SALT LAKE CITY (AP) — A co-founder of exotic juice maker XanGo LLC — one of Utah's most successful brands — has filed a lawsuit claiming his partners are looting the company for exotic vacations and luxury gifts.
The lawsuit also claims XanGo bribed Russian customs officials to allow tax-free imports of its mangosteen-based juice, derived from a tropical fruit with purported curative powers.
Lehi, Utah-based XanGo said Wednesday the claims are without merit and that co-founder and board member Bryan B. Davis was being asked to leave the company before filing his $3 million lawsuit May 16 in federal court in Salt Lake City.
The company brought a lawsuit Monday against Davis in state court, asserting he fumbled obtaining regulatory approval for sales in Europe, among other alleged job lapses.
"Mr. Davis made his intention to sue his partners clear during his separation discussions," company attorney Richard J. Armstrong responded by email. "The result of this threat is the unfounded allegations in Mr. Davis' lawsuit, intended to embarrass his partners."
It isn't the first allegation of looting at XanGo, with the company pointing out Davis was among defendants of the first lawsuit.
In 2007, a group of minority shareholders asserted executives were buying expensive cars and designer suits, among other things, on the company dime.
XanGo ultimately reached a confidential settlement with Angel Investors LLC after accusing the group of being handsomely rewarded many times over for its initial investment.
Now, Davis is accusing top executives of charging the company for luxury watches and jewelry, furniture, electronics, guitars, event tickets, sports equipment, Vespa scooters and country club memberships. They also take expense-paid vacations by private jet, his lawsuit claims.
The lawsuit was filed against XanGo co-founders Aaron Garrity, Gary Hollister, Kent Wood, brothers Gordon and Joseph Morton, and the company's chief financial officer Nate Brown.
XanGo sells a mangosteen-based juice for nearly $40 a bottle through a network of unsalaried sales associates who take a cut of the profits of others they recruit.
The private company has claimed to have enjoyed explosive growth with more than $2 billion in cumulative sales since it got started in 2003. It doesn't have to make financial information public.
"XanGo is known as a category-creator and brought the mangosteen supplement category to the global marketplace," Armstrong said. "While the global financial crisis and changes in the marketplace have certainly challenged business, XanGo continues to grow internationally and expand its market reach."