White Plains investment firm says $16M deal based on deception

A Troob Capital Management affiliate that invested more than $16 million in a California manufacturing company claims that the seller sealed the deal by concealing legal and financial problems.

Context TCM Riviera Acquisition, of White Plains, accused Sidney E. Anderson, former majority owner of Riviera Bronze MFG, of fraud, in a complaint filed last month in Westchester Supreme Court.

Anderson courted Context TCM to buy a controlling stake in Riviera by “portraying himself as an honest, forthright and trustworthy business owner eager to grow and expand his business,” the complaint states, “while intentionally obfuscating and hiding numerous material liabilities that should have been disclosed.”

Anderson’s attorneys at Glenn Agre Bergman & Fuentes, Manhattan, did not reply to a request for comment.

Context TCM is an affiliate of Troob Capital Management, a White Plains investment firm founded in 2002 by Douglas and Peter Troob.

Riviera Bronze in Santa Barbara, California bills itself as a premier designer and manufacturer of custom steel doors and windows. It was founded in 2003 and purchased by Anderson in 2011.

The Troob affiliate saw potential for making Riviera a “true nationwide presence in its industry that could achieve a meaningful return on investment,” the complaint states.

A deal was struck in December 2020 to buy 55% of Riviera for $16,225,000.

Anderson allegedly insisted on retaining tight control of the due diligence process and restricted access to Riviera employees so as to avoid “spooking them.”

He represented in writing that there were no pending actions against the company, according to the complaint, and no events or circumstances that could serve as a basis for legal proceedings or government orders.

“Each one of these representations was false,” the complaint states.

Anderson allegedly knew, for instance, about several customer disputes that could lead to litigation. Six months after the deal closed, when the first of several lawsuits was filed, Anderson “feigned surprise.”

He also allegedly knew about potential liability with a type of window glass that frequently failed and that Troob now calculates will cost more than $2 million to replace.

The Troob affiliate also accused Anderson of manipulating financial records to make it appear as if Riviera had more than $1.3 million in cash on hand at the closing. But weeks later the cash balance was at zero.

Troob claims it has spent more than $4 million remedying concealed issues and putting the company back on solid footing.

Anderson, who had stayed on as president, was fired this past December.

On Feb. 9, he allegedly rejected a demand for $3 million in reimbursements.

The Troob company accuses Anderson of breach of contract and fraudulent inducement, and it is demanding unspecified damages to be determined at trial.

Troob is represented by Manhattan attorneys Samidh Guha, Alexander K. Parachini, and Rachel Fleder.