Boston Business Journal
Angel investor accused of diverting funds
by Sheri Qualters
CHESTNUT HILL -- Software financial services company PLEJ Inc. is suing former CommonAngels investor David Solomont for allegedly siphoning money from PLEJ while he served as chairman and CEO of the startup.
According to a lawsuit filed in Suffolk Superior Court late last month, Chestnut Hill-based PLEJ Inc. believes Solomont "diverted and concealed more than $1 million (worth) of money invested in PLEJ" over a year and a half. Founded in 2002, the startup is developing software that links credit cards to gift cards and customer loyalty programs. Earlier this month, the court granted PLEJ's motion to freeze $1.2 million worth of Solomont's assets at four banks while the lawsuit is pending.
PLEJ's lawsuit accuses Solomont of using his Chestnut Hill-based HeathHill Cos. Inc. holding company as a conduit and overcharging PLEJ for services performed by HeathHill. According to the court papers, Solomont siphoned $437,500 for real estate and office expenses and $120,000 in unauthorized salary money. More than $439,000 is also missing from PLEJ's books, according to the documents.
PLEJ is seeking recovery of the missing funds, reimbursement of its legal costs and triple damages under the state's Consumer Protection Act.
PLEJ claims it first discovered Solomont's alleged misappropriations after it appointed an audit committee last November; the board demanded his resignation on Dec. 10, according to the court papers. PLEJ in its filing said that PLEJ president Jason Pavona "learned for the first time" on Dec. 11 that Solomont did not have enough remaining of investors' $2.5 million to cover about $25,000 in payroll. Pavona did not respond this week to multiple telephone calls and e-mail requests for comment.
"For reasons to be discovered, Solomont has become overextended, and is robbing Peter to pay Paul," states the PLEJ lawsuit, which references two other recently settled Suffolk County lawsuits against Solomont from companies seeking to recover money from him.
Solomont, who was away on vacation from Dec. 23 through Jan. 6, according to a copy of a Solomont e-mail entered as evidence in the case, did not respond to several telephone calls and e-mails from the Boston Business Journal. The lawsuit noted that Solomont was "leaving the country" for vacation, and Solomont's e-mail specified that he would go out of town "without my cell phone, Blackberry, or any other 'connection' to business."
Solomont's Dec. 17 e-mail states that he wired $275,000 to PLEJ-controlled accounts, but the lawsuit claims only $200,000 was sent and an additional $400,000 was due.
"I do not believe that PLEJ was overcharged by HeathHill Companies," Solomont wrote in his e-mail, refuting the allegation that HeathHill charged too much for some services and rents to PLEJ as the lawsuit alleges. "There are charges for equipment and furniture that were never passed on and substantial expenses incurred that were part of the 'package.' "
Bruce Miller of Aloisi & Aloisi, who was Solomont's lawyer for the other Suffolk County lawsuits but whose connection to the latest suit isn't known, also did not return calls. Documents gave no indication who might be working as Solomont's lawyer in the PLEJ suit.
The other lawsuits referenced in the PLEJ complaint were filed against Solomont in Suffolk Superior Court earlier this year. Citizens Bank of Massachusetts, which filed a lawsuit in April 2003 after Solomont defaulted on a $500,000 promissory note, got a $564,000 judgment from the court last September.
Advantage Payroll Services of Concord filed and settled a lawsuit in November, after it covered defaulted payrolls for PLEJ and Candide Media Works Inc., a New York-based production studio where Solomont serves as chairman. Advantage lost more than $42,000, according to the lawsuit, but the matter was settled for about $37,000.
Through a spokeswoman, Citizens said it does not comment on litigation or specific customer matters. Advantage president Michael Young also declined to discuss his company's litigation.
Solomont's current relationship with CommonAngels is unclear. Although Candide's web site and several published reports refer to Solomont as a Common-Angels' founder and organizer, and a Boston Globe article published earlier this year referred to him as a "managing director," Solomont was no longer on CommonAngels' web site by midweek.
As recently as last month, on the same day PLEJ's board demanded Solomont's resignation, Solomont participated in an MIT Enterprise Forum of Cambridge in his role as a managing director of CommonAngels and chairman of PLEJ. The Forum stages educational events for technology entrepreneurs that feature venture capitalists and company executives as guest panelists.
CommonAngels managing director James Geshwiler did not respond to telephone calls from the Boston Business Journal.
Solomont, whose software career spans 25 years, according to Candide's site, is also a founding trustee and past chairman of the Massachusetts Software & Internet Council, according to published reports.