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.
