Mario Gabelli’s lawyers are being kept pretty busy these days. The U.S. Justice Department said earlier this month that it would be filing civil charges agains Mr. Gabelli alleging that he created sham companies to bid for cell-phone licences at a discount via rules favoring small businesses and minorities. And just yesterday, New York State Supreme Court judge Linda S. Jamieson granted a summary judgement against him in a long running legal battle with two men who provided financial backing to him in the 70’s and who allege that they were unfairly prevented from selling their shares in his private company Gabelli Group Capital Partners, which controls Gamco Investors, Mr. Gabelli’s publicly traded mutual fund company…
Judge Jamieson also agreed to grant the two investors a trial to determine if Mr. Gabelli’s company should be dissolved — refusing Mr. Gabelli’s efforts to have the case thrown out — and said, "There are allegations made against Mr. Gabelli that trouble this court."…
In the lawsuit brought by the two investors, Frederick J. Mancheski and David M. Perlmutter, they argue that Mr. Gabelli and his firm’s directors "are guilty of looting the assets of the company, breaching their fiduciary duties to its shareholders and oppressing its minority shareholders."
Yesterday’s decision was a victory for the two investors because the judge ruled in their favor without requiring a trial. Mr. Mancheski, a longtime associate and friend of Mr. Gabelli, was his very first investor, in 1976.
The ruling will allow the two investors to sell their shares in the company on the open market. Their shares, bought for about $75,000 in the late 1970’s, are now worth more than $30 million and possibly $100 million, depending on how the value is calculated. Mr. Gabelli had contended that the two men’s stock was restricted and could be sold only to the company at book value, which the two men have suggested is an artificially depressed price.
Mr. Mancheski and Mr. Perlmutter also argued that Mr. Gabelli had deprived them of millions of dollars by siphoning money to himself and his family. (In 2002, Mr. Gabelli took $87 million in cash when Gamco’s net income was $53.3 million.)….
Court Rules Against Gabelli – New York Times
