Feuding partners trade in gas and lawsuits
Companies and clashing partners
A Thornwood-based company”™s $43-million acquisition last year of nearly 90 Shell Oil Co. gas stations in Westchester and metropolitan New York has sparked a bitter battle for control of the $50-million enterprise between a long-time service station owner and operator in the region and two major investors.
The opponents and their attorneys since June have pumped hundreds of pages of legal filings into state Supreme Court that contain charges and countercharges, claims and denials involving the theft of more than $1 million in gas-pump revenue, alleged death threats and false criminal complaints, illegal firings and hirings, gross mismanagement, a “scorched-earth” attempt by its day-to-day operator to ruin and devalue the company, dealer price and rent manipulations, “predatory pricing” that undercut and angered some Shell dealers and libel and slander.
At the center of the entangled business conflict ”“ which includes a related legal battle for control of a fuel distributorship and eight Shell stations in Fairfield County, Conn. ”“ is Sammy Eljamal, owner of Wholesale Fuels in Thornwood. In addition to the bitterly divisive Shell venture, which also has offices in the Wholesale Fuels building at 25 St. Charles St., Eljamal has interests in several other service stations in the region.
In his libel and slander suit against a business partner, Eljamal said he acquired his first Mobil gas station franchise at the age of 18 and his “extraordinary growth” within the Mobil franchise system earned him the nickname “Mobil Man Sam.”
Eljamal in 2009 joined Leon Silverman, chairman of Silverman Realty Group Inc. in White Plains and a prominent commercial landlord in the county, Scarsdale investor James A. Weil and three passive investors to form the limited liability companies NY Fuel Holdings and Metro NY Dealer Stations and subsidiaries to acquire, lease and distribute fuel to 88 Shell-branded stations in Westchester, New York City and Long Island. The oil company”™s gas-station subsidiary, Motiva Enterprises L.L.C., agreed to sell its New York-market properties and assets for approximately $43.3 million, according to court papers.
Eljamal put up an approximately $2-million stake in the deal and the investors led by Silverman and Weill put up some $21 million. The deal was completed in June 2010 with a $33-million loan from Manufacturers and Traders Trust Co. Eljamal was the only personal guarantor to sign the loan and purchase agreements.
He, Silverman and Weil agreed to co-manage the business, with Weil as the venture”™s financial chief and the industry-experienced Eljamal running day-to-day operations.
Soon after the closing, however, Eljamal”™s partners say they grew disillusioned with his performance and ability. Weil in his affidavit said Eljamal had “little to no experience” operating the wholesale distribution or a business “of this size and magnitude.”
His lack of financial acumen also led the partners into unprofitable station acquisitions and costly renovations, Weil said. They were irked by his “habit of disappearing for days on end” and unavailability on business matters. Weil, who invested $7 million of his own and family funds in the venture, said Eljamal”™s failure to sign operators for several acquired stations has caused “substantial and continuing losses” for the company.
Weil said “the last straw” for him and Silverman was Eljamal”™s alleged theft of some $1.4 million from the company from gas-pump sales.
He and his father, Musa Eljamal, separately operate Fuelco stations supplied by the partners”™ company, NY Fuel Distributors. As commission agents, they are required to deposit all cash sales proceeds into the distributor”™s bank account and in return receive a monthly per-gallon commission.
Weil said Eljamal withheld the deposits. Though he made partial restitution, Weil claimed Eljamal still owed the company about $1.2 million. The partners contacted the Westchester County district attorney”™s office.
Less than one year after their purchase closed, his partners notified Eljamal they were offering to sell all of the Shell properties for $25 million to a buyer who also would assume all company debt.
Eljamal was told he would be removed as a company manager in June.
Eljamal, though, through attorney Albert J. Pirro Jr. has obtained a temporary court order barring his removal and keeping him in control of day-to-day decisions at the company. Weil, though, must first sign off on any decisions regarding financial matters.
Pirro argued that removing Eljamal as manager would place the company in default of its loan agreement and leave Eljamal personally liable for the balance of the loan, which attorneys for Silverman and Weil said amounts to about $24.3 million.
The clashing business partners in June were issued a gag order by Supreme Court Justice William Giacomo.
In late August, Eljamal returned to state Supreme Court with another attorney, Joshua J. Grauer of Cuddy & Feder L.L.P. in White Plains, seeking hundreds of millions of dollars in damages from Weil for libel and slander. His business partner”™s “campaign of lies” has driven away Eljamal”™s fuel-supply customers and contractors and employees and has damaged his ability to obtain financing for his business, he claimed.
Silverman and Marc S. Oxman, co-counsel in White Plains for Eljamal”™s legal opponents, declined to comment when contacted by the Business Journal.
Eljamal”™s assistant at his Thornwood office said he was “out of state this week.” He did not return the call for comment.
“On or about May 8, 2011, Sammy (Eljamal) told Brent (Brent Coscia, NY Fuel Holdings general manager) over dinner that all he needed to do was put $15,000 in a brown paper bag, and he could have Leon or me killed. While some of Sammy”™s friends and relatives tried to explain away this statement to Brent later that same day, it was not a bell that could be unrung.” ”“ James A. Weil, in an Aug. 19 court affidavit
“Plaintiff has seen first-hand noticeable changes in his business relationships, only to discover upon inquiry that the individual dealing with plaintiff in a dramatically changed manner had been told by defendant that plaintiff was out of the business, always ”˜high”™ on drugs or, in sum and substance, was on his way to jail.” ”“Complaint by Sammy Eljamal in his libel and slander suit against James Weil