Wolf Group Integrated Communications is fighting a lawsuit brought by the former CEO of Viaduct, the interactive venture that chairman Larry Wolf has pointed to as the first brick to crumble in the Toronto-based holding company's January demise.
Wolf Group lawyers filed a motion last Wednesday to dismiss the suit, brought in December by Scott Brown, who alleges that he lost out on millions because Wolf "intentionally withheld" the risks associated with joining the New York office. Brown, who arrived in 2000 and says in the suit that he was fired 16 months later, is seeking nearly $17 million in compensation and damages.
The suit, filed in New York State Supreme Court, alleges that after Wolf recruited Brown from Toronto-based marketing firm ICE, at least five drafts of a contract were passed between Brown and Wolf but no agreement was ever signed. The complaint alleges that the defendants—Wolf himself and the company—"intended to delay the signing of a final agreement" until Brown's value to the shop became clear. "Such deception has been a business practice of the defendants," the suit alleges.
After it became apparent that Viaduct was losing money, Brown was terminated without the compensation he had been promised, the suit also alleges.
Wolf's attorneys at Todtman, Nachamie, Spizz and Johns in New York did not return calls. Brown's lawyer, M. Bradford Randolph, declined comment.
A February letter sent by Wolf's law firm to the company's creditors described the interactive operation, which shut down in 2001, as the "primary factor" in Wolf Group's dissolution. "The startup proved to be a financial failure, resulting in losses in excess of $9 million from which the company was never able to recover," the letter states.
That, combined with last year's bankruptcy of estimated $25 million client The Wiz and a woeful new-business record, put the company under.
The holding company closed its New York and Toronto offices in January. The Cleveland and Rochester, N.Y., offices, and the National Yellow Pages Marketing unit, were sold to the executives running those outposts.
The letter also states that the company, which has not filed for bankruptcy, is liquidating its assets and believes it can offer creditors more than 50 cents on the dollar.
Separately, The New York Daily News has sued Wolf Group Integrated Communications together with the Lower Manhattan Development Corp. and the Empire State Development Corp. for $26,595 in unpaid media debt. Calls to the newspaper's attorney and the New York State attorney general's office were not returned. Wolf had handled the "I Love New York" campaign, but lost the business shortly before the agency closed.
The Battery Park City Broadsheet, which also ran ads placed by Wolf Group for the Lower Manhattan Development Corp., is owed $5,000, according to publisher Robert Simko. He said he will not pursue legal action.
When the Wolf Group shuttered its New York and Toronto offices, the shops employed a combined 80 people and billed more than $140 million. Their largest account was the $80 million Scotts Co. business, handled out of New York.