The board of Bloom Farms was sued Friday in Delaware by one of its board members. The board member, Jeff A. Menashe, who got a seat on the board of American General Resources LLC (AGR), which operates Bloom Farms, claims AGR is refusing to let independent auditors look into allegations that it doctored its books to court a seven-figure investment while its CFO ran a solar energy Ponzi scheme.
The suit accuses the other AGR board members of soliciting Menashe's investment with financials that significantly inflated its past performance and future prospects. They also allegedly concealed the role of then CFO Ronald J. Roach in the $1 billion scam to which he later plead guilty.
Just a month after, he invested, AGR claimed insolvency according to the complaint. Menashe was "unsettled" by the Roach situation and demanded, unsuccessfully, a forensic accounting to audit "questionable financials dreamed up by a felonious CFO".
Adding insult to injury, Menashe later learned that the AGR board had initiated another financing round without engaging earlier investors in any discussion of crucial matters like liquidation preferences, according to the complaint. Menashe got a seat on the board of AGR after investing $5M into the venture last year through an investment vehicle he manages, DG BF LLC.
"Combined with the initial deception that caused DG BF to invest $5M into AGR, its cavalier form of corporate governance has caused plaintiff to fear that its investment is unsafe."- Jeff A. Menashe
A Bloom Farms spokesman called the allegations "unfounded" and said the company would defend itself vigorously against them.