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Star Tribune (Minneapolis, MN)
January 19, 2013 Saturday
METRO EDITION
Suit against Cafesjian has hint of scandal
by DAN BROWNING; STAFF WRITER, STAR TRIBUNE (Mpls.-St. Paul)
HIGHLIGHT: Former aide threatens to tell family secrets of ex-West exec.
A former aide to retired West Publishing Co. Enhanced Coverage
LinkingWest Publishing Co. -Search using:News, Most Recent 60
DaysCompany ProfileCompany Dossierexecutive Gerard Cafesjian is
raising troubling questions in a federal lawsuit that could expose
embarrassing family secrets and worse about the wealthy 87-year-old.
John J. Waters Jr., 56, of Eden Prairie, sued Cafesjian in March
seeking $5 million for what he called "deferred compensation."
But Cafesjian, who splits his time between Roseville and Naples, Fla.,
countersued and says in court filings that he doesn't owe Waters a
dime. He said that his longtime former employee embezzled more than $3
million from him over at least a decade, and that he's now trying to
"extort his way out of this by threatening scandalous revelations."
Cafesjian, a patron of the arts and Armenian causes, is the primary
benefactor of the historic State Fair carousel that now bears his name
in St. Paul's Como Park.
Waters, who is acting as his own attorney, could not be reached for comment.
The latest dustup in the lawsuit pertains to Waters' plans to depose
Cafesjian's wife, Cleo. His prospective list of questions appears
intended to reveal infidelities by Cafesjian, potentially embarrassing
things about the Cafesjian children and a granddaughter, and Gerard
Cafesjian's use of friends' private jets, including one belonging to
Dwight Opperman, the former CEO of West Publishing who runs a venture
capital firm in Minneapolis.
Some questions appear intended to raise concerns about defections by
some business associates, about Cafesjian's cash purchases and about
his tax reporting.
"I've prosecuted a number of embezzlement cases. They always involve a
shocking breach of trust. But I've never encountered an embezzler who
turns around and sues his victim and then threatens to expose personal
secrets about the victim," said Andrew Luger, a former federal
prosecutor whom Cafesjian hired to find his missing money.
"It is an outrage, and Mr. Cafesjian won't stand for it," he said.
Cafesjian tried to quash his wife's deposition.
"Mrs. Cafesjian is 87 years old and in failing health. She has
dementia, hearing loss, cognition, cardiac issues, spinal compression,
collapsed vertebra and exhaustion," he said in an affidavit. "She
simply cannot endure any more pain."
Magistrate Judge Leo Brisbois said Waters could submit questions to
her in writing.
U.S. District Judge Richard Kyle is considering a motion by Cafesjian
to dismiss the case.
Waters started working for Cafesjian in sales and marketing at West in
1994. He says Cafesjian reaped about $300 million from his shares in
West when Thomson Corp., Enhanced Coverage LinkingThomson Corp.,
-Search using:News, Most Recent 60 DaysCompany ProfileCompany
Dossiernow Thomson Reuters, bought the company in 1996. Waters left
with Cafesjian to manage his investments and philanthropic activities.
His employment contract called for a salary of $84,000 a year, plus up
to $36,000 more in bonuses, at Cafesjian's discretion. It says nothing
about deferred compensation.
But Waters claims Cafesjian modified the terms in an oral agreement
that provided for deferred compensation based on the value of
Cafesjian's holdings. Over the years, Waters has represented Cafesjian
in business deals in Armenia and elsewhere around the world.
Cafesjian says in court filings that after Waters quit in 2009, his
replacement found previously unknown bank accounts and discovered the
alleged embezzlement.
Richard Ostrom, a retired FBI agent who works as a private
investigator, traced the missing cash. He concluded that Waters
embezzled the money, converted some of it to cash and funneled
additional funds to various accounts he controlled or shared with his
wife, his daughter, an Armenian exchange student, and his
then-girlfriend, Cheri Kuhn. Waters divorced his wife and married
Kuhn, who is listed as a co-defendant in the case.
In an interview, Ostrom said, Waters told him that if Cafesjian thinks
he can take any action against him without repercussions, "Mr.
Cafesjian does not realize what he is getting into."
Cafesjian denies any wrongdoing.
January 19, 2013 Saturday
METRO EDITION
Suit against Cafesjian has hint of scandal
by DAN BROWNING; STAFF WRITER, STAR TRIBUNE (Mpls.-St. Paul)
HIGHLIGHT: Former aide threatens to tell family secrets of ex-West exec.
A former aide to retired West Publishing Co. Enhanced Coverage
LinkingWest Publishing Co. -Search using:News, Most Recent 60
DaysCompany ProfileCompany Dossierexecutive Gerard Cafesjian is
raising troubling questions in a federal lawsuit that could expose
embarrassing family secrets and worse about the wealthy 87-year-old.
John J. Waters Jr., 56, of Eden Prairie, sued Cafesjian in March
seeking $5 million for what he called "deferred compensation."
But Cafesjian, who splits his time between Roseville and Naples, Fla.,
countersued and says in court filings that he doesn't owe Waters a
dime. He said that his longtime former employee embezzled more than $3
million from him over at least a decade, and that he's now trying to
"extort his way out of this by threatening scandalous revelations."
Cafesjian, a patron of the arts and Armenian causes, is the primary
benefactor of the historic State Fair carousel that now bears his name
in St. Paul's Como Park.
Waters, who is acting as his own attorney, could not be reached for comment.
The latest dustup in the lawsuit pertains to Waters' plans to depose
Cafesjian's wife, Cleo. His prospective list of questions appears
intended to reveal infidelities by Cafesjian, potentially embarrassing
things about the Cafesjian children and a granddaughter, and Gerard
Cafesjian's use of friends' private jets, including one belonging to
Dwight Opperman, the former CEO of West Publishing who runs a venture
capital firm in Minneapolis.
Some questions appear intended to raise concerns about defections by
some business associates, about Cafesjian's cash purchases and about
his tax reporting.
"I've prosecuted a number of embezzlement cases. They always involve a
shocking breach of trust. But I've never encountered an embezzler who
turns around and sues his victim and then threatens to expose personal
secrets about the victim," said Andrew Luger, a former federal
prosecutor whom Cafesjian hired to find his missing money.
"It is an outrage, and Mr. Cafesjian won't stand for it," he said.
Cafesjian tried to quash his wife's deposition.
"Mrs. Cafesjian is 87 years old and in failing health. She has
dementia, hearing loss, cognition, cardiac issues, spinal compression,
collapsed vertebra and exhaustion," he said in an affidavit. "She
simply cannot endure any more pain."
Magistrate Judge Leo Brisbois said Waters could submit questions to
her in writing.
U.S. District Judge Richard Kyle is considering a motion by Cafesjian
to dismiss the case.
Waters started working for Cafesjian in sales and marketing at West in
1994. He says Cafesjian reaped about $300 million from his shares in
West when Thomson Corp., Enhanced Coverage LinkingThomson Corp.,
-Search using:News, Most Recent 60 DaysCompany ProfileCompany
Dossiernow Thomson Reuters, bought the company in 1996. Waters left
with Cafesjian to manage his investments and philanthropic activities.
His employment contract called for a salary of $84,000 a year, plus up
to $36,000 more in bonuses, at Cafesjian's discretion. It says nothing
about deferred compensation.
But Waters claims Cafesjian modified the terms in an oral agreement
that provided for deferred compensation based on the value of
Cafesjian's holdings. Over the years, Waters has represented Cafesjian
in business deals in Armenia and elsewhere around the world.
Cafesjian says in court filings that after Waters quit in 2009, his
replacement found previously unknown bank accounts and discovered the
alleged embezzlement.
Richard Ostrom, a retired FBI agent who works as a private
investigator, traced the missing cash. He concluded that Waters
embezzled the money, converted some of it to cash and funneled
additional funds to various accounts he controlled or shared with his
wife, his daughter, an Armenian exchange student, and his
then-girlfriend, Cheri Kuhn. Waters divorced his wife and married
Kuhn, who is listed as a co-defendant in the case.
In an interview, Ostrom said, Waters told him that if Cafesjian thinks
he can take any action against him without repercussions, "Mr.
Cafesjian does not realize what he is getting into."
Cafesjian denies any wrongdoing.