Bridgestone Americas has filed suit in U.S. District Court against several related investment funds it claims haven’t produced an account for more than five years of $75 million belonging to the tire maker’s pension fund.
The suit filed Tuesday alleges that Steven Stevanovich, founder of Westford Asset Management, has repeatedly stonewalled Bridgestone executives asking for details about their investments in two funds he has marketed as putting money to work in “special situations containing hidden value.” In addition, the tire maker’s representatives say Stevanovich’s operation lent more than $40 billion over almost six years to a convicted Minnesota Ponzi schemer.
Nashville-based Bridgestone first invested in The Westford funds, which are based out of the British Virgin Islands and the Cayman Islands, respectively, in October of 2007 and later followed that up with two other investments. But Bridgestone officials say they have rebuffed each time they’ve asked for financial information since July 2008, when they received year-end 2007 statements. Because Stevanovich and the fund groups are in charge of pension funds, the company says the mismanagement is a violation of the Employee Retirement Income Security Act.
The situation has understandably grown tense over time. Bridgestone’s complaint states that Stevanovich has in the past “complained that he ‘wastes a full day to visit’ whenever he is asked to visit” with Bridgestone execs at their offices near Nashville International Airport. The suit also relays this curious exchange from a meeting held this past April:
Stevanovich represented that the underlying investments in Westford I and Westford II were “doing well” and that he expects “venture capital-type” returns on investment for Westford I and Westford II. When pressed for documentary support for his pronouncements, Mr. Stevanovich angrily refused. When, as an alternative, the Chief Administrative Officer / Chief Risk Officer of Bridgestone Americas, Inc. asked for copies of even publicly filed documents in other lawsuits that Mr. Stevanovich mentioned related to Westford I and Westford II that purportedly would support his statements, Stevanovich refused. Then, when asked merely for docket numbers for those lawsuits concerning Westford I and Westford II that might have reference to the supposed documentary support, Stevanovich refused, claiming that the information would make Plaintiffs “terrified” and would “lead to tons of questions and second-guessing” of the viability of Westford I and Westford II.
Additionally, the suit claims Stevanovich invested Westford funds into Petters Group Worldwide, a Minneapolis-based conglomerate that at one time owned Sun Country Airlines and Polaroid. CEO Tom Petters was arrested in 2008 and later convicted for spearheading a $3.65 billion Ponzi scheme. Petters Group filed for bankruptcy three weeks after his arrest.
Contractually, Bridgestone could redeem its shares in the Westford funds for U.S. dollars, the suit says, but a Court of Appeals for the Territory of the British Virgin Islands ruled in 2011 that interests in the Westford Master Fund — allegedly illiquid — could be used as redemption payments.
Tuesday’s suit — filed by Waller attorneys Bob Boston, Ames Davis and Michael Harmon — requests the court order Stevanovich and the funds to produce documentation, make good on Bridgestone's investments, repay various profits and fees and award damages. The company also wants the court to appoint an independent fiduciary to help run the Westford funds.
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