Chicago Business Litigation Lawyer Blog
If someone is accused of defrauding investors in one city, does that mean that person can’t do business with another company in another city? Especially before the allegations of fraud have been determined by a court of law?
That’s the question James “Woody” Dillard’s attorneys and business partners are asking as investors who were allegedly defrauded by Dillard try to claim potential vendors for Dillard and his business partners should have all their facts in order before signing on the dotted line.
Dillard has recently partnered with Streamline Boats of Hialeah, Florida, which makes semi-custom fishing boats. Although the company is only a couple years old, it has already changed locations several times and is currently looking to sign a lease for warehouse space at the Port of Pensacola. The city of Pensacola has put the lease on hold while they investigate.
Specifically, the city is worried about styrene, a foul-smelling by-product from working with fiberglass, which is a prominent material used to make all kinds of boats these days. Having made strides in reducing their emissions and their impact on the environment, the city is concerned that having a boat manufacturer in their warehouse district will undo much of the work they’ve done towards making and maintaining a more eco-friendly city.
Sanchez, one of the managers of Streamline Boats, claims they use very little styrene in the production of their boats, and that they invest heavily in the warehouse space they use to make sure they don’t stink it up. Essentially, they strive to become ideal tenants.
But two investors who invested in another of Dillard’s business ventures claim emissions should be the least of the city’s concerns when deciding whether to approve the lease.
Clyde Patroni and Kathleen Van Alstine invested a total of $770,000 in South Palafox Group, an investment company of which Dillard is a managing principal. According to a lawsuit (in which Dillard is named a defendant), the two investors were allegedly promised “membership units” in exchange for the funds they invested into the company – funds that were supposed to be repaid after one year.
Not only have Patroni and Van Alstine not seen any return on their investment, but they allege they were misled by Dillard and his business partners into investing in the company. According to the lawsuit, Alexander Cover, one of Dillard’s business partners in South Palafox Group, allegedly claimed he and Dillard had invested a combined total of $1 million in the company, and that Dillard did nothing to dispute this claim when it was made in front of him during a meeting. They later discovered that the claim was false.
The lawsuit further alleges that Dillard signed a personal guarantee to insure Van Alstine’s share of the loan, which was $520,000 – approximately two-thirds of the total loan. According to the lawsuit, Dillard has not upheld his end of the deal and that loan has never been repaid.
Richard Beckish, a lawyer representing South Palafox Group, has claimed that the lawsuit against one company has nothing to do with another company’s application for a lease in another city, but Patroni and Van Alstine say they worry that Dillard is just setting up to defraud investors in another part of Florida. Dillard vigorously denies all of these claims.
Litigating on behalf of businesses and individuals who have been the victims of fraud or who have been maligned, abused, or treated unfairly or unjustly is what we stand for at Lubin Austermuehle. We are vehemently against deception because our firm was founded on honesty, integrity and trust more than 30 years ago. If you’ve been wronged, why not let us stand with you and work toward justice and just compensation? Our fraud flag flies high from Naperville and Oak Park to the North Shore and beyond.
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