VMP’s provide chain as a chance that they might exploit for his or her private profit,” the corporate says now.
The three executives determined to begin a vinyl urgent plant that might provide information to Vinyl Me, Please straight. They got here earlier than VMP’s board with a proposal in late 2021.
In VMP’s recollection, the plan was for the manufacturing unit to be independently owned and independently funded, save for some minor expenditures and VMP workers time. The seven-person board was divided, 4-3, with Schaeffer casting the deciding aye vote, the corporate mentioned.
Vinyl Me, Please accuses Schaefer, Block and Kylberg of violating that plan earlier than it was even authorized, by spending $200,000 in firm funds on gear for the plant in mid-2021. They’d additionally spent lots of of firm hours on the plant by then, VMP alleged.
And when it got here time to rent a supervisor for the plant, it was VMP that paid the “substantial wage, advantages and bonuses” of trade veteran Gary Salstrom, the lawsuit alleges. 5280 journal reported final yr that Salstrom was made an fairness companion in VMP.
“Defendants didn’t open up to the board that that they had directed lots of of 1000’s of {dollars} of VMP cash to pay the wage and bonuses for a VMP worker that labored nearly completely for the urgent plant,” the lawsuit mentioned Schaefer, Block and Kylberg.
Earlier than lengthy, Vinyl Me, Please’s prime executives have been spending a majority of their time on what was alleged to be an impartial aspect undertaking, and convincing different VMP staff to do the identical, in keeping with the corporate. “As a direct results of defendants’ devotion” to the plant, “VMP’s working outcomes declined all through 2023 and into 2024,” it alleged.
In the meantime, outdoors funding for the manufacturing unit fell by way of, so VMP’s executives spent lots of of 1000’s of {dollars} of firm funds on gear for it, “together with a specialised sound system that was not crucial…however was quite an amenity,” VMP mentioned. They allegedly spent lots of of 1000’s of {dollars} on leases too, and hid that from the board.
In March 2022, two years earlier than the manufacturing unit was practical, VMP’s executives signed an settlement that made VMP a buyer of the plant, at an upfront price of $1.5 million, the lawsuit alleged. Additionally they despatched out advertising supplies “implying the 2 entities” — VMP and the manufacturing unit — “have been one and the identical, creating confusion amongst prospects,” VMP mentioned.
“When, by late 2023, the urgent plant was nonetheless not in a position to press information or fulfill orders, the board started to research the connection and enterprise dealings between the urgent plant and VMP,” in keeping with the lawsuit. Schaefer, Block and Kylberg “didn’t present a candid or truthful accounting or rationalization to the board,” in order that they have been fired in March.
Vinyl Me, Please is suing the trio of ex-execs for breaching their fiduciary responsibility to the corporate. Its attorneys are Chad Nitta and Shelby Morbach within the Denver workplace of Kutak Rock. The corporate and its attorneys didn’t reply to interview requests this week.
Emails and cellphone calls to the listed numbers of Schaefer and Kylberg weren’t answered or returned this week both. Contact info for Block was not obtainable.
VMP co-founder Matt Fiedler turned interim CEO of the corporate final month, in keeping with his LinkedIn profile, which states he was beforehand CEO from 2012 to 2020.
The corporate’s subscriptions run $46 a month or $435 a yr, in keeping with its web site.
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