Fam­ily feud lands in court­room

Brothers at ven­er­a­ble Ch­ester County con­struc­tion firm face crim­i­nal charges, law­suit

Daily Local News (West Chester, PA) - - FRONT PAGE - By Michael P. Rel­la­han mrel­la­han@21st-cen­tu­ry­media.com @Ch­escoCourtNews on Twit­ter

Com­pet­ing ac­cu­sa­tions of em­bez­zle­ment at a ven­er­a­ble Ch­ester County con­struc­tion firm have landed two brothers in court, one fac­ing crim­i­nal charges and the other a de­fen­dant in a civil law­suit.

Mark A. Davis, the former chief ex­ec­u­tive of­fi­cer at C. Ray­mond Davis & Sons in Kim­ber­ton, was ar­rested and charged last month by East Pike­land Po­lice with felony theft by un­law­ful tak­ing, ac­cess de­vice fraud, and re­ceiv­ing stolen prop­erty for al­legedly tak­ing more than $300,000 in com­pany funds just days be­fore he was dis­missed from his po­si­tion at the 90-year-old com­pany.

Three days af­ter the charges were filed against him, Mark Davis filed a law­suit in Com­mon

Pleas Court against his younger brother, Kyle L. Davis, the com­pany’s chief fi­nan­cial of­fi­cer; his fa­ther, T. Ray­mond “Ray” Davis, the son of the founder of the gen­eral con­tract­ing busi­ness and former owner; and the com­pany it­self, which has of­fices in Kim­ber­ton, Prince­ton, New Jersey, and Bolton Land­ing, New York, in the Adiron­dack Moun­tains.

Kyle Davis is the main ac­cuser in the crim­i­nal com­plaint against his older brother, hav­ing told a town­ship in­ves­ti­ga­tor that Mark Davis was not au­tho­rized to write a check for $308,344 to a busi­ness he owned out­side the con­struc­tion firm, Kim­ber­ton Com­pany. On the other hand, Mark Davis is the sole plain­tiff in the law­suit, which gen­er­ally

ac­cuses his younger brother of us­ing com­pany funds for his own ben­e­fit, in­clud­ing a sur­rep­ti­tious bonus of $150,000.

The crim­i­nal charges against Mark Davis are sched­uled for a pre­lim­i­nary hear­ing later this month at the district court in South Coven­try. The civil ac­tion, which charges breach of con­tract, breach of fidu­ciary duty, and wrong­ful ter­mi­na­tion, has been as­signed to Judge Al­li­son Bell Royer. No trial date has been set.

An at­tor­ney rep­re­sent­ing Mark Davis in the crim­i­nal ac­tion, Thomas Schindler of Ken­nett Square, said that he be­lieved the po­lice had be­come im­prop­erly in­volved in what es­sen­tially is a busi­ness dis­pute be­tween fam­ily mem­bers. The civil suit was filed on Mark Davis’ be­half by at­tor­neys James Sargent Jr. and Guy A. Donatelli of the West Ch­ester law firm of Lamb McEr­lane.

“This clearly is a civil dis­pute,” Schindler said in an email on Fri­day. “We do not know or un­der­stand the jus­ti­fi­ca­tion for the fil­ing of crim­i­nal charges; we see this as an ab­so­lute mis­use of law en­force­ment re­sources.”

An at­tempt to reach Kyle Davis at the firm’s home of­fice on Fri­day was un­suc­cess­ful. It is not known who is rep­re­sent­ing him or the other par­ties in the civil ac­tion, which was filed at the Ch­ester County Jus­tice Cen­ter in West Ch­ester on Sept. 23.

Ac­cord­ing to its web­site

and court doc­u­ments, C. Ray­mond Davis estab­lished the con­struc­tion firm that bears his name in 1926, first as pri­mar­ily a home builder and then later as a com­mer­cial build­ing con­trac­tor. Over the years the busi­ness ex­panded as the founder’s son, Ray Davis, opened De­vault Con­tract­ing, which worked on high-end projects such as One Lib­erty Place and Vet­eran’s Sta­dium, both in Philadel­phia.

In re­cent years, C. Ray­mond Davis has been the gen­eral con­trac­tor and man­age­ment firm for such dis­tinc­tive projects as the East Brandy­wine Bap­tist Church and the nu­mer­ous new Ci­tadel Fed­eral Credit Union of­fices across the county.

Mark Davis, 59, of East Pike­land be­came in­volved in the com­pany upon his grad­u­a­tion from King’s Col­lege in Wilkes-Barre. He was pro­moted to CEO in 1992, and be­gan branch­ing the com­pany out into up­scale res­i­den­tial build­ing projects, ex­pand­ing the firm’s reach from the Delaware Val­ley to sub­ur­ban New Jersey and up­state New York. The com­pany has ap­prox­i­mately $50 mil­lion in an­nual gross re­ceipts, ac­cord­ing to the law­suit.

Kyle Davis, 58, who lives less than five miles from his older brother in West Vin­cent, is also a grad­u­ate of King’s Col­lege. He too be­gan work at the firm upon grad­u­a­tion, tak­ing on fi­nan­cial du­ties that suited his busi­ness ad­min­is­tra­tion col­lege de­gree. He was pro­moted to CFO in 1992.

The two brothers worked side by side in com­pli­men­tary roles for years, each be­ing paid the same amount of salary and hav­ing equal ben­e­fits, and shar­ing stock in the firm. But in the suit, Mark Davis states that over the years, he had raised “his view that Kyle Davis should be com­pen­sated only at a level re­flect­ing his very lim­ited con­tri­bu­tion par­tic­u­larly since out­side con­sul­tants … con­tin­u­ally crit­i­cized Kyle Davis for poor ac­count­ing prac­tices.”

On June 8, Kyle Davis con­tacted East PIke­land Po­lice and ul­ti­mately spoke with Cpl. Bernard Martin about the al­leged theft of funds by his older brother. In his ar­rest af­fi­davit, Martin iden­ti­fied him­self as a 10-year vet­eran po­lice of­fi­cer who has worked pre­vi­ously on fraud and theft cases in his ca­pac­ity as a town­ship po­lice of­fi­cer.

Kyle Davis told Martin, ac­cord­ing to the com­plaint, that there had been “nu­mer­ous is­sues” over sev­eral years re­gard­ing his brother’s use of cor­po­rate funds for his own pur­poses, and that he and his fa­ther had “con­tin­u­ally” at­tempted to curb his spend­ing. Those ef­forts even­tu­ally led to the adop­tion by Kyle Davis and Ray Davis of an ex­penses and re­im­burse­ment pol­icy that stated that no em­ployee of the com­pany could is­sue a check for over $1,000 with­out agree­ment by the board of di­rec­tors — es­sen­tially Mark Davis, Kyle Davis and Ray Davis.

But on May 13, Mark Davis wrote the check for $308,344 to Kim­ber­ton, which is a hold­ing com­pany he uses for, among other pur­poses, own­er­ship of a 42-foot Sea Ray cruiser boat he docks in Delaware and a Cessna air­plane. Both are used for C. Ray­mond Davis busi­ness to en­ter­tain clients and pro­vide trans­porta­tion to job sites, ac­cord­ing to the law­suit, but Kyle Davis told Martin that Mark Davis had not been au­tho­rized to write the check to the firm.

When in­ter­viewed by Martin, Mark Davis ad­mit­ted writ­ing the check, but said that he had been ad­vised by a com­pany at­tor­ney that he was en­ti­tled to do so, since it rep­re­sented ex­penses charged to C. Ray­mond Davis & Sons from Kim­ber­ton. He told the of­fi­cer that he had been un­der­paid by the con­struc­tion firm and was owed “hun­dreds of thou­sands of dol­lars.” He also ac­knowl­edged that he had taken the check out of se­quence in the com­pany’s books so that it would not be no­ticed im­me­di­ately and stopped.

He did so, he said, be­cause he and his brother had been ar­gu­ing over the ex­penses and that Kyle Davis and Ray Davis had called an un­usual board of di­rec­tors meet­ing for May 16, at which he sus­pected they in­tended to fire him. They did.

Martin wrote that he was fil­ing the charges be­cause he be­lieved that Mark Davis was not en­ti­tled to write checks for that amount with­out au­tho­riza­tion, and be­cause Mark Davis at­tempted to con­ceal the trans­ac­tion.

In the law­suit, how­ever, Mark Davis con­tends that it was not he that was im­prop­erly us­ing com­pany funds for per­sonal use, but Kyle Davis. The suit con­tends that the younger man used the com­pany’s re­sources to fund $250,000 for ren­o­va­tions to his Hall­man Mill Road home, and the unau­tho­rized bonus. Mark Davis claims to have spo­ken to his brother about those al­leged abuses in the past, to no avail.

The suit also al­leges that Kyle Davis im­prop­erly drew up the ex­pense pol­icy in De­cem­ber, and passed it with­out a proper meet­ing of the com­pany’s board. He was not given the op­por­tu­nity to re­view the pol­icy be­fore­hand, even though he was a mem­ber of the board, and never saw any min­utes of the “pur­ported board meet­ing,” the suit al­leges.

The civil com­plaint al­leges that ahead of the May check, Mark Davis con­sulted with a se­nior man­ager at the Davis com­pany about what he said were out­stand­ing, le­git­i­mate ex­penses owed to Kim­ber­ton. The em­ployee, Dan Donatelli, sought ad­vice from cor­po­rate coun­sel, Dave Davis (no re­la­tion), and was told that Mark Davis was free to write a check to Kim­ber­ton, since the ex­penses came be­fore the re­im­burse­ment pol­icy was changed.

The role of Ray Davis in the af­fair is am­bigu­ous. The suit al­leges that Ray Davis was not in­volved in the day-to-day op­er­a­tions of the com­pany that bears his fa­ther’s name af­ter 1992, and that although he ar­rived for work ev­ery­day from 1992 to 2005, he was “clearly dis­en­gaged in the man­age­ment of the busi­ness.” By 2005, he had given up all but a small por­tion of the firm.

Now, 86 years old, Ray Davis is “no longer com­pe­tent” to un­der­stand the op­er­a­tions of the busi­ness, the suit al­leges. His “in­de­pen­dent judge­ment has been co-opted and over­rid­den as a result of mis­in­for­ma­tion pro­vided and un­due in­flu­ence ex­erted by … Kyle Davis,” it reads.

PETE BAN­NAN — DIG­I­TAL FIRST ME­DIA

C. Ray­mond Davis & Sons in Kim­ber­ton. Com­pet­ing ac­cu­sa­tions of em­bez­zle­ment at the con­struc­tion firm have landed two brothers in court, one fac­ing crim­i­nal charges and the other a de­fen­dant in a civil law­suit.

PETE BAN­NAN — DIG­I­TAL FIRST ME­DIA

C. Ray­mond Davis & Sons con­struc­tion firm in Kim­ber­ton.

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