A founder of ReThink Capital Partners is suing his former colleagues for allegedly trying to cheat him out of his interest in the White Plains investment firm by depressing the value of his shares by millions of dollars.
Richard D. Segal accused the company, four executives and an outside valuation firm of conspiracy, in a Nov. 4 complaint filed in Westchester Supreme Court.
Segal, of Indian River Shores, Florida, and formerly of Rye, claims that his colleagues manipulated an outside valuation service to reduce the value of his shares by millions of dollars in an appraisal that was “clearly divorced from reality.”
ReThink Capital was founded in 1981 and was originally named Seavest Inc. It manages $2.5 billion in assets through a variety of private funds that specialize in real estate and venture capital.
The company makes money from front-end fees, such as a 2% management fee on the funds and a 20% share of the profits.
For several years, Segal says, he and his partners have taken home millions of dollars in up-front fees and even more from the 20% profit sharing.
He says ReThink is worth more than $50 million, making his 40.9% share worth at least $20 million. But an outside valuation service calculated a $4.74 million buyout.
The other equity partners are Douglas F. Ray, of Manhattan; Michael Walden, of Wilton, Connecticut; and Jonathan L. Winer, of Greenwich, Connecticut. Shak Chowdhury, the chief financial officer, and Andersen Tax LLC, a Delaware valuation service, are also named as defendants.
Segal traces the dispute back to 2009, when he was told that his heart transplant would likely last 10 to 12 years.
He began planning for retirement but for years, he claims, company executives ignored his requests to develop an independent buyout valuation, as required by the firm’s operating agreement.
But his colleagues often asked whether he was healthy enough to continue working, the complaint states, and how much longer he thought he would live. He says he responded that he would retire when he was 70.
Two years ago, Segal agreed to resign on October 15, 2024, and the company agreed to buy out his portion of the business.
The separation agreement included a provision that ReThink could buy half of Segal’s interest for $4.5 million, the complaint states, implying that his total interest was worth $9 million before a formal, outside valuation was done.
As the retirement deadline was approaching this year, Segal claims, his partners “schemed to oust him.”
ReThink hired Andersen Tax LLC to do the independent valuation. But the executives allegedly fed information to Andersen that understated revenues, overstated expenses, omitted key financial information, and presented the company as a third-rate business.
The 20% profit sharing, for instance, was not included in the calculations, and Segal was not allowed to participate in the process, according to the complaint.
“These (and other) manipulations,” the complaint states, “resulted in a valuation many millions of dollars below fair value.”
Andersen valued Segal’s share of the business at $4.74 million. The report stated the analysis was based on information provided by ReThink management that was not independently verified but “is believed to be reliable.”
Segal’s former colleagues refused to discuss the report, according to the complaint, and made the first installment payment based on the $4.74 million valuation. Segal rejected the payment.
He accused the executives of breach of fiduciary duty for artificially depressing the value of his interests “through dishonest, unethical, and fraudulent means.” He accused Andersen Tax of aiding and abetting breach of fiduciary duty, and all of the defendants of breach of contract and conspiracy. He is demanding unspecified monetary damages.
ReThink and Andersen did not reply to messages asking for their sides of the story.
