Broken Faith

Broken Faith

Many entrepreneurs struggle with entrusting others, even top employees, with company secrets. Jordan Fishman is one who did trust, only to suffer disastrous consequences.

ENTREPRENEURS by Mark Gordon | Managing Editor

For a simple down-home guy who designs blueprints for industrial mining tires, and wears blue jeans to work, Jordan Fishman has spent parts of the past three years caught up in some serious international intrigue.

He has traveled to China, where, at a restaurant outside the Singapore Changi International Airport, he met face-to-face with the former employee who allegedly ripped off his company's copyrighted blueprints and other top-secret information.

He has met with three Arab businessmen who aided the alleged thief, once in Dubai and another time in neutral grounds at a London hotel. And he's spent hours working with and seeking help from the somewhat disinterested Chinese government.

The stakes have been just as big as the travel itinerary: Fishman's company, Sarasota-based Alpha Mining Systems, designs and manufactures tires for underground mining vehicles, a lucrative niche in a fast-growing and hyper-competitive market. An average order for the company, for example, is $250,000. Alpha Mining Systems' annual revenues recently surpassed $20 million.

The good news for Fishman is that he recently won a court judgment totaling $59 million in compensatory and exemplary damages against the former employee, Sam Vance. The final judgment, handed down by Sarasota 12th District Circuit Court Judge Robert McDonald March 18, is one of the largest ever in a Florida trade secrets case.

But the bad news is that Fishman has yet to receive any of that money, and he's aware it could be a long while before he does. For starters, Vance didn't attend the trial or court hearings and is supposedly still in China, where the trade infringement allegations took place.

Vance, who faces arrest in the U.S. for failure to appear at the trial and was also banned from working in the tire mining industry, is appealing the $59 million judgment, his attorney says.

What's more, the saga has taken up a majority of Fishman's time - just as Alpha Mining System's specialized market of producing high-impact tires for the underground mining industry is going through a major growth period. Fishman, 71, wants to get back to business.

"Do I think about running a business?" Fishman asked one recent afternoon while sitting in his office. "No. I think about a lawsuit."

And here's the worst part of the ordeal for Fishman: He struggles to find a lesson he could learn from the experience, past the obvious one of trusting people too much.

That's not much of a lesson, Fishman counters, as he had little choice but to trust someone. How else can you grow a $20 million company with a headquarters in Sarasota, operations in China and clients in places as far-flung as Australia, Canada and Sweden?

"I was like the husband whose wife is getting it on the side," says Fishman. "I didn't have a clue as to what was going on."

A complex case

What was going on, Fishman and his attorneys argued in court, was in many ways an entrepreneur's worst nightmare: Vance, who had worked his way up over 20 years with the company to the point where he ultimately ran its international sales unit, essentially brokered business deals with company property - only to cut Fishman and Alpha Mining Systems out of the money end of the sales.

Vance "acted willfully and maliciously in misappropriating [Alpha Mining System's] trade secret information," McDonald wrote in the March 18 decision that followed the trial. What's more, the judge wrote that Vance "acted with the specific intent to harm" Fishman and the company. Jennifer Compton and Jason Collier, two attorneys from the Sarasota office of Able Band, Chartered, represented Fishman in court.

Vance's attorney, Scott Petersen, says the complex case and its subsequent orders are one-sided because they are based only on Fishman's allegations. Petersen, of the Sarasota firm Kirk-Pinkerton, P.A., is appealing McDonald's decision to the state Second District Court of Appeals.

Part of the appeal, says Petersen, relies on Vance's assertion that his actions were only taken after Fishman told the employee he couldn't pay him for "services rendered." And even then, Vance's actions were simply an attempt to fill outstanding orders for a joint venture Alpha Mining Systems was working on with a Chinese company, Petersen says.

"[Vance] denies misappropriating any trade secret information from Alpha or acting inappropriately in any manner," Petersen says. "Mr. Vance believes that when the full story is told, he will be completely exonerated of any charges of wrongdoing."

Fishman scoffs at any notion that Vance's intentions were noble.

If Fishman doubts anything in the entire saga, it's his own judgment. And he pledges that he will stick with the case through any appeals, despite the distractions it might cause to his business, which is still operating in China and in the same industry.

"I'm not going to lay down and roll over and say it's ok you took it," Fishman says. "We are going to fight it the best we can fight it."

A secretive business

Up until late spring in 2005, Fishman had no reason to doubt or mistrust Vance. He had worked for Alpha Mining Systems for about 20 years, leaving once in the late 1980s to start his own business. He returned to the company in the early 1990s though, and eventually became its top international salesman through ambitious and aggressive work habits.

But the case against Vance began to come out May 18, 2005. That's the day that Fishman, sitting in his Sarasota office, got a call from a manager working for the Guizhou Tire Co., Alpha Mining System's Chinese manufacturing partner.

The manager told Fishman that representatives from an Australian mining company, one of Alpha Mining System's biggest customers, were touring the plant in China and discussing new orders.

The call jolted Fishman. He knew there was no deal in the works with that customer, so he began poking around. When he found out Vance was behind the invitation for the Australian company to come to China, his confusion turned to suspicion.

Fishman, who took over the tire blueprints business from his father in the 1970s in Chicago, had always been secretive with the business model. He always kept each customer's purchasing orders separate from both each other and from pricing data. This way, only a limited number of employees had access to all of the information, including profit margins.

Company blueprints, some of which described the complicated and patented process of how one tire with a pounds-per-square-inch (PSI) score of 170 could hold 4 tons of steel and metal, were also locked up and only available to a limited number of employees.

As head of international sales, Vance had access to all of the company's files and blueprints. That's why Fishman zeroed in on him so quickly after getting that initial phone call.

Still, a lot of damage had allegedly already been done, which Fishman would only learn about over the next two years. For example, according to court records, Vance allegedly cut Alpha Mining Systems out of $15 million in sales orders over a three-year period.

Compounding Fishman's problems even further was the fact that the Guizhou Tire Co., which was initially Fishman's manufacturing partner, went along with Vance in an effort to raise its own margins. Pleas to Guizhou officials and the Chinese government for the company to return its illegally earned profits to Alpha Mining Systems were ignored, Fishman says.

What's more, according to court records, Vance also took the Alpha Mining Systems blueprints to the owners of the Al Dobowi Group, a Dubai-based tire production firm run by three Arab businessmen. Vance and the Al Dobowi Group then began producing and selling tires off of the Alpha Mining Systems designs, Fishman's attorneys alleged in court. That cost Fishman another $3 million in profits.

Moving on

That May 2005 phone call was also the impetus for a two-year long internal company investigation of Vance, which culminated in the lawsuit and trial held earlier this year. The investigation also led Fishman to Dubai and London, where he spoke with the father and two sons who own the Al Dobowi Group at two separate meetings last year.

At both meetings, Fishman says he told the Al Dobowi officials they were selling products they had no right to sell because the designs were stolen. Fishman brought rolls of blueprints and stacks of computer printouts to prove his claim.

But proving his case wasn't the problem, it turned out. The Al Dobowi officials more or less shrugged and told Fishman that since they had already invested more than $1 million in Vance and his blueprints, they weren't about to shut things down.

And earlier this year, before the court judgment was released but after the trial had ended, Fishman got a hold of Vance in China. They met at the restaurant outside the Singapore airport.

It was the first time the two met face-to-face since Fishman became aware of what Vance was allegedly up to and fired him. Fishman says he pleaded with Vance to return to the U.S. and fess up to what he had done. Vance, according to Fishman, denied any wrongdoing and professed to know little about the trial or the sanctions and punishments he was potentially facing.

Although Fishman says he's doing the best he can to move on, both with his life and with Alpha Mining Systems, he still carries some bitterness - toward Vance for what he did, to the Chinese government for not doing more to control corruption and to the owners of Al Dobowi Group for not acting in good business faith.

But Fishman is mostly upset with himself.

"I was talking to [Vance] everyday and I had no idea this was going on," says Fishman. "I was the idiot."

REVIEW SUMMARY

Businesses. Alpha Mining Systems, Sarasota

Industry. Manufacturing

Key. The owner of the company is trying to move on after a painful and costly lawsuit involving stolen trade secrets.