An article in the Wash Post today (with photos) shows how the son of a (local to me) public company CEO misused funds in a joint venture to buy himself eight of cars. The detailed list includes a new Alpina and a (probably used based on the $114k price) Z8.

Joint Venture's Expenses Detailed
Lawsuit Affidavits Show Spending Spree by BioVeris CEO's Son

By Michael Barbaro
Washington Post Staff Writer
Tuesday, June 22, 2004; Page E01

Jacob N. Wohlstadter used funds from a joint venture to buy or place deposits on 10 luxury cars, including a $136,000 BMW roadster, and a $4.2 million condominium in the new Time Warner building in Manhattan, according to affidavits in a lawsuit filed against him by BioVeris Corp., the Gaithersburg company his father heads.

The documents, filed in state court in Delaware, provide new details of alleged improper spending by the younger Wohlstadter, who is president of Meso Scale Diagnostics. His company is developing testing technology with BioVeris, formerly known as Igen International Inc. His father, Samuel J. Wohlstadter, is BioVeris's chairman and chief executive.

Jacob Wohlstadter contends that the purchases he made remained the property of the joint venture .

"The company at all times has had title to all this real and personal property," Wohlstadter said in an affidavit that provided his first public defense. "In other words, company funds were never used to purchase property in my name." He also said he has taken steps to "reverse these transactions" so that "there will be no negative financial impact to MSD."

BioVeris executives said in affidavits that Wohlstadter told them he bought the cars as a perk for company employees and the real estate because it was a good investment for the company.

The Delaware Court of Chancery yesterday granted a motion filed by BioVeris to bar Wohlstadter from spending more than $10,000 without approval of the joint venture's two-person management board, of which he is a member.

The court also blocked Wohlstadter from removing the second member of the joint venture's board, BioVeris president and chief operating officer Richard J. Massey. Wohlstadter is trying to push Massey off the board, according to BioVeris's lawsuit.

Wohlstadter, who lives in Potomac, and his father did not respond to phone calls yesterday. Attorneys for both declined to comment.

But in sworn affidavits filed with the Delaware state court last week, the younger Wohlstadter and two top BioVeris executives offer the most detailed account to date of the cars and properties Wohlstadter allegedly bought using the joint venture's funds.

According to an affidavit by BioVeris's chief financial officer, George V. Migausky, Wohlstadter said that he purchased the luxury cars for senior personnel at the joint venture "in lieu of a stock or option plan or similar benefits" and that they could use the cars regularly, "but not for commuting."

Between February 2003 and March 2004, according to Migausky's affidavit, Wohlstadter used company money to purchase at least eight cars -- five BMWs, a Dodge Viper, a Land Rover and an Isuzu sport-utility vehicle -- for about $700,000. In addition, he placed a $166,000 deposit on two Ferraris, which were expected to be purchased when delivered by the beginning of 2005, Migausky said.

Wohlstadter also directed his company to create a temperature- and humidity-controlled garage to store the fleet of cars, Migausky said (contů)