William L. Richter, senior managing director and president of Cerberus Capital Management LP (CCM), has been named in a lawsuit filed by David Schwartz, founder of Rent-A-Wreck (RAWA), according to a statement released by the law firm Gordon & Simmons, LLC.
“This complaint was made public in response to recent news articles erroneously implying that the lawsuit had been settled in a jury trial,” the statement says.
The complaint charges Richter, a former Rent-A-Wreck company officer, and other directors of Rent-A-Wreck with fraud and misuse of corporate assets. Richter served in various capacities with Rent-A-Wreck from 1983 until January 2006, including as director and vice chairman.
Also named in the suit is Kenneth Blum, Sr., a former Rent-A-Wreck president, who is accused of misusing company resources for personal use.
According to the statement, Richter and Blum also entered into an agreement in 2006 to merge Rent-A-Wreck with MBFG, Inc., a wholly owned subsidiary of J.J.F. Management Services. Further, Richter and Blum delisted Rent-A-Wreck's stock following the passage of the Sarbanes-Oxley Act. This caused the value of the shares to drop dramatically, the statement says.