CHARLESTON – Powerball winner Jack Whittaker is suing a Beckley woman he hired to run a used car lot for him, claiming she defrauded the company out of thousands of dollars.
In the lawsuit filed Jan. 23 in Kanawha Circuit Court, two companies owned by Whittaker -- Blackburn Pre-Owned Autos LLC and Whittaker LLC – claim Linda Blackburn is guilty of numerous actions that resulted in financial damages.
The suit says Whittaker's Blackburn Autos bought the assets of a used car business from Linda Blackburn. She, however, is not a member of Blackburn Autos and has no ownership.
That company hired Blackburn in January 2004 to manage the company for one year at a salary of $65,000. She also was eligible for a bonus program where she could get 10 percent of the net profit for the calendar year.
The company also agreed to employ Blackburn's brother Mark Blackburn for one year at $30,000.
But Blackburn did things she wasn't authorized to do, according to the suit filed by Charleston attorney Norman T. Daniels Jr.
Blackburn allegedly paid herself $85,000 instead of $65,000, and she also paid her brother $50,000 instead of $30,000. She also paid herself an additional $30,000 without permission.
The suit claims Blackburn also enrolled Blackburn Autos in a health insurance program without permission thereby incurring expenses on behalf of Blackburn Autos that it would otherwise not have incurred.
Then, Blackburn "employed family members and friends solely in order that they could be enrolled in the company health insurance program, thereby incurring even further expense for Blackburn Autos," the suit states.
Additionally, "despite the purchase of Blackburn Autos of the accounts receivable of the prior entity, defendant Blackburn continued to collect those receivables and keep them for herself."
Also, Blackburn allegedly engaged in a practice known as pin-hooking.
"She would attend automobile auctions and purchase vehicles in her own name in the morning and sell them through the same auction later that same day," the suit alleges. "If the vehicle sold at a profit, she kept the money from the sale. If she was unable to sell the vehicle at a profit, she charged the $100 fee to place the vehicle in the auction to Blackburn Autos, paid for the vehicle out of Blackburn Autos' funds and delivered it to be sold on Blackburn Auto's lot."
And there's more, according to the suit.
"In an effort to make the company's profit appear larger, thereby making her bonus larger, defendant Blackburn concealed or otherwise failed to properly record $70,000 in accounts payable on the ledger and account book of Blackburn Autos.
"In an effort to secure extended employment, increase the size of her bonus and justify taking additional payments throughout the course of her employment in 2004, defendant Blackburn drafted a letter to Andrew J. Whittaker dated July 29, 2004, in which she misstated the basis of her bonus by asserting that it was based on the company's gross profit rather than the net profit agreed to, stated that she intended to begin taking the bonus on a regular basis throughout the course of the year, and stated that Blackburn Autos had agreed that she could continue to be employed as general manager for as long as she managed the company profitably rather than for the one-year term of employment specified in her Employment Agreement. She then left a space for Mr. Whittaker's signature, indicating his agreement to and acceptance of the statements in the letter. The letter was never sent to or seen by Andrew J. Whittaker and he did not sign the letter."
Blackburn since has resigned from the job, according to the suit.
The two plaintiff companies sue Blackburn on four counts: Breach of contract, conversion, fraud and constructive fraud.
In her Employment Agreement, Blackburn agreed to "devote her best efforts and her full business time and attention to the business and affairs of the Company and its Affiliates," the suit claims.
The plaintiffs seek a judgment of $166,000 or such amount to be proven at trial. The companies, which have the same Putnam County address, also seek pre- and post-judgment interest, punitive damages to be determined, legal fees, court costs and other relief. And they request a jury trial.
The case originally was filed July 13, 2005, in Putnam Circuit Court. On Aug. 1, Blackburn filed a motion to dismiss, claiming Putnam County was the improper venue because she lives in Beckley, the lot is located there and the contract was executed in Raleigh County. In an Aug. 15 response, the plaintiff says Putnam was the proper venue because the plaintiff resides and sustained the injuries there.
On Jan. 16, 2006, Putnam Circuit Judge Ed Eagloski ordered the case transferred to Kanawha County, and the case was filed Jan. 23.
It has been assigned to Kanawha Circuit Judge Jennifer Bailey Walker.
Kanawha Circuit Court case number: 06-C-105