Travel Lite Amended Complaint Details Cause For Lawsuit
January 21, 2020 at 2:39 a.m.
By Amanda [email protected]
Michael J. DeWitt filed a third amended complaint Friday in Kosciusko Superior Court IV, specifically outlining details of the alleged fraud and breach of contract for $2 million in a $4 million real estate transaction in 2018.
DeWitt alleges the Johns entered into a purchase agreement on July 14, 2018, for three parcels of land at 11199, 11200 and 11190 NE Wawasee Drive, Syracuse, for $4 million. The purchase agreement amendment states the Johns would transfer 3.5 shares of Travel Lite Inc. stock, valued at $2.1 million, to DeWitt at closing, along with $1.885 million in cash and a $15,000 earnest money deposit.
DeWitt sued the Johns Sept. 20 and claims they provided him with fraudulent financial information regarding Travel Lite Inc. and the Trave Lite Stock in connection with the sale and transfer of the stock. The sale of the stock in exchange for the real estate was a transaction covered by the Indiana Uniform Securities Act, Ind. Code 23-19.
DeWitt asked the court to order the Johns to transfer the real estate to him and he will return the patrial consideration previously paid. He is also seeking $2.1 million in damages – the value of the stock from the deal – plus 8% interest, along with attorney fees and court costs.
On Oct. 30, the Johns filed a motion to dismiss the suit, arguing the claims didn’t meet Indiana rule standards for alleging fraud. On Nov. 6, DeWitt filed a response and asked the court to rule on the matter without a hearing.
Superior Court IV Judge Chris Kehler seemed to agree with the Johns, and ordered DeWitt to provide sufficient details with respect to the allegations of fraud and other counts.
At the time, Dustin Johns told the Times-Union, “Anyone can sue anyone, but in this case, I didn’t do anything wrong.”
DeWitt got more specific in his newest response, now including numbers.
DeWitt writes that he was told the stock held a value of $2.1 million as a result of the company’s performance in prior years; its 2018 performance through July of 2018 in which the company had a net profit of $2.7 million; its current inventory; its account receivables; and its fixed assets. The value of each share, DeWitt was told, was $600,000.
DeWitt’s complaint states that the Johns represented to him they had over 500 units in backlog; had over 1,000 ordered units pending; had a $2.7 million profit in the first six months of 2018; and was on track to net $6 million in profit in 2018.
“Dustin Johns also reported to DeWitt that Jake Vogel, a well-known and respected businessman, was his business partner and had invested over $5 million in Travel Lite,” court papers state.
Dustin Johns assured DeWitt he would provide the necessary financial, accounting and inventory documentation and reports substantiating the $2.1 million valuation before the parties closed on the real estate, the complaint reads.
Part of the amended purchase agreement also requires Dustin Johns to rebate DeWitt $500,000 in the event that Travel Lite fails to hit a gross annual revenue of $45 million in 2018.
DeWitt alleges that six days after the agreement was signed, Dustin Johns emailed DeWitt’s real estate agent Travel Lite’s balance sheet and profit and loss for Jan. 1 through July 20, 2018. DeWitt writes that Dustin and Lindsey Johns were involved in the preparation of these financial statements, as Dustin is the president, a principal and majority shareholder of Travel Lite and his wife served as an officer with Travel Lite and held a senior management position in the company that included preparation and oversight of the company’s accounting and financial records.
The 2018 financial statements reported that as of July 20, 2018, the company had total accounts receivable of $2,051,711.06; total inventory of $1,654,598.65; total current assets of $4,144,105.17; total current liabilities of $1,560,437.29; and total liabilities and equity of $4,132,969.40.
On the profit and loss portion of the financial statements for Jan. 1 through July 20, 2018, DeWitt says those numbers were given as total income of $15,398,487.82; gross profit of $7,455,607.44; and a net income of $2,745,786.51.
DeWitt also details what the Johns reported in their inventory list as of July 20, 2018, was a total net WIP of $185,550; total gross WIP of $205,495; total online WIP of $107,237.07; finished goods in net of $1,192,015; finished goods total in gross of $1,281,105; finished goods in total of $1,045,576.51; accounts receivable net of $1,920,691.03; accounts receivable gross of $2,081,361.03; and accounts receivable total of $2,081,361.03. The inventory list also included 140 total RV units in Travel Lite’s accounts receivable; 82 total units in Travel Lite’s finished goods; and 13 units in its WIP.
In lieu of these financial reports, DeWitt says he agreed to enter into the stock purchase agreement with the Johns to close on the real estate.
After the parties closed on the deal, DeWitt claims he began discovering the deception, including that the reports the Johns gave him reported the company was operating at a net profit of $2,745,786.51 for the six-month period at the start of 2018. “In fact, Travel Lite was operating at, or near, a net loss for the period of Jan. 1 through July 20, 2018,” DeWitt’s court papers claim. Nor did Travel Lite have 140 total RV units in its accounts receivable inventory, DeWitt writes, and says that information came to light at the end of 2018 when the company reported its 2018 year-end inventory and financial numbers.
DeWitt alleges that year-end report also showed significantly less material inventory on hand, with no corresponding increase in income from units manufactured and/or sold.
“Also during 2018 – the same year Dustin Johns claimed that Travel Lite stock held a value of $2.1 million or $600,000 share – Dustin Johns purchased one share of Travel Lite stock from Keith Troyer for $16,917. In a separate 2018 transaction, Dustin Johns purchased 0.4 shares of Travel Lite stock from Keith Troyer for $5,167,” the complaint reads. Court papers also state that Travel Lite then diluted its stock. When DeWitt acquired his 3.5 shares in 2018, the company had 100 total shares. DeWitt alleges that changed after 2018 when Dustin Johns, as majority shareholder, recapitalized the company with holders of unsecured debt by issuing additional shares without DeWitt’s knowledge or consent.
“By the time Dustin Johns and Travel Lite issued additional shares in its recapitalization maneuver, DeWitt’s effective share count plummeted to 0.18 in total, which held minimal, if any, value,” the complaint reads.
DeWitt goes on to allege the fraud by writing that Dustin Johns told him Travel Lite had over 500 units in backlog and over 1,000 ordered units pending as of July 2018, but that is not true.
DeWitt also writes that Vogel, the well-known businessman Dustin Johns claimed was his business partner who invested over $5 million in the company, was in fact not business partners with Dustin Johns and Vogel never invested $5 million in Travel Lite.
The Johns took ownership of Travel Lite in 2015, after Dustin’s father, who founded the business, sold it to them.
In May 2018, the Johns invested $5 million to build the company’s new headquarters at 100 Innovation Blvd. in the Syracuse 6 & 13 Industrial Park. The business was originally based in New Paris.
A halt in production in August 2019 included laying off 125 employees, which Dustin explained was due to the downturn in the RV industry hitting his growing company harder than he had forecast. Travel Lite began operating again in October.
Michael J. DeWitt filed a third amended complaint Friday in Kosciusko Superior Court IV, specifically outlining details of the alleged fraud and breach of contract for $2 million in a $4 million real estate transaction in 2018.
DeWitt alleges the Johns entered into a purchase agreement on July 14, 2018, for three parcels of land at 11199, 11200 and 11190 NE Wawasee Drive, Syracuse, for $4 million. The purchase agreement amendment states the Johns would transfer 3.5 shares of Travel Lite Inc. stock, valued at $2.1 million, to DeWitt at closing, along with $1.885 million in cash and a $15,000 earnest money deposit.
DeWitt sued the Johns Sept. 20 and claims they provided him with fraudulent financial information regarding Travel Lite Inc. and the Trave Lite Stock in connection with the sale and transfer of the stock. The sale of the stock in exchange for the real estate was a transaction covered by the Indiana Uniform Securities Act, Ind. Code 23-19.
DeWitt asked the court to order the Johns to transfer the real estate to him and he will return the patrial consideration previously paid. He is also seeking $2.1 million in damages – the value of the stock from the deal – plus 8% interest, along with attorney fees and court costs.
On Oct. 30, the Johns filed a motion to dismiss the suit, arguing the claims didn’t meet Indiana rule standards for alleging fraud. On Nov. 6, DeWitt filed a response and asked the court to rule on the matter without a hearing.
Superior Court IV Judge Chris Kehler seemed to agree with the Johns, and ordered DeWitt to provide sufficient details with respect to the allegations of fraud and other counts.
At the time, Dustin Johns told the Times-Union, “Anyone can sue anyone, but in this case, I didn’t do anything wrong.”
DeWitt got more specific in his newest response, now including numbers.
DeWitt writes that he was told the stock held a value of $2.1 million as a result of the company’s performance in prior years; its 2018 performance through July of 2018 in which the company had a net profit of $2.7 million; its current inventory; its account receivables; and its fixed assets. The value of each share, DeWitt was told, was $600,000.
DeWitt’s complaint states that the Johns represented to him they had over 500 units in backlog; had over 1,000 ordered units pending; had a $2.7 million profit in the first six months of 2018; and was on track to net $6 million in profit in 2018.
“Dustin Johns also reported to DeWitt that Jake Vogel, a well-known and respected businessman, was his business partner and had invested over $5 million in Travel Lite,” court papers state.
Dustin Johns assured DeWitt he would provide the necessary financial, accounting and inventory documentation and reports substantiating the $2.1 million valuation before the parties closed on the real estate, the complaint reads.
Part of the amended purchase agreement also requires Dustin Johns to rebate DeWitt $500,000 in the event that Travel Lite fails to hit a gross annual revenue of $45 million in 2018.
DeWitt alleges that six days after the agreement was signed, Dustin Johns emailed DeWitt’s real estate agent Travel Lite’s balance sheet and profit and loss for Jan. 1 through July 20, 2018. DeWitt writes that Dustin and Lindsey Johns were involved in the preparation of these financial statements, as Dustin is the president, a principal and majority shareholder of Travel Lite and his wife served as an officer with Travel Lite and held a senior management position in the company that included preparation and oversight of the company’s accounting and financial records.
The 2018 financial statements reported that as of July 20, 2018, the company had total accounts receivable of $2,051,711.06; total inventory of $1,654,598.65; total current assets of $4,144,105.17; total current liabilities of $1,560,437.29; and total liabilities and equity of $4,132,969.40.
On the profit and loss portion of the financial statements for Jan. 1 through July 20, 2018, DeWitt says those numbers were given as total income of $15,398,487.82; gross profit of $7,455,607.44; and a net income of $2,745,786.51.
DeWitt also details what the Johns reported in their inventory list as of July 20, 2018, was a total net WIP of $185,550; total gross WIP of $205,495; total online WIP of $107,237.07; finished goods in net of $1,192,015; finished goods total in gross of $1,281,105; finished goods in total of $1,045,576.51; accounts receivable net of $1,920,691.03; accounts receivable gross of $2,081,361.03; and accounts receivable total of $2,081,361.03. The inventory list also included 140 total RV units in Travel Lite’s accounts receivable; 82 total units in Travel Lite’s finished goods; and 13 units in its WIP.
In lieu of these financial reports, DeWitt says he agreed to enter into the stock purchase agreement with the Johns to close on the real estate.
After the parties closed on the deal, DeWitt claims he began discovering the deception, including that the reports the Johns gave him reported the company was operating at a net profit of $2,745,786.51 for the six-month period at the start of 2018. “In fact, Travel Lite was operating at, or near, a net loss for the period of Jan. 1 through July 20, 2018,” DeWitt’s court papers claim. Nor did Travel Lite have 140 total RV units in its accounts receivable inventory, DeWitt writes, and says that information came to light at the end of 2018 when the company reported its 2018 year-end inventory and financial numbers.
DeWitt alleges that year-end report also showed significantly less material inventory on hand, with no corresponding increase in income from units manufactured and/or sold.
“Also during 2018 – the same year Dustin Johns claimed that Travel Lite stock held a value of $2.1 million or $600,000 share – Dustin Johns purchased one share of Travel Lite stock from Keith Troyer for $16,917. In a separate 2018 transaction, Dustin Johns purchased 0.4 shares of Travel Lite stock from Keith Troyer for $5,167,” the complaint reads. Court papers also state that Travel Lite then diluted its stock. When DeWitt acquired his 3.5 shares in 2018, the company had 100 total shares. DeWitt alleges that changed after 2018 when Dustin Johns, as majority shareholder, recapitalized the company with holders of unsecured debt by issuing additional shares without DeWitt’s knowledge or consent.
“By the time Dustin Johns and Travel Lite issued additional shares in its recapitalization maneuver, DeWitt’s effective share count plummeted to 0.18 in total, which held minimal, if any, value,” the complaint reads.
DeWitt goes on to allege the fraud by writing that Dustin Johns told him Travel Lite had over 500 units in backlog and over 1,000 ordered units pending as of July 2018, but that is not true.
DeWitt also writes that Vogel, the well-known businessman Dustin Johns claimed was his business partner who invested over $5 million in the company, was in fact not business partners with Dustin Johns and Vogel never invested $5 million in Travel Lite.
The Johns took ownership of Travel Lite in 2015, after Dustin’s father, who founded the business, sold it to them.
In May 2018, the Johns invested $5 million to build the company’s new headquarters at 100 Innovation Blvd. in the Syracuse 6 & 13 Industrial Park. The business was originally based in New Paris.
A halt in production in August 2019 included laying off 125 employees, which Dustin explained was due to the downturn in the RV industry hitting his growing company harder than he had forecast. Travel Lite began operating again in October.
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