Mark Kalmbach owns about 3,600 shares of the Bend IT company where he was a system administrator, but he says in a recently filed lawsuit that he can’t get an explanation of why the value of those shares dropped 44 percent in one year.
Kalmbach, who lives in Texas, is suing N-Link Corp. over access to information about the employee stock ownership plan, or ESOP.
N-Link is a federal contractor that touts its employee-owned status.
According to the lawsuit filed Nov. 1 in Deschutes County, CEO Sandra Green is the only member of the board of directors, so she also directs the stock plan.
One the reasons Kalmbach stated for his stymied quest for records is to find out whether there’s been mismanagement or breach of fiduciary duty, the suit says.
N-Link at one point had 150 employees and $21 million in annual revenue, according to a statement by Green cited in the lawsuit.
Green moved the company to Bend in 2007, and it used to have its offices on Franklin Avenue downtown.
Kalmbach’s stake in the employee stock plan is relatively small with a vested balance of $1,591.24 as of Sept. 30, 2017, according to a participant account statement sent to Kalmbach in September. There are other conflicts between Kalmbach and N-Link.
N-Link sued him and two other former employees in 2017 for $750,000 over alleged violations to business protection agreements.
That lawsuit, also in Deschutes County, is still open.
Kalmbach’s attorney in the ESOP lawsuit, Cody Berne of Stoll, Stoll, Berne, Lokting & Shlachter PC in Portland, declined to comment.
N-Link attorney James Steiker did not respond to requests for comment. Green did not reply to an email.
Kalmbach’s lawsuit focuses on Green’s control of the company and the ESOP, which has 316 participants, according to an annual filing with the U.S. Department of Labor.
The stock plan started the plan year Oct. 1, 2016, with $2.29 million in net assets and ended at Sept. 30, 2017 in the red by $146,744, according to the statement filed this year.
A trust established in connection with the stock ownership plan paid Green more than $7 million for her shares of N-Link in 2009. And the company still owed Green $3.3 million in 2015, according to Kalmbach’s lawsuit.
Earlier this year Kalmbach and another former N-Link employee, Eugene “Victor” Cordell, tried to get information about the stock plan and the company from the ESOP trustee.
The trustee, Rick Cash, refused to provide articles of incorporation, bylaws, minutes of shareholders’ meetings, financial statements and accounting records of the corporation.
“Mr. Kalmbach and Mr. Cordell find their rights in the ESOP being tended to by a trustee that is intent on shielding N-Link,” Berne wrote in a letter to Steiker, N-Link’s Pennsylvania attorney for ESOP matters.
“Ms. Green runs N-Link with no meaningful oversight, least of all from Mr. Cash and Farmers (National Bank of Danville),” Berne wrote.
This is at least the third lawsuit N-Link has faced in the past two years from a former employee. Two previous suits have been settled.
Employees aren’t the only ones suing. N-Link sued Kalmbach, Cordell and a third former employee, Benjamin Roth, in April 2017.
The suit alleges that Kalmbach formed a business that entered a contract with an N-Link client to do similar work. Roth and Cordell were hired by Kalmbach’s business, Trinity Bend Solutions Inc., according to the lawsuit.
N-Link appears to be struggling financially.
Green signed a declaration dated April 25 that said N-Link “has withered from 150 employees and $21 million in annual revenue, to just 18 full-time employees and $3 million in annual revenue,” according to Kalmbach’s lawsuit.
— Reporter: 541-617-7860, email@example.com