LOUISVILLE, Ky. (WDRB) -- Braidy Industries Inc. says it has uncovered evidence that company founder Craig T. Bouchard misused hundreds of thousands of dollars of company money while he was CEO of the Ashland, Ky.-based aluminum firm.
The company said in a court filing on Thursday that an internal review raised several "red flags" about Bouchard's travel spending, credit card charges and legal expenses, and that it has hired a third-party firm to conduct an independent investigation.
The outside investigation is "likely to prove self-dealing and other wrongful conduct by Bouchard," the company said the court filing.
Bouchard was removed as CEO of the company, which in 2017 received an unusual $15 million investment of taxpayer money from Kentucky, last month after the company's other board members claimed they weren't happy with the pace of fundraising to build a $1.8 billion aluminum plant near Ashland.
Bouchard and Kentucky elected officials have touted the plant -- which could employ more than 600 people -- as a first step toward "revitalizing Appalachia."
"This is what hope feels like," former Gov. Matt Bevin, who orchestrated the public investment in Braidy Industries, said in a June 2018 "groundbreaking" ceremony for the facility.
But nearly three years after the plan was announced, construction hasn't started, as the company remains $500 million short of the investor money it says is needed to finance the project.
The company's other board members say that, after sidelining Bouchard, they have taken the reins and are focused on raising the money needed for the project.
Bouchard is not backing down. He sued the company this week to enforce what he said is his right to replace all the board members with directors of his own choosing.
PODCAST: Bouchard explains his decision to sue his fellow board members
The company and its four non-Bouchard board members said in a court filing Thursday that Braidy Industries began an internal investigation of Bouchard's actions in early February after the company's chief financial officer raised concerns.
"The company has identified certain financial and operational irregularities in connection with your role as Chief Executive Officer that warrant investigation," Braidy Industries board chairman Charles Price, of Louisville, wrote to Bouchard on Feb. 3, informing him that he would be placed on paid leave.
The company claims that it found several "red flags" when reviewing its finances under Bouchard.
The court filing lists them:
Personal expenses charged by or on behalf of Bouchard to the company's credit cards, a violation of the company's travel policies
About $220,000 in "unsubstantiated" travel charges and $113,000 "unsubstantiated" meal charges to company credit cards
Unauthorized charges "associated with chartered private planes," in violation of the company's travel policies
Legal work conducted on behalf of Bouchard billed to the company
Bonuses paid to Bouchard, at Bouchard's own direction, that the company believes violate his employment agreement
Related-party transactions involving "businesses associated with Bouchard's son and brother-in-law"
The company said the unsubstantiated travel charges “appear to be corroborated” by Bouchard’s Facebook page, “including posts suggesting that Bouchard's recent globe-trotting (paid for by the Company) resulted from his personal, as opposed to business, motivations.”
The company said, for example, that Bouchard posted on Facebook in October 2019 about bringing his daughter to see the Taj Mahal in India.
Braidy Industries included about two dozen Facebook posts as an exhibit to the court filing. The posts on Bouchard's public page show him and a daughter in Qatar, Kuwait, Singapore, Abu Dhabi, Ireland and London, among other places.
One of Bouchard's lawyers, in an exhibit filed with the company's response on Thursday, said the company's external investigation "appears to be a post hoc effort to manufacture some basis for dismissing Mr. Bouchard with cause from his roles as CEO, Chairman, and Secretary."
Bouchard took to Facebook on Friday morning to denounce the company's "outrageous deliberate inaccurate suggestions about my expenses unsupported by facts."
He said expenses for his daughter to accompany him on the India trip were "paid personally."
In an email to WDRB on Thursday evening, Bouchard said he was in fact "about to terminate" several Braidy Industries members -- whom he did not name -- because of allegations of fraud made against them in an unrelated business lawsuit filed in Boston.
"Braidy can have no directors with such a history. Investors will accept no board members with this history. We were in line of sight to $2 billion of funding for the mill. I'm sorry to say they beat me to the punch and removed me," Bouchard said in the email. "This was self preservation. But, they will go home, and I will build the mill. I owe (it) to Ashland, Kentucky."
Bouchard also called the company's allegation that he paid himself improper bonuses "pure baloney."
"I have nothing to do with bonuses. All employees received a 5% bonus last year after a specific board meeting approval. That is administered through (Human Resources) and the CFO," Bouchard wrote.
Video of @GovAndyBeshear comment on @braidyinc situation this morning, via @KevinWheatleyKY https://t.co/R9QBnE1D5c pic.twitter.com/0juP5CebwV
— Chris Otts (@christopherotts) February 21, 2020
Gov. Andy Beshear told reporters Friday that he remains hopeful the aluminum plant will be built, but the dispute between Bouchard and the other directors is "very concerning."
"The allegations going back and forth are beyond a normal disagreement over management," Beshear said.
Beshear added that, should it become clear the plant will not be built, "You bet I am going to do everything I can to get that $15 million back."
