Paving powerhouse locked in family feud
Founder’s daughter says she’s getting ‘frozen out’
Waukesha construction company Payne & Dolan, known for smoothing roads and highways around the Midwest, has hit a rough stretch concerning its ownership.
The third-generation family-run business now comprises five related companies under the umbrella Walbec Group, based in Waukesha. It’s worth millions, maybe hundreds of millions. It’s just not clear.
And that’s the problem, according to a new lawsuit. Nancy Dewey, one of founder Walter Bechthold’s three children, and her son want to sell their stakes but say Walbec’s current CEO, Bechthold’s grandson Kurt Bechthold, and other executives are trying to hide the company’s real value.
The suit says the executives are manipulating financial statements to reduce the plaintiffs’ share value by “perhaps hundreds of millions of dollars,” and subjecting the plaintiffs to “a classic freeze out/squeezeout oppression formula.”
Without an honest accounting of the firm’s real value, Nancy Dewey, 84, and her son John D. Dewey, 53, both of Florida, say, they face a “Hobson’s choice” of keeping a minority interest without any control or selling at “artificially depressed value.”
The suit asks that the court appoint a receiver to conduct “a forensic accounting investigation” into the company records.
‘Trumped-up falsehoods’
The Deweys’ lawsuit asserts fraud, shareholder oppression, breach of fiduciary duty and violations of a state law mandating shareholders access to corporate records. It also asks the court to find that restrictions on trans-
fers of shares are unreasonable or not applicable to John Dewey’s shares.
Summer Strand, a spokesperson for Walbec Group, said the company intends to vigorously defend the “scurrilous” suit and its “trumped-up falsehoods.”
“We believe these claims to be wholly without merit and that the filing of this new lawsuit is totally inappropriate,” Strand said in a statement. “We are confident that the court will again reject all the false claims that are made.”
The seeds of the current litigation were planted five years ago when John Dewey sued over the distribution of excess funds and practices he said didn’t give him a fair voice in the operation of the company.
That case, filed in Waukesha County Circuit Court, was dismissed on defendants’ motions in 2015 and judgments of more than $4,000 were imposed against Dewey.
The new case is in federal court.
The Deweys are represented by Stephen Kravit of Milwaukee and the New York law firm Gibson, Dunn & Crutcher.
It says that starting in 2013 John Dewey believed the companies weren’t providing a reasonable return on investment while the executives earned “excessive compensation.”
Kravit said the new suit differs significantly from the Waukesha County case.
He said Nancy Dewey “is sad” that her nephew “has chosen to operate the business in ways that deprive her side of the family of their rightful legacy, and in so doing has sacrificed what were close family relations.”
Nancy and John Dewey sued individually and as trustees for several family trusts that own combined interests of about 19% in Payne & Dolan, 12% in Northeast Aggregates, 33% in Zenith Tech, 24% in Timberstone and 15% in Construction Resources Management.
Named as defendants are the companies plus Kurt Bechthold; his brother David Bechthold, CEO of Zenith; Mark Filmanowicz, Walbec president; and John G. Sorenson, Walbec’s chief financial officer until May.
About 1,500 people work for Walbech’s five companies.
In addition to paving, they provide services in construction and engineering, drilling, blasting, and marine and dam work in 11 states.
Fair market or book value?
According to the lawsuit, the Deweys are required to offer their shares first to the companies, then to other shareholders at easily manipulated book value rather than fair market value.
It says the companies use aggressive depreciation of real estate and accounting methods that don’t comply with generally accepted principles.
The suit says the plaintiffs’ investigation has found assets worth tens of millions that aren’t reflected at all in the companies’ books, like certain mining operations.
From state records, the plaintiffs say they learned the companies took in about $160 million annually from the state for work from the past five years.
The plaintiffs also list 16 properties where the companies make asphalt or sell gravel, sand and stone that have countyassessed values of nearly $40 million and generate an estimated $250 million to $332 million in annual sales.
The Deweys believe the facilities’ fair market values are much higher and that the companies value them at even less internally.
A Midwest paving powerhouse
Walter Bechthold built up Payne & Dolan from a small Illinois company into a Midwest paving powerhouse, then added related companies. He left it to his three children, Nancy Dewey, Ned Bechthold and Ellen Bechthold, of Chicago.
Ned ran the company until about 1999 and turned the job over to his son Kurt, who is the current CEO.
Until 2013, Nancy Dewey, Ned Bechthold and Ellen Bechthold served as the directors of the company. Dewey contends that her siblings met that June while she was having surgery and changed the board to seven members, with new outside directors picked by Kurt Bechthold, reducing her representation from 33% to 14%.
Ned Bechthold died in May 2014.
Walter Bechthold was still the acting chairman of the Payne & Dolan board when he died in December 1982 at age 88. His 4,425 shares in the company were valued at $1.3 million when his estate was in probate in 1983.