There is a certain level of trust that exists between an employer and employee based on the assumption that all parties will work in the company’s best interest. However, sometimes certain parties put their own interests first, even going to the extent of committing fraud against their company. The Illinois business fraud lawsuit of Catmet Company, Inc. v. Michael Melnick, 4M Trading, LLC, et al., 05 L 9164, involves three separate counts of fraud committed by a former employee.
The business fraud cases were brought by Catmet Company, Inc., a company involved in processing catalytic converters. Catmet’s business model involves purchasing catalytic converters from scrap yards and other supplies. Catmet then removes valuable metals from the used catalytic converters, e.g. platinum, palladium, and rhodium, which it then sells to other end-users.
Catmet alleged that between 2003 and 2005 one of its former employees, Michael Melnick, had worked in conjunction with other outside parties to defraud Catmet. Catmet’s lawsuit involved not one, but three different schemes in which Melnick had swindled its employer out of business profits. And while the jury considered each of the schemes separately, it returned verdicts in favor of Catmet on all three counts.
The first scheme accused Melnick of conspiring with his long-time friend Mark Tomassini to create a company that would compete directly with Catmet. According to Catmet, the competition caused by Melnick and Tomassini’s 4M Trading company forced Catmet to pay inflated prices for its catalytic converters and also to pay for converters that it never received. The jury awarded Catmet $498,476 for compensatory damages regarding the first scheme and an additional $500,000 in punitive damages to be paid by Tomassini.
The second scheme involved Melnick conspiring with another defendant and his company, S&S Capital, to force Catmet to pay inflated prices for the contents of catalytic converters. Once again the jury found in favor of Catmet and awarded the company $415,182 in compensatory damages and another $500,000 in punitive damages against the owner of S&S Capital.
The last scheme involved allegations that Melnick conspired with defendant Michael Siegel to have Catmet issue checks to Siegel’s companies for materials that Catmet never received. The last claim represented the bulk of the ultimate jury award, with the jury awarding $2,834,711 in actual damages and $500,000 in punitive damages against Siegel.
The total verdict resulted in a $5,248,369 award to Catmet; $3,748,369 of that award was for compensatory damages while $1.5 million was from punitive damages. During the course of the business litigation process it had become obvious that the defendants had not only destroyed computer evidence, but had provided the plaintiff with misleading affidavits and statements during the discovery process. As a result, the trial court had already imposed various pretrial sanctions against the defendants prior to the jury deliberation process. However, due to the complexity of the various claims, it still took the jury four hours to reach the various verdicts.
Kreisman Law Offices has been handling Illinois commercial litigation matters for more than 35 years in and around Chicago, Cook County and surrounding areas, including Flossmoor, Calumet City, Wilmette, Tinley Park, Hinsdale and Downers Grove.
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