By Dan Mitchell, MLM Blog Correspondent
From Desert News:
The Utah Supreme Court recently ruled that a 1 percent stockholder of
XanGo can continue with a lawsuit against the company's founders for
corporate malfeasance.
Angel Investors LLC is one of 20 entities with a small ownership interest in the mangosteen-driven company XanGo, LLC. The "majority owners," which include founders Aaron Garrity, Bryan Davis, Gary Hollister, Gordon Morton, Joseph Morton and Kent Wood, own the remaining 86 percent, according to a Utah Supreme Court ruling.
Angel Investors LLC. filed a lawsuit in 4th District Court against XanGo, alleging the company was loaning money to the majority owners so they could personally acquire minority interests in the company and had refused to allow Angel Investors LLC. access to financial records, according to the ruling.
After that direct lawsuit, Angel Investors filed a derivative lawsuit in June 2007. A derivative lawsuit, or a stockholder's derivative suit, is filed by a shareholder who sues in the name of the company against an entity.
In this case, Angel Investors, on XanGo's behalf, again sued the majority owners for allegedly acting against XanGo's interests.
In that lawsuit, Angel Investors LLC. alleged the majority owners had taken millions of dollars in personal loans from XanGo and purchased minority interests in the company with those loans, thus getting benefits belonging to XanGo and all its shareholders. They also allege the founders paid themselves huge wages and wasted corporate assets, according to the ruling.
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