The Herald, Sharon, Pa.

Local News

February 26, 2014

Judge halts some takeover moves

Paramount founder ousted by stockholders

WHEATLAND — The founder of a Wheatland business and three directors of its corporation have filed suit over what they claim was Paul J. Swartz’s illegal ouster from the company.

Swartz, founder of Paramount Games Inc., 30 Mill St., and the other plaintiffs sought and have received a preliminary injunction prohibiting the 16 defendants from taking certain actions on behalf of Paramount.

Mercer County Common Pleas Court Judge Robert G. Yeatts issued the injunction Monday, the day the suit was filed, temporarily preventing the defendants from any action to “assert control” over the company, its contracts with employees or its bank accounts; borrow money; pledge assets; or violate or fail to comply with local or licensing agreements.

The order was contingent upon Swartz posting $10,000 bond with the Mercer County Prothonotary’s Office, which has been done.

Yeatts also set a hearing for Monday to give the defendants a chance to show why the injunction should not remain.

Swartz, of Las Vegas, is joined in the suit by Louis M. Swartz of Hermitage, John M. Gronvall of Boardman, Ohio, and W. Dale Musick of Las Vegas.

The defendants, all company stockholders, are Douglas S. Dohner of Annville, Pa.; Frank T. Taverrite and Brent Hall of Lakeside, Mont.; Scott Anderson of Heath, Texas; William Rose, Robert Lancaster, Marny Blake and Leroy Brorson, of Dallas; Ronald J. and Jeannette M. Russo, trustees of the Jeannette M. Russo Revocable Trust, and John Lindsay, of Boca Raton, Fla.; Richard Love of Great Falls, Mont.; Robert Russo of Delray Beach, Fla.; Anthony Serenita of Elmont, N.Y.; Carol Wagner of Stuart, Fla.; and Michael Watt of Sun City, Ariz.

Swartz said he founded Paramount Games in 1994 and that it makes small games of chance jar tickets for charitable and nonprofit organizations and event tickets for sporting events and tournaments.

He owns 35 percent of stock for the company that has 80 employees, and has been president, chief executive officer and the only member of the company’s board because of the resignations of the other three board members.

In early 2013, “Dohner began maneuvering secretly to take over control of Paramount from Swartz,” the suit said.

A voicemail message left with Dohner, who owns 9 percent of company stock, was not returned.

Dohner and Taverrite secretly circulated a document that purported to increase the number of directors from one to five – assuming the corporation only has one – and elect Brorson, Hall, Dohner, Love and Taverrite to the board.

“The intended effect ... was to remove Swartz as a director without notice, since he was not included in the list of five individuals,” the suit said.

An attempt to reach Taverrite was not successful.

On Jan. 8, stockholders who hold 57 percent of company stock signed the agreement.

“The remaining stockholders were not even provided with a copy of” the document, Swartz said. “Swartz was not given notice of the (document), its execution and purported effect until the evening of Jan. 27.”

The “new” board met and fired Swartz and appointed Dohner as CEO and president and Taverrite as board chairman, actions Swartz said he was informed of in a letter dated Jan. 29.

Swartz said, as sole director, he was the only one who could fill vacancies on the board, and on Feb. 18 he appointed Louis Swartz, Gronvall and Musick.

The Dohner-led management changed the locks on the building to keep Swartz out, and blocked his access to company e-mail, Swartz said.

Dohner has “manipulated” Paramount’s finances by, for example, moving $30,000 into a bank Paramount does not have an account with, Swartz said.

The defendants also are “dissipating corporation assets” and planning to spend millions of dollars for “unnecessary ... equipment,” Swartz said.

The five-count complaint alleges violation of Delaware and Pennsylvania state law – Paramount, like many Pennsylvania companies, is incorporated in Delaware – and breach of contract.

The plaintiffs are asking a judge to nullify the Dohner-led board, institute the Swartz-led board and reinstate Swartz to the positions of president and CEO.

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