• 08 Apr 2010 at 5:30 PM

Warren Buffett Hit With Lawsuit by RV Dealer

Warren Buffett take note: Don’t get involved in the RV business. It’s full of wealthy rednecks and sometimes they like stealing cash directly from the office vending machines.

That’s at least what one executive of a Berkshire Hathaway-owned RV company has alleged in a recent lawsuit filed after he was denied the CEO position and fired from the company. The former exec, Brad Mart, said he helped orchestrate the $800 million sale of the RV company, Forest River, in 2005 by simply submitting a two-page summary of the business to the Oracle of Omaha, who “surprisingly” called Mart a few hours later and bought the company shortly after.

“Mart was surprised that Buffett made the decision to purchase the company with virtually no due diligence, including no onsite visit to Forest River,” he said in the complaint.

But the real charges come against former Forest River owner and current CEO Peter Liegl, who Mart accuses of taking cash from factory vending machines and depositing it in his personal bank account. If that wasn’t enough of a crime, Mart also says Liegl keeps Forest River employees on the payroll even though they had retired and required the company to purchase RV parts and supplies from National Supply, a company wholly-owned by Liegl, at inflated prices, “pouring millions of dollars into Liegl’s pockets over a period of years,” according to the complaint.

Mart said he talked to Buffett six times in 2008 about the alleged frauds committed by Liegl, but the Berkshire chairman said through an assistant that, “he just can’t get involved in issues like this at subsidiaries.”

“Mr. Mart did not alert Mr. Buffett to any unethical, fraudulent or illegal activities” at Forest River, a Berkshire Secretary said in an interview with Bloomberg News. “In the course of the investigation, these allegations came to light,” Krutter said of the fraud claims. “My investigation did not identify any fraudulent, unethical or illegal activities.” the secretary said he’s seen “no evidence or indication” that allegations of death threats from Liegl are valid, and that the reasons for Mart’s dismissal aren’t related to his claims.

Read Complaint Against Berrkshire filed by Brad Mart


14 comments (hidden to protect delicate sensibilities)
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Comments (14)

  1. Posted by Andrew | April 8, 2010 at 6:17 PM

    Oh well, if some Republican, or Democrat for that matter, redneck sues Buffett, he can always apply to become an “Apprentice” for Donald Trump!

  2. Posted by Anonymous | April 8, 2010 at 6:24 PM

    This is standard practice at Berkshire Hathaway. Executives of small, fully-owned subsidiaries inflate earnings all to hell while simultaneously employing unimaginative ways to drain assets from the company (typically through related party transactions). As the internal auditor, E&Y is willfully oblivious to anything (including financial statement fraud) that happens at subsidiaries below a few billion in annual sales (as it’s more concerned with the prestige of the client). E&Y absolutely refuses to investigate such issues. For his part, Buffet is totally disinterested in hearing about the unethical or fraudulent activity occurring throughout his company.

    In fact, Buffet’s quote regarding the “newspaper ethics test” couldn’t be more misunderstood. When he implores businessmen to consider how they would feel if their actions were reported on the front page of a newspaper when trying to determine whether such actions are ethical…what he was really driving at was that before partaking in or approving of some shady shit you’d better be damn sure you won’t get caught and let it tarnish the company’s image. Berkshire Hathaway’s stellar reputation is in large part due to an organizational structure that systematically refuses to investigate or even acknowledge what goes on at many of its smallest (and most profitable) companies.

  3. Posted by Anonymous | April 8, 2010 at 6:28 PM

    I don’t know I’d side with WB if he wasn’t balls deep into that Dilly Bar.

  4. Posted by Anonymous | April 8, 2010 at 8:05 PM

    you can’t spell for shit.

  5. Posted by Anonymous | April 8, 2010 at 8:15 PM

    Zack,
    I swear by the power of grayskull that you better not mess the Oracle.

  6. Posted by Anonymous | April 8, 2010 at 8:20 PM

    @2 if you’ve got serious information you’ve got a book deal. otherwise shut it crazyhead

  7. Posted by Anonymous | April 8, 2010 at 8:47 PM

    No sex, didn’t read.

  8. Posted by Guest | April 8, 2010 at 9:26 PM

    “Rednecks,” Zachery? Isn’t that a racist slur?

  9. Posted by Look at the big picture | April 8, 2010 at 11:28 PM

    If you look at the dates (October-December 2008) you will probably realize that Buffet had much bigger things to worry about that petty theft at a subsidiary. In the weeks that followed the fall of Lehman Buffett was surveying deal across the markets that would make or lose billions for Berkshire and he probably just didn’t have time to concern himself with these issues. Imagine being him and trying to decide between figuring out if an RV executive is stealing a few million here or there or if he should invest in Goldman or buy toxic assets off distressed financial firms.

  10. Posted by Anon | April 8, 2010 at 11:30 PM

    who spells their name “Zachery?”

  11. Posted by CoveredLong | April 9, 2010 at 8:10 AM

    @9 – That’s why you hire subordinates who can take care of that kind of isht. Buffett doesn’t need apologists.

  12. Posted by anon | April 9, 2010 at 10:56 AM

    @2 – go back to Going Concern and check your motivations!

  13. Posted by Anonymous | April 9, 2010 at 12:33 PM

    where did zach lift this article from?

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