TCT lawsuit continues in Cody court

CODY — District Court Judge Norman E. Young, from the Ninth Judicial District, heard continued arguments in the case Campbell versus Tri-County Telephone Association in Cody on Monday, primarily concerned with a motion for Partial Summary Judgement filed on behalf of the plaintiff.

The lawsuit, filed in December 2016 by a former board member of TCT, claims that the original, 2014 sale of the telecommunications company was undervalued and defrauded approximately 825 members of the Tri-County Telephone Cooperative.

BACKGROUND

The suit, filed by attorneys Robert DiLorenzo of Emblem and Drake D. Hill of Cheyenne on behalf of former board member Joe Campbell and his wife Barbara, of Hamilton Dome, alleges fraud and violation of Wyoming statute concerning the sale or disposition of assets of a cooperative utility, and also alleges civil conspiracy to defraud and breach of fiduciary duties.

The suit names TCT CEO Chris Davidson, CFO Steve Harper, former board members Dalin Winters, Clifford Alexander, J.O. Sutherland, Daniel Greet and John K. Johnson as defendants. Also included is purchaser Neil Schlenker of Meteetse.

The suit alleges that TCT held hard assets of over $90 million when TCT was sold for $51 million in 2014, less $12 million to retire debt and $10 million held back for “unseen liabilities”, leaving $29 million paid to Tri-County Telephone cooperative members.

According to the complaint, the “total transaction was not $51 million” and therefore the owners were “bilked out of tens of millions of dollars of value that they owned” in TCT.

MONDAY HEARING

On Monday, Hill argued that the sale of TCT violated Wyoming Statute 17-20-1106, which states that for a non-profit entity to convert to a for-profit corporation, “the corporation is not a cooperative utility pursuant to the Wyoming Cooperative Utilities Act” and that the transaction was illegal. Hill further argued that all assets of TCT should have been sold off before purchase, and the company reformed.

Hill also requested that the court overturn the sale of the telecommunications company, and that the court appoint an interim board of directors, with a standing board to be elected as quickly as possible. Hill also recommended the return of all pre-takeover assets, including Verizon, Best of the West, Eleutian and all TCT stock.

Representing the defense team, Robert Jarosh countered that 12 professional corporation attorneys were involved in the sale of TCT, and surely they couldn’t be compared to “a single disgruntled former employee and his lawyers” when it came to Wyoming laws involving corporations.

If that was the case, argued Jarosh “then the court must assume the 12 councilors for the defendant were complicit in a conspiracy.”

Jarosh argued that two previous cooperatives, Shoshone River Power and Garland Light and Power, had become for-profit corporations, and that, according to Hill, TCT would have to have continued forever, or else have a “fire sale” of all services.

Furthermore, Jarosh claimed that Joe Campbell had told purchaser Neil Schlenker that he would vote for the sale if members received an additional $5 million, during a private phone call. Jarosh also pointed out that Campbell never filed an objection to the sale, as per TCT bylaws.

In his counter argument, Hill reinforced that Statute 1807 forbids non-profit to profit status, and when asked by Judge Young if that meant TCT would have to continue forever as a non-profit, Hill replied that not if the company were dissolved and all assets liquidated first.

Judge Young suspended the hour-long hearing for recess, and noted to the 85-plus people in attendance that he would reach a decision soon in the matter of the Summary Judgement.

Previously, Judge Young dismissed Schlenker’s business entity, Big Horn Telecommunications, from the case, while all the remaining defendants will be named in the class action lawsuit on behalf of the class including an estimated 825 original owners of TCT.