Live

Watch CBSN Live

Globalhue Settles Allegations It Bilked Montemayors of Earnout Payments

Globalhue chief Don Coleman has quietly settled a lawsuit with business partners who joined him when his agency acquired hispanic shop Montemayor y Asociados. The late Carlos Montemayor and his wife accused Globalhue of stiffing them on their earnout payment -- at least $1 million, according to court documents.

Globalhue denied the accusations and said it was the Montemayors who refused to hand over the necessary information needed to calculate their payment.

The combined Montemayor-Globalhue agency successfully retained the Chrysler business following a review in 2002.

Although the suit is settled, the original allegations within it may be of interest to officials in Bermuda who have audited Globalhue and found its books not to their liking. In 2000, the suit alleges, Carlos and Barbara Montemayor entered into a stock agreement with Coleman (pictured), under "a complex and variable formula." The formula included an earnout payment of at least $1 million, according to a response to the suit filed by Globalhue. However, the Montemayors alleged:

On or about the 30th day of March 2004, Mr. and Mrs. Montemayor were notifed there would be no Earnout Payment paid.
The pair alleged that Globalhue:
... engaged in a conspiracy to cause Montemayor y Asociados Inc. (the "agency") to show a loss or, at least, no profit by denying Mr. and Mrs. Montemayor financial reports and by concealing assets and revenue and misstating expenses.

The Defendants took profitable divisions and moved the work, including production and print ads, to a third-party contractor, thereby causing the clients to be billed more for the total advertising services and reducing revenue.

Globalhue also allegedly credited other divisions with revenue earned by the Montemayor unit and had its staff do uncredited work for other Globalhue divisions. And Globalhue allegedly got Montemayor staff to abandon smaller clients in favor of pitches that, if won, were credited to Globalhue and not Montemayor, the suit said.

In response, Globalhue alleged that the Montemayors refused to allow a "Big 5" accounting firm to mediate the dispute, as called for in their contract:

The Montemayors initially refused to agree to any of the Big Five accounting firms ... [they later agreed on Ernst & Young but] ... then failed to proceed with providing information to Mr. Wolski and/or Ernst & Young for the evaluation ...
A judge signed an order dismissing the case in light of the settlement on May 8.
View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.