Wilbur Ross is accused in a lawsuit of wrongfully seizing $3.6 million belonging to a former employee, just as the billionaire investor is preparing to face a Senate confirmation hearing as President-elect Donald Trump’s pick for Commerce Secretary.
Joseph Mullin, a former assistant vice president at WL Ross & Co., claims his former boss pocketed private-equity fund profits and interest that rightfully belonged to him, according to a lawsuit filed Dec. 30 in federal court in Manhattan. In May, David Storper, a founding member of the firm, sued claiming Ross wrongfully withheld more than $800,000 from him.
Ross is already facing some headwinds as he readies to face congressional scrutiny as Trump’s pick to lead the U.S. Commerce Department. Senate Democratic leader Chuck Schumer said on Jan. 4 that his party lists Ross among a group of cabinet choices that are “the most troublesome,” and vowed to hold extended hearings on their qualifications.
Ross started his eponymous firm in 2000. He continued to oversee WL Ross after selling it to Invesco Ltd. in 2006. Jeaneen Terrio, an Invesco spokeswoman, declined to comment on the lawsuit. Ross didn’t respond to an e-mailed request for comment.
Ross made his fortune buying distressed companies and flipping them for billions. He made about $2.9 billion selling International Steel Group Inc., a company Ross pieced together from the bankrupt assets of several U.S. steelmakers.
Mullin, who worked as a research analyst as part of a 15-member team at Ross’s investment firm, left the company in 2007 to take a job with a London-based bond fund, according to the lawsuit. He contends he still had claims on some of Ross’s funds under partnership agreements he’d signed.
The former analyst said he later learned that his former colleagues had sent him inaccurate statements about profits and interest he was entitled to from his stake in Ross-controlled funds.
Mullin accused Ross’s officials in the lawsuit of misleading him about the liquidation of Ross CG Associates.
“This notice was a mere sham to conceal Wilbur L. Ross Jr.’s apparent personal misappropriation of Mr. Mullin’s share of the substantial fees and profits,” the former analyst claimed in the lawsuit. He said he was shortchanged at least $1.4 million as a result.
Mullin’s share of at least $1.5 million of the carried interest and profits from Ross Expansion FLP was also wrongfully withheld, he said. The rest of the money he claims he’s owed comes from his interests in other Ross funds and what Mullin said were improperly deducted expenses.
“Regrettably, these facts are part of a pattern of similar conduct directed at a number of former employees of WL Ross/Invesco, including David H. Storper," according to the complaint.
Mullin’s suit wasn’t listed in Ross’s Jan. 3 disclosure filing with the Senate Commerce Committee, which will weigh his nomination at a hearing starting on Jan. 12.
The billionaire acknowledged Storper’s lawsuit on the form. A judge later dropped Ross as a defendant in that case.
The case is Mullin v. WL Ross & Co. LLC, 16-cv-10060, U.S. District Court for the Southern District of New York (Manhattan).
© Copyright 2023 Bloomberg News. All rights reserved.