Former Buchanan business partner files suit

By | 03.26.12 | 12:37 pm

Rep. Vern Buchanan, R-Sarasota, addresses the audience at a Bradenton town hall event (Pic via buchanan.house.gov)

Sam Kazran, a former business partner of Rep. Vern Buchanan, R-Sarasota, is filing suit against the lawmaker, alleging the congressman defrauded him and abused the offices of the court to silence Kazran “regarding numerous election laws which were knowingly violated by Buchanan during his run for public office.”

Kazran and Buchanan became business partners in 2004, as co-owners of Hyundai of North Jacksonville. Buchanan had a majority share ownership of that dealership (51 percent) while Kazran was the minority owner (49 percent). The two eventually grew their partnership until they co-owned four automobile dealerships.

But when Buchanan decided to run for Congress, the relationship grew strained. According to a sworn deposition given by Kazran to the Federal Election Commission, Buchanan sought help from his employees to raise money for his campaign and there was an “immense amount of pressure” to donate.

Despite the allegations, it was Kazran who was eventually fined for reimbursing dealership employees who gave to Buchanan’s 2006 and 20008 congressional campaigns. Kazran freely admits that he was aware of the reimbursements, but says he had no idea they were illegal. Buchanan himself was never charged with any wrongdoing by the FEC, despite the fact that the Commission doubted the congressman’s credibility.

Several other investigations into Buchanan have been opened since the close of the FEC’s review. Both the Department of Justice and the Office of Congressional Ethics have opened investigations into the lawmaker. The Office of Congressional Ethics has referred two of those investigations to the House ethics committee.

Kazran’s complaint, which was filed on Friday, alleges that, due to Buchanan’s wrongdoings, Kazran “lost his entire business and has suffered damages in excess of $40,000,000.”

Kazran further alleges that Buchanan transferred funds from Gwinnett (the company the two men co-owned) to use for personal expenses, like private jet travel, rather than business expenses. 1099 Management Company, another defendant in Kazran’s lawsuit, is owned and controlled by Buchanan. According to the suit, 1099 “is a mere instrumentality of Buchanan, and serves as his alter-ego to evade, defraud and frustrate creditors including [Kazran.]”

From the suit:

Kazran and Gwinnett bring this suit in order to obtain renumeration for the manifold wrongs perpetrated upon them by Buchanan and 1099. At the same time that Kazran was trusting Buchanan as a business partner and friend, Buchanan was violating that trust by (I) defrauding Kazran to provide him with an ownership interest in Gwinnett and then failing to properly capitalize Gwinnett; (II) siphoning off money to 1099 and defrauding Kazran to try and purchase back Buchanan’s ill-gotten ownership interest in Gwinnett; and, (III) abusing the good offices of this Court to silence Kazran regarding numerous election laws which were knowingly violated by Buchanan during his run for public office. As a result of this gross misconduct, Kazran lost his entire business and has suffered damages in excess of $40,000,000.

According to the complaint, Buchanan sought an $825,000 loan from Chrysler Financial to fund a portion of Gwinnett’s operating expenses. One of the conditions of that loan was that Buchanan would be required to deposit $825,000 of non-borrowed funds into Gwinnett’s account, as working capital. Kazran’s suit claims that Buchanan did, in fact, deposit $825,000 into Gwinnett’s account, but misrepresented “that he did not borrow said funds.” “The truth was,” claims the suit, “that he borrowed said funds from M & I Bank and kept the loan ‘off the books’ of Gwinnett in breach of his fiduciary duties to Gwinnett and Kazran. Worse still, as soon as chrysler had confirmed that Buchanan had deposited the $825,000.00, Buchanan caused the funds along with others to be withdrawn. Buchanan kept the money and employed it for other private or business uses unrelated to Gwinnett.”

Kazran’s suit goes on to claim that Buchanan fraudulently withdrew hundreds of thousands of dollars from Gwinnett, without ever informing Kazran.

“Not only did Buchanan withdraw these funds from Gwinnett, but the payments for loan he obtained to deposit the $825,000.00 were made with funds from Buchanan obtained from Gwinnett,” reads the suit. “Moreover, Kazran later discovered that all the funds which Buchanan obtained from this loan, in excess of the $825,000.00, were not even provided to Gwinnett. Therefore, Gwinnett was paying back a loan, with interest, for funds which were not provided to Gwinnett and should have been provided by Buchanan personally.”

Kazran alleges that, during his tenure with Gwinnett, Buchanan “removed funds from the operating account in numerous ways, including by way of random wire transfers for hundreds of thousands of dollars, as well as miscellaneous fees which were either unrelated to any service performed to the benefit of Gwinnett or for services performed by Buchanan’s own companies for over-market prices, or both.”

According to the suit, while Kazran struggled to operate Gwinnett’s “grossly under-capitalized dealership, Buchanan pursued his political ambitions full-time.” Kazran further alleges that Buchanan “attempted to add expenses to Gwinnett for use of his private jet while he traveled to pursue that political career,” even though those expenses did not benefit Gwinnett in “any cognizable way.”

For his part, Buchanan has repeatedly denied the allegations, choosing to paint Kazran as a disgruntled ex-employee who can’t be trusted. Buchanan has filed his own suits against Kazran, in more than one court. His first suit, filed in Jacksonville, was dismissed. He then filed portions of the same suit in Sarasota and, later filed suit against Kazran in Hillsborough County (regarding $624,061 that Buchanan said he was owed by Kazran.)

In the suit filed Friday, Kazran alleges that Buchanan’s true intention in filing those suits had little to do with business, and more to do with politics: “Buchanan’s true intention in filing this lawsuit was to harass Kazran and obtain leverage over him with respect to an ongoing investigation of Buchanan by the Federal Election Commission.”

View the full complaint here:

Follow Virginia Chamlee on Twitter


Comments

Switch to our mobile site