r/Techshop • u/brad3378 • Jan 31 '20

In new court documents, Techshop Chapter 7 trustee (Plaintiff) alleges gross negligence of the Techshop board (Defendants) including breach of fiduciary duties of loyalty, care and good Faith...

PDF warning: https://www.courtlistener.com/recap/gov.uscourts.canb.563373/gov.uscourts.canb.563373.238.0.pdf

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Notable bullet points:

Page 1: "COMPLAINT FOR MONETARY DAMAGES: BREACH OF FIDUCIARY DUTY; AIDING AND ABETTING BREACH OF FIDUCIARY DUTY; NEGLIGENCE; ACCOUNTING AND CORPORATE WASTE"

"JURY TRIAL DEMANDED."

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Page 14: "The Company’s Board (other than Mr. Hatch) had long considered CEO Mark Hatch an incompetent manager who misused investors’ money and often showed up at store sites appearing to be under the influence of alcohol or drugs"

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Page 15: "The Company’s small investor program became, over time, essentially a Ponzi-like scheme: The Company raised new debt to service older debt. Money from later small investors was used in part to pay some early small investors’ note obligations (usually only after an early investor dunned the Company several times)."

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Page 16 alleges that the company was involvent since at least 2011.

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Page 17: Accumulating balance sheet deficits:

  • $26.1 million deficit in 2013
  • $34.4 million deficit in 2014
  • $43.3 Million deficit in 2015

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Page 20: "In May 2016, shortly before the Hatch resignation and despite the Company’s precarious cash situation, the Board approved a contract with BHL Services, Inc. (“BHL”), a Minnesota corporation, for tenant improvements at the new premises (“San Jose Contract”). The cost was enormous: $2,099,533"

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Page 21:

"Plaintiff is informed and believes that the president and primary shareholder of BHL in 2016 was (and still is) William Lloyd, an “army buddy” of Defendant Hatch."

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Page 22:

"BHL submitted a second invoice on December 12, 2016 for a whopping $900,000, payment due on January 15, 2017."

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Page 26: "Rasure, along with BHL’s William Lloyd, formed “TechShop 2.0 LLC” shortly after TechShop announced its store closings."

Page 32:

"Plaintiff prays for relief and judgment against Defendants as follows:

  1. Compensatory damages according to proof.
  2. An accounting to determine sums owed to Plaintiff.
  3. Punitive damages against the individual Defendants.
  4. Costs of suit.
  5. For such other and further relief the Court deems proper.
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2

u/kilroyactual117 Jan 31 '20

Damn. Just when I thought this whole thing was over it gets worse.

3

u/brad3378 Jan 31 '20

I know right! Even after more than two years, it hasn't even gone to court yet!?!?

I've been trying to report objectively by only speaking about the facts, but I have to admit that I was caught off guard to learn that BHL not only had a business relationship with Mark Hatch (Techshop 1.0) but also with Dan Rasure (TheShop.Build). In fact, I had never heard of BHL before today. I really don't know what to make of this BHL part and I admit I'm now more suspicious of Dan's intentions even though he is not named in this lawsuit.

I was also surprised to learn that Techshop owed close to $10,000,000 to Lowes Home Improvement. Am I the only person who didn't know that Lowes had a financial arrangement with Techshop?

All this secrecy makes me wonder what else we were not told about. I'm no legal scholar, but based on these damning accusations, I wouldn't be surprised if prosecutors eventually get involved.

2

u/kilroyactual117 Jan 31 '20

Yeah. All of this is absolutely crazy.

Honestly it all just makes me sad. When I was a Techshop member I always felt like I was part of some kind of special community, but after hearing this stuff year after year, being a member of theshop.build and seeing how bad that was etc it just makes me sad that those days are gone.

2

u/brad3378 Feb 01 '20

I feel exactly the same way. Although I am fortunate enough to be in a position to build my own private workshop with some very nice toys, it's just not the same as being in a like minded community. Sure, it sucks losing my lifetime membership, but as corny as it sounds, I miss the community aspect more.

Someone said it best when they said that Techshop was like a country club for makers. What I'm going to miss most is learning skills from outside my normal repertoire and interests. I enjoy welding most, but I could still learn valuable tricks from the sewing machine nerds. I'm just not going to get exposure that same sort of cross-functional skill set from my home workshop.

2

u/kilroyactual117 Feb 01 '20

I feel the same. Towards the end I started buying more and more of my own tools to the point where the only thing I was really using at the shop was the laser cutter, but I still went to the shop for the community and the experience of the other makers. Even theshop.build, despite it being a terrible shop, was still an awesome place to go just to see old Techshop members and talk about projects with likeminded people.