More allegations fly as Live band members deal with fallout from ThinkLoud
Unpaid loans, tax returns not filed and millions of dollars worth of stock lost amid legal wrangling are the latest allegations to swirl among the former business partners and Live bandmates over a York City redevelopment deal gone sour.
The lawsuit, filed Tuesday, came about a week after the founders of the rock band, and more recently of the Think Loud family of companies, were named in another case by a former business partner Bill Hynes.
Both suits primarily single out Chad Taylor, of Lancaster, with allegations of fraud and financial mismanagement.
In the new case, fellow bandmate Chad Gracey seeks a judgment of at least $1.7 million against Taylor and Patrick Dahlheimer as managers of Think Loud Holdings, according to the suit. Gracey cites counts of breach of fiduciary duty and breach of contract.
Taylor declined to comment on the lawsuit’s allegations Tuesday, saying his lawyer advised him to refrain from making public statements on the case.
Gracey and Dahlheimer sold half their private equity shares in the company to Taylor for $50,000 each as they resigned as managers in 2016. The move gave Taylor two-thirds of the company’s shares and control as the sole manager. Gracey and Dahlehimer together held the other third, the newest lawsuit states.
Taylor apparently later reappointed Dahlheimer, of Spring Garden Township, as a manager but didn’t hold a formal vote on it, Gracey alleges in the suit. With Taylor leading Think Loud, he allegedly took out various commercial loans, including two promissory notes from Truist Bank in 2020.
Allegedly defaulted on loans: The suit singles these out because the North Carolina-based bank filed civil complaints Oct. 28 against Taylor, Dahlheimer and Gracey in Lancaster County seeking to recover $310,488 in outstanding principal, interest and costs.
The first loan was for $275,000 in January 2020, followed by another $50,000 that May. Gracey, in his suit, said he personally guaranteed the second loan at Taylor’s request.
Truist, in its own civil filings, alleges Think Loud failed to make payments on the loans.
Figures in Gracey's complaint indicate about $7,400 was paid on the first note’s principal, while nearly $11,300 was paid on the principal in the second note.
At the same time, Truist also filed a separate complaint against Taylor and his wife involving a $50,000 commercial loan that was taken out in November 2009. That loan allegedly defaulted due to nonpayment this year as well, and the bank seeks $39,468 in the outstanding principal, interest and fees on that, court documents show.
Gracey, meanwhile, raises questions about Think Loud receiving a $150,000 Small Business Administration loan via federal COVID-19 relief funding in August 2020.
“Due to the lack of transparency from Taylor in his management of the company, Gracey is unaware of the actual purpose of these loans and is unable to determine how they were used,” the lawsuit states.
Tax concerns: Think Loud’s tax returns also allegedly haven’t been filed for 2021, according to Gracey's suit.
Gracey offered in September to have an accountant file the tax returns, the suit alleges, but Taylor indicated he’d rather reach out to the accountant himself as the company manager.
When Gracey agreed to that a couple weeks later, he offered to pay for the accounting services.
“Taylor failed to respond to the offer and continues to delay the process of filing the 2021 tax returns with the end of the 2022 tax year looming,” the lawsuit states.
Gracey also alleges Taylor violated their operating agreement by failing to provide quarterly and annual financial reports since 2016 when asked formally and informally.
When Gracey’s attorney reached out to seek the documents in March, Taylor allegedly sent a workbook with profit and loss information, balance sheets, real estate holdings and distribution, followed by a profit and loss sheet for 2022 in August. However, he did not send a formal report, the suit says.
Costly legal wrangling: Further, Gracey accuses Taylor of pulling Think Loud into rival lawsuits in 2020 involving Hynes and United Fiber & Data, the fiber optics company the group founded. The resolution, he alleged, cost Think Loud millions.
The company sued Louis Appell III, the son of late local philanthropist Louis Appell Jr., in Lehigh County, accusing him of trying to usurp control of UFD.
UFD, led by Appell III, countersued in York County and primarily targeted Hynes with allegations of theft, fraud and misuse of funds — including millions of dollars UFD received in loans from his family.
Those cases were settled in August.
Gracey said in his lawsuit that under the agreement, Think Loud had to give up and transfer 100,000 shares of stock back to UFD. The suit says each share was valued at about $85.29, alleging the company essentially lost $8.5 million in assets from the transfer. Gracey’s share was calculated at $1.4 million.
Gracey filed his allegations roughly a week after Hynes sued Taylor, Gracey and Dahlheimer to recover loans he reportedly made to the three a decade ago. That lawsuit, filed in York County on Nov. 11, alleges counts of breach of contract, fraud and conspiracy.
Hynes' suit shows that he issued promissory notes of $482,000 each to the three to invest in his company, ADS Builders East, in Nazareth, Northampton County, in January 2011.
He let the repayments slide for years by putting the loans in forbearance, believing assurances they could be paid back with more time, the suit alleges.
'Landscape has now changed': Then in August, according to exhibits in the suit, Hynes emailed Taylor, Dahlheimer and Gracey, saying “the landscape has now changed” and he needed payments to start on the loans or he’d end the forbearance.
The next day, he filed notice of legal action against the three, court documents show. The lawsuit’s complaint came three months later.
In the suit, Hynes zeroed in on Taylor, accusing him of lying about his wealth and covering up financial problems when the loan was made. Documents attached as exhibits indicate Taylor had overdue accounts, faced collections on unpaid bills, faced a home foreclosure, and was losing money on business ventures between 2010 and 2012.
The financial records were found in an office Taylor had at the former Think Loud building in October 2021, the suit shows.
Hynes also accused Taylor of once conspiring with Dahlheimer to create a false financial statement. The suit alleges the statement inflated Dahlheimer’s personal net worth and showed most of his income came from investments in businesses, including those partially owned or managed by Taylor and with allegedly inflated values.
Taylor commented on Hynes’ lawsuit and told The York Dispatch that no loans were made in 2011. He also suggested the documents from his office may have been obtained illegally in order to build what he called a “false loan story.”
Gracey, however, refuted Taylor’s assertion with a comment to The Dispatch, saying Hynes’ promissory note was valid.
“We submitted those documents to our accounting firm, and they were reported on our 2011 taxes filed in 2012,” Gracey told The Dispatch. “The note is real and the supporting information in the claim seems irrefutable.”
Gracey also called Hynes gracious in allowing the forbearance.
“I intend to settle this amicably with him,” he said.
Upheaval: The discovery of Taylor’s financial records, as described in Hynes’ suit, came amid upheavals for Think Loud and the company’s former headquarters at 210 York St. last year.
120 York LLC, a Think Loud affiliate and the business that owned the building, went through bankruptcy proceedings after Kinsley Construction won a nearly $14 million judgment over a defaulted construction loan. Kinsley had led design and renovation work on the structure.
After 120 York emerged from bankruptcy, Kinsley took possession of the building and then sold it to the current owner, Invictus One LLC.
Fast forward to August again, and as Hynes was calling in his loans, and amid the settlement of the UFD lawsuits, Invictus filed a separate civil suit involving Think Loud.
The new case sought to divide up ownership of assets that Think Loud left in the building, which included music, memorabilia, gear, studio equipment and a painting valued at $100,000.
Currently, the Pennsylvania Secretary of State's website shows 12 active companies with the Think Loud name registered at the 210 York Street address.
— Reach Aimee Ambrose at email@example.com or on Twitter at @aimee_TYD.