Sons sue Duxbury beer baron Jerry Sheehan, declare he tapped firm money for personal use

In new a long time, Jerry has been at odds with the two siblings most deeply included in the small business, Tim, 62, and John, 59, more than his control of Sheehan Household Cos.’ funds. A several days just before Xmas, the brothers took the struggle public in Suffolk Outstanding Court docket, with a lawsuit alleging money misconduct by their father.

The grievance, which runs 92 internet pages, lays out two lengthy-simmering grievances: Jerry shifted cash close to Sheehan entities to “level the stacks” among the the eight siblings — “redistributing wealth” to himself, his wife, and other siblings who weren’t as concerned in the enterprise as Tim and John. By “effectively misappropriating” firm funds, the lawsuit suggests, Jerry was equipped to pay out himself and Maureen inflated salaries, make tens of tens of millions of bucks in personalized purchases of art, antiques, and other goods, and donate millions in their names to their beloved charities.

Tim and John say in the submitting that they tried to work points out with Jerry for quite a few a long time. While mediation was pending in 2018, Tim was suspended from his most modern family members post, functioning the company’s flagship distributorship on the South Shore, amid a dispute more than when he transformed his legal residency to Florida, a transfer Jerry thought could have threatened the company’s South Shore offer with Anheuser-Busch, in accordance to the lawsuit. He was fired the up coming 12 months, the grievance claims. John continues to be with the organization as a manager of its Wisconsin wholesaling unit.

“After a long time of concerted and superior-faith initiatives to take care of this relatives enterprise dispute, Plaintiffs are forced to carry this motion as a past vacation resort to put a cease to the unlawful behavior of the family patriarch . . . who is abusing his fiduciary powers over organizations owned by his young children,” according to the grievance.

Ouch.

The lawsuit does not specify damages. But the legal filing alleges Jerry was dependable for extra than $80 million in “fabricated ‘management fees’ unsupported by formalized agreements and documented only through a just one-line bill, as well as hundreds of thousands of dollars in fascination on intercompany financial loans.”

When Jerry’s actions are the concentration of the promises, Maureen, 88, is involved as a defendant simply because of her position as a trustee. In other text, she, like Jerry, experienced a fiduciary responsibility to defend the fascination of all the company’s proprietors.

Also named as defendants are Margaret Sheehan, 64, the oldest sibling and a firm director, and Charles E. Clapp III, a trustee of trusts recognized for Margaret and her sisters Anne Landers and Susan Sheehan. The lawsuit was introduced by Tim, along with George Cushing, a trustee of trusts established for Tim and John.

The brothers, by means of their spokesman, Casey Sherman of Regan Communications, declined a request for an interview. The similar goes for Jerry, but a statement from his spokesman, Peter Mancusi of Weber Shandwick, didn’t pull any parental punches.

“Timothy’s and John’s employment and other advantages have furnished them with tens of tens of millions additional than the quantities gained by their siblings, and now each have internet truly worth perfectly in excess of a hundred million dollars thanks to their father’s largesse,” the statement says.

“Despite all that they have been provided, and all they carry on to choose from the enterprise, the sons want a lot more, at the cost of their siblings, corporation workforce (whose positive aspects they see as extremely generous) and charitable results in the company supports. In an attempt to get it, they have filed this sick-conceived and inaccurate lawsuit. That they did so just times in advance of Christmas and even provided their possess mom as a defendant reveals just how misguided their steps are.”

Ouch.

The Sheehans, via Maureen’s father, Domero Cortelli, received into the beer match all through the Despair, providing Budweiser in Southeastern Massachusetts, in accordance to a organization background on its site. (Domero’s father, Luigi, who emigrated from Italy in 1898, started off as a grocer. He called himself Louis Knife in his new country cortello, an alternate spelling of the spouse and children name, means knife in Italian.)

Jerry joined L. Knife & Son in 1956 as a route salesman. When Domero, who went by Tim Knife, died in 1963, Jerry took over the Kingston organization. He’s remained at the leading, as CEO or chairman, ever given that.

Currently, the rebranded Sheehan Spouse and children Cos. is a collection of 19 regional beer distributors in 13 states, plus an importing company and a craft spirits division. Even though it is a single of the greatest distributors of Bud and other Anheuser-Busch labels, the business went massive into craft and overseas beers, stocking every thing from Abita Turbodog to Zundert 8 Trappist Ale.

In accordance to the lawsuit, Jerry’s early growth ambitions have been hampered by Anheuser-Busch guidelines that produced it rough for a distributor in one particular state to open up in another. Overly simplified, the supervisor of a Bud franchise had to are living in the location and individual a stake in the procedure.

The grievance says that to stimulate siblings to relocate outside the house of Massachusetts, the spouse and children attained what they termed the 60/40 arrangement. The arrangement gave “active siblings” — outlined as a full-time staff ready to relocate and handle new distributorships — the prospect to invest in a merged 60 per cent of any out-of-condition distributor the spouse and children obtained, with the remaining 40 p.c accessible in equal shares to all eight kids.

Mancusi, the spokesman for Jerry, said there was no this sort of formal arrangement. Instead, he claimed, “there was a one particular-time allocation of fairness to [Tim and John] in various of the 19 distribution firms that diluted their siblings’ shares. The brothers however hold that greater fairness.”

In accordance to the court submitting, only Tim, John, and a 3rd brother, Chris, were being prepared to uproot their families and devote in and take care of out-of-condition distributorships, which includes in New York Town, upstate New York, and Wisconsin. Chris, 54, did not join the lawsuit.

In the lawsuit, Tim and John assert Jerry siphoned off company funds, in some scenarios at the price of all 8 siblings, and in other circumstances with a disproportionately unfair influence on the two brothers.

Jerry’s payment — which he established “unilaterally and arbitrarily” — totaled far more than $45 million from 2015 to 2019, according to the criticism, much out of line with peers in the beverage marketplace. Maureen took property extra than $400,000 a 12 months from 2011 to 2017, even while she “did not offer any expert services” to the company for the duration of that period, the submitting suggests.

The brothers claim the mother and father used company funds to purchase art and antiques, at just one place valued at $30 million, as very well as furniture, vintage cars, jewelry, clothes, and authentic estate. Mancusi said the purchases were investments produced on behalf of the business.

In accordance to the lawsuit, at least $33.5 million of company money was contributed to a charitable-giving account at Fidelity Investments from 2012 by 2018. The account, which is different from the Sheehan Household Basis, then manufactured donations in the parents’ names to Jerry’s “pet charities.”

Jerry also structured administration fees, income movement, and shareholder distributions to fiscally favor L. Knife, an entity owned similarly by all the siblings, about the 60/40 businesses, according to the grievance. The actions enabled Jerry to steer far more cash to nonactive siblings as element of his hard work to “level the stacks,” the criticism says.

The statement issued on behalf of Jerry says: “Throughout his prolonged stewardship, Jerry has usually operated the providers to progress core Sheehan spouse and children values of generosity to workforce and philanthropy. The two sons have a historical past of opposing the two . . . Jerry gets no individual gains from such conclusions [to be fair to all eight children]. His only compensation is a wage established by impartial administrators based on pro input — which he then donates completely to charity. He does not gain personally from any of the company conclusions explained — frequently inaccurately — in the match.”

Then will come the kicker: “Jerry and Maureen Sheehan will defend the litigation their only query is why these two sons are so ungrateful for possessing been provided a lifestyle of nearly unparalleled privilege.”

Ouch.