Think Loud sues York philanthropist's son over control of fiber optic company
Three members of the rock band Live, through one of their Think Loud companies, have sued the namesake son of the late York philanthropist Louis Appell Jr., alleging he is trying to wrest control of United Fiber & Data from them.
Think Loud Holdings LLC — co-founded by band members Chad Taylor, Chad Gracey and Patrick Dahlheimer — filed the lawsuit on Friday in York County Court but withdrew it on Monday and instead filed it in Lehigh County Court, according to court records.
United Fiber & Data, or UFD, was created in 2012 to bring high-speed internet to Pennsylvania's southcentral counties. Since that time, UFD has completed laying about 400 miles of fiber optic cable from Manhattan to Ashburn, Virginia, according to the lawsuit.
Also listed as a plaintiff is BKS Capital LLC. Like most of the Think Loud businesses, both UFD and BKS are housed in Think Loud Development's renovated 210 York St. headquarters in York City, and BKS was also involved in UFD.
Appell Jr. was one of UFD's primary lenders and investors from mid-2012 until he died in June 2016, according to the lawsuit, filed by Lancaster-based attorney Jason Confair.
The lawsuit alleges that since inheriting his father's 26% stake in UFD, Louis Appell III successfully requested the company be restructured and has served on UFD's board as a manager since late 2017.
'Substantial control': Appell III has "exerted substantial control" over UFD despite his minority stake in the company, the lawsuit claims, and has "acted as though it is his birthright to exercise total dominion over UFD's affairs."
In November 2019, Bill Hynes stepped down as CEO and manager of UFD after he was criminally charged in an unrelated matter.
Since then, Appell III has tried to seize control of the board through "underhanded and hostile means" and tried to extort the Live members and BKS to give away or sell their shares at the lowest possible price to whomever Appell III chooses, the lawsuit alleges.
Think Loud Holdings and BKS own about 40% of UFD's outstanding equity, according to the lawsuit.
In May, Appell III sent a letter to the plaintiffs "out of the blue … containing specious allegations and threatening legal action unless Plaintiffs surrendered control of UFD to Appell," according to the lawsuit.
Prior to that, Appell III hadn't notified anyone within UFD, Think Loud Holdings or BKS that he suspected any "wrongdoing related to UFD's affairs," according to the lawsuit, which states a subsequent investigation found nothing of substance.
Millions invested: The lawsuit notes that not only did the late Appell Jr. invest many millions of dollars into UFD, Appell III has continued to invest "substantial sums of his inherited wealth" into UFD.
The suit alleges that Appell III has deadlocked UFD's board by refusing to entertain outside offers to buy the company "so long as 'those guys' (i.e., the Plaintiffs and their principals) are 'still around.'"
Appell III is trying to use the deadlock as leverage to coerce Think Loud and BKS to surrender their equity to him "for next to nothing," the plaintiffs allege, and appointed one of his friends as a board member in his effort to "hijack" UFD.
Because of that, the three-person UFD board remains deadlocked, the lawsuit states.
Appell III has ordered UFD's sales team be disbanded and that UFD stop paying its "most substantial creditors, which has exposed UFD to very significant liability," according to the lawsuit.
'Liquidate' UFD: The lawsuit asks a judge to remove Appell III's friend from the board, and to stop Appell III from making "any substantial operational decisions" until an independent board member is appointed to replace Appell III's friend.
It also asks that Appell III pay punitive and compensatory damages to Think Loud Holdings and BKS.
In addition, the lawsuit asks that a judge appoint an independent receiver to liquidate UFD's assets "per the highest offer received from a responsible party," use the liquidation proceeds to satisfy all UFD's "outstanding obligations," and distribute the remaining proceeds from the sale to UFD's equity holders.
— Reach senior crime reporter Liz Evans Scolforo at email@example.com or on Twitter at @LizScolforoYD.