The telephone co-op was sold to a private corporation controlled by Meeteetse businessman Neil Schlenker for $51 million in late 2014.
The cooperative’s members voted overwhelmingly to support the sale, but Joe Campbell — who was a member of the cooperative’s board at the time — and his wife Barbara are now alleging in a suit that the members “were bilked out (of) tens of millions of dollars of value” through a deceitful and fraudulent conspiracy.
The Campbells are seeking to recoup the lost millions of dollars — plus punitive damages — and to have the telecommunications company’s assets returned to its former owners’ control in a constructive trust. The couple wants to represent the interests of the 800-some former owners of the cooperative and have the suit turned into a class action; a judge will have to rule on that request.
Schlenker and TCT CEO Chris Davidson — two of the defendants in the case — each say the allegations in the complaint are unfounded.
Schlenker said the sale price was fair and the process clean and above board. He dismissed the suit as a “nuisance.”
“While it is a shame that we will have to divert our attention and resources to deal with this lawsuit, we are confident that the courts will find no wrongdoing by any of the named defendants,” he said in an email.
TCT’s owners had been its original members in Otto, Emblem, Burlington, Hyattville, Ten Sleep and the Hamilton Dome areas; the business swelled over the decades to include thousands of customers around the Big Horn Basin, including in Powell and Cody.
The Campbells’ 43-page complaint accuses the other members of TCT’s board, the cooperative’s attorney and Davidson of all having “conspired” to give Schlenker a bargain price. The Campbells allege the cooperative’s leaders made decisions intended to deflate its value and were “manipulating the books.”
“The defendants named in this complaint breached their duty of loyalty, fidelity and good faith, by among other things, deceiving the owners of the company, intentionally violating Wyoming law governing the sale of cooperative utility assets, seeking to disenfranchise the owners of the cooperative, wasting company assets, failing to comply with the terms of the company’s organizational governing agreements, and using fear, intimidation, oppression, and strong-arm tactics to obtain approval of the sale,” says a portion of the complaint, filed on the Campbells’ behalf by attorneys Robert DiLorenzo of Emblem and Drake Hill of Cheyenne.
DiLorenzo told the Northern Wyoming Daily News that the Campbells and others approached him with their allegations last summer.
“They explained it to me and I didn’t quite believe it. I spent six months digging through documents” before filing the suit, DiLorenzo told the Daily News.
The Campbells’ suit alleges the price should have been much higher, asserting that TCT was a roughly $90 million company. It says just the co-op’s cash (nearly $12 million) and stake in local Verizon business ($19 million) were worth more than the $29 million paid out.
That same calculation was put forward last year by a group of concerned members who called themselves the “Save Our Co-Op Committee.” The committee encouraged no votes and argued the return wasn’t large enough.
“It is the same argument,” Davidson said of the new suit. “They (the Save Our Co-Op Committee) were very vocal and public with their argument last time. That helped people make an informed decision, and the members made their decision and now they’re trying to re-live it all.”
Only 42 of the then-cooperative’s 825 members (or about 5 percent) voted against the December 2014 sale, according to the Basin Republican-Rustler. The no votes included the Big Horn County government and the Cowley-based Big Horn School District No. 1, the Republican-Rustler reported.
Some 652 members (or 79 percent) voted in favor of the deal — above the required 66 percent threshold. (The other 16 percent of the members didn’t vote on the proposal, which had the same effect as voting no.)
The Campbells’ complaint says Schlenker previously tried buying the company for $11 million in 2009 and was turned down by TCT’s board.
It suggests the cooperative’s members supported the larger deal in 2014 because they weren’t told the true facts. The Campbells claim Davidson was “very close friends” with Schlenker, worked to quash opposition to the deal (Campbell said he was branded as a “liar”) and rushed through the process so the co-op’s owners wouldn’t have enough time to review the deal.
“As this all plays out, we’ll see that none of this stuff is supported,” Davidson said. “The transaction was aired publicly over a long period of time last year — months — and public meetings and newspaper articles and mailings to all the members.”
The Campbells’ suit also accuses co-op attorney Michael Rosenthal and his firm, Hathaway and Kunz of Cheyenne, of legal malpractice. It says Rosenthal ignored various legal requirements for selling cooperatives and also worked to silence dissenters.
“It looks like he (Joe Campbell) threw everything in there, including the kitchen sink,” Schlenker said of the civil complaint, describing Campbell as “a bitter old man.”
Davidson said the suit is a “smear campaign.”
“Obviously, I supported this transaction before and everything was done properly and I think the members benefited from the sale,” he said.
Davidson noted that members received cash payouts for their shares.
“They were able to receive a big value without losing anything,” he said. “They surrendered a membership, but their services are still in place; the same employees are at the company.”
The payouts varied based on how long each member had been with the co-op and how much business they had (such as multiple phone lines), but many members received between $25,000 and $30,000. The Campbells were due to receive around $28,140 for their share of the $29 million, according to court records.
As part of the sale, Schlenker and his company, Big Horn Telecommunications, agreed to leave prices the same for at least three years, to keep the same local management and staff and to continue co-op’s members’ discounts for at least six years, among other conditions.
The sale included TCT’s investments in Eleutian Technologies and Best of the West, along with its cellular partnership with Verizon Wireless.
Davidson, Schlenker and the other defendants will have 20 days to respond after being formally served with the Campbells’ complaint.