Six former executives of the defunct One Call Communications are battling over ownership of a company they later founded that provides services to silent auctions.
At stake is the survival of Qtego, a northwest-side firm that develops telecommunications technology. Its products are used for placing phone bids during auctions and for marketing and alternative bill payment.
In a suit filed last month in Marion Superior Court, four men who say they were founding partners of Qtego allege two other partners—Joseph Pence and Brad Benge—locked them out of Qtego’s offices “and severed all ties with them.”
Pence was former chief executive officer of One Call, a Carmel firm that collapsed in 2006 after earning the ire of regulators in several states for allegedly placing bogus charges on phone bills and then harassing consumers to pay. He remains the target of litigation by Pittsburgh-based PNC Bank, which alleged One Call left the bank on the hook for $19 million it lent to the firm.
Now, four of Pence’s former One Call executives who insist they’re equal partners in Qtego demand that Qtego be dissolved and they receive their share of the assets. They also seek triple damages from Pence and Benge for taking “unauthorized control” of Qtego.
“Due to Pence’s and Benge’s breaches, plaintiffs are entitled to an accounting of all of the joint venture’s assets and liabilities, to the dissolution of the joint venture and distribution of its assets,” states the lawsuit by Graham Cohen, Scott Hall, Daniel Rohn and Robert Treash.
Neither Pence nor Benge returned phone calls from IBJ to Qtego’s offices at 5636 W. 74th St.
The suit claims that all six former One Call executives were equal partners in Qtego, which they formed five years ago. All six received an equal distribution of profits, the suit claims.
The four plaintiffs contend that Pence and Benge lacked “the depth of experience and contacts” that they had.
Apparently the relationship began unraveling last summer. Then, according to the suit, the six decided to explore venture capital or other funding to finance Qtego’s growth.
According to the suit, several potential investors surfaced but Pence and Benge refused to continue discussions, “apparently for fear of losing their own jobs.”
Last fall, the suit contends, Pence and Benge began talks with two businessmen listed as Ethan and Kyle Jackson. The four other partners were not in favor of the Jacksons’ proposal to obtain an 80 percent ownership share in exchange for a $250,000 repayable line of credit, according to the suit.
The offer also contained a two-year non-compete requirement “that would prevent their employment in the field in which they had each worked for decades.”
Pence and Benge would be guaranteed employment, however, according to the lawsuit.
Cohen, Hall, Rohn and Treash allege that in November, Pence and Benge gave them a take-it-or-leave-it offer and a deadline of Nov. 18 to agree to the Jackson deal.
The four allege the deal with the Jacksons was not in the best interests of Qtego or for them but rather for the self interests of Pence and Benge “in light of their own lack of customer contacts and lack of employability.”
The suit also cited “Pence’s serious ongoing legal issues involving allegations of business fraud prior to forming Qtego that resulted in tens of millions of dollars in damages.”
That’s an apparent reference to One Call.
An attorney for the four plaintiffs, Eric Pavlack of Indianapolis, declined to elaborate on the complaint.
It’s unclear how many employees Qtego has or its annual sales.
According to the company’s website, clients over the years have included the Indianapolis Indians, M&I Bank and Training Inc.
Such ownership disputes among partnerships are not uncommon, said Donald Kuratko, a professor of entrepreneurship at Indiana University.
“Because the law does not require the filing of official articles of partnership, as it does for articles of incorporation, many entrepreneurs start out their partnerships very informally,” he said.
But articles of partnership are “hugely beneficial down the road when everyone’s memory seems to fade,” Kuratko said, adding that in cases where there are no articles of partnership, courts often assume an even split among partners.
The Qtego suit alleges breach of partnership agreement, conversion, breach of joint venture and unjust enrichment.
Pence is currently defending a suit PNC brought against him and three other former One Call executives in 2008. PNC alleges the executives misrepresented and artificially inflated One Call parent OCMC Inc.’s assets to induce the bank to lend it money.
Pence remains the one executive PNC is pursuing in that suit. A trial is scheduled for June 11 in U.S. District Court for the Southern District of Indiana.
It was one of several lawsuits stemming from One Call’s collapse that also involved Benge. He settled with a receiver appointed in the One Call case—Pittsburgh-based Meridian Group, according to court records.
Margaret Good, principal of Meridian, said the firm is still involved in litigation but “I am not at liberty to comment.”
Among One Call’s services was a so-called “fat finger business” that targeted consumers who misdialed well-known services such as 1-800-COLLECT.
In 2002 the Federal Communications Commission proposed a $5.1 million penalty for One Call’s failure to identify itself to consumers who misdialed the number of the collect call service by AT&T.
One Call ultimately paid only $500,000 to the FCC. But the company was pursued by utility regulators in other states, including Iowa and Missouri.•