Lawsuits over Sallyport, Bridgeville-based government contractor, target DeBlasio brothers
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Three brothers from Bridgeville are at the center of a maze of lawsuits over the sale of Sallyport, a Bridgeville-based government contractor that assisted in the post-war reconstruction of Iraq.
Sallyport was owned by John DeBlasio and its books were kept by brothers Pasquale and Franco DeBlasio. They work for DeBlasio and DeBlasio Associates, the family's Bridgeville accounting firm.
The allegations include claims by Thomas Charron, John DeBlasio's former partner, that the brothers engineered millions of dollars of unauthorized wire transfers from Sallyport to entities they controlled. The source of those allegations is documents produced after John DeBlasio sued affiliates of DC Capital Partners, the Alexandria, Va., private equity firm he sold Sallyport to last year.
The DeBlasios say there were no improper cash transfers and accuse Mr. Charron, a West Point graduate, of making a few of his own.
In addition to those lawsuits, Sagent Advisors, the New York investment banker that advised Sallyport on the deal, is suing, claiming it has not been paid, and John DeBlasio is suing for severance pay after resigning this year from KS International, the DC Capital company that is Sallyport's new owner.
"I've succeeded in [angering] both the buyer and the seller. How I did that so perfectly, I don't know," said Mr. DeBlasio, a Chartiers High School and West Point graduate who lives in Chicago. Mr. DeBlasio said his 21 years of active and reserve U.S. Army service include serving as an adviser to the Coalition Provisional Authority, Iraq's transitional government, during a 14-month tour in Iraq from 2003 to 2004.
"Tom's case is that we all conspired [against] him," Mr. DeBlasio said. "I don't wake up every morning wanting to [get] Tom Charron."
Lawyers for Mr. Charron and DC Capital declined comment.
Mr. Charron, who lives in Florida, founded Sallyport in 2003 and later made Mr. DeBlasio his 50-50 partner in the business. While the company's headquarters was listed as being in Bridgeville, the only operations there were the DeBlasio family's company, which provided accounting, payroll and tax services to Sallyport.
The contractor's business was overseas, providing security, logistics and other services, including shuttling Iraqi police trainees between Iraq and Jordan and building secure compounds for the U.S. Agency for International Development. DC Capital's KS International provided similar services in global trouble spots and purchased Sallyport to expand its business.
In July, DC Capital disclosed it had purchased a 5.2 percent interest in Michael Baker, a Moon engineering company that hired Sallyport as part of its post-war work in Iraq. DC Capital president Thomas Campbell said he wanted to discuss "strategic alternatives" with Baker, including a merger or seeking seats on Baker's board of directors.
According to lawsuits Mr. Charron filed last month in federal court in New York City and in Fairfax County, Va., he sold his stake in Sallyport in December 2010 after discovering the DeBlasios were making unauthorized transfers of money from the company to themselves. The lawsuits cite a $4.8 million wire transfer to the DeBlasios' Bridgeville company.
Pasquale DeBlasio said the $4.8 million transfer, made in June 2010, paid off a line of credit Sallyport had. Initially, John DeBlasio said it was for meeting Sallyport's payroll, but later said it was for payroll and the line of credit.
"Tom knew what we were doing and understood [the transfers] were for corporate purposes that were regular and customary," John DeBlasio said.
In turn, he accused Mr. Charron of taking $224,000 out of the company without authorization, including reimbursements for moving his family to Florida.
Also at issue is what DC Capital paid for Sallyport and whether Mr. Charron is entitled to a bonus that was to be triggered if Mr. DeBlasio sold the company for more than $65 million. Mr. DeBlasio said the price tag was $64.5 million, $7 million more than the private equity firm initially offered. Mr. Charron disputes that, citing an auditor's report filed in Mr. DeBlasio's lawsuit against the affiliates of DC Capital. The audit put the value of Sallyport at $82.8 million.
Mr. DeBlasio said he paid $40 million for Mr. Charron's half of Sallyport in December 2010. The sales agreement included a provision entitling Mr. Charron to a 20 percent bonus if Mr. DeBlasio sold Sallyport within a year for $65 million or more.
Mr. Charron's lawsuits maintain he is entitled to $16.6 million, or 20 percent of the $82.8 million value cited by the auditor.
Mr. DeBlasio sued KS International in May over $4 million withheld from the sales price until DC Capital accounted for what cash and unpaid bills Sallyport had at the time of the sale as well as what payments it had coming from customers.
The lawsuit was filed after Mr. Campbell of DC Capital refused to turn over any of the $4 million. In a letter Mr. Campbell sent to Mr. DeBlasio in February, he said Mr. DeBlasio owed KS International money because of cash the Bridgeville man had drained from the company prior to the sale.
The letter is part of court records.
Mr. DeBlasio withdrew the lawsuit last month and said he is trying to settle the matter with Mr. Campbell.
In the meantime, Mr. DeBlasio cannot understand why Mr. Charron is suing him, given that he received $64.5 million for selling all of Sallyport after paying his former partner $40 million for half the company six months earlier.
Court records indicate that when Mr. DeBlasio and Mr. Charron put Sallyport on the market in 2010 before Mr. DeBlasio bought out his partner, prospective buyers valued the company at $90 million to $110 million.
"Any investment banker will tell you an expression of interest is hardly worth the paper it's written on," Franco DeBlasio said.
The DeBlasios said Sallyport's value fell as U.S. forces withdrew from Iraq, which accounted for a significant portion of Sallyport's revenue. John DeBlasio said he "was trying to sell a company that was in a free fall from a revenue perspective."
"[Mr. Charron] still can't admit to himself that the company was not worth what he thought it was worth," he said.
First Published October 14, 2012 12:00 am