The owner of a longstanding Chattanooga investment firm has sued three former principals of the company, saying they secretly began operating a rival firm while continuing with him as staff members.
Warren Barnett is suing Chris Hopkins, George Thompson Bryant and Jennifer Hairston in Circuit Court.
Mr. Hopkins has since filed a counter complaint, saying that the three employees felt it necessary to start their own investment company "due to the ongoing and pervasive unethical , unprofessional and unlawful conduct of Barnett and Company through its principal, Warren Barnett."
He claimed that the actions of Mr. Barnett put the stability of Barnett & Company and its clients at risk.
Mr. Hopkins said after undergoing a heart transplant in April 2019 he was forced to return to work two weeks early because Mr. Barnett "had gotten so intoxicated at a work event, he had embarrassed and humiliated himself, and greatly upset the staff at Barnett & Company."
It was claimed that Mr. Barnett misused company funds, causing the firm to periodically become insolvent. It says he violated a 2019 agreement with the Securities and Exchange Commission and made false statements and representations on loan documents.
The counter suit says Mr. Barnett used Barnett & Company's FedEx account to send substantial bi-weekly cash payments to a female allegedly living in Louisiana. She was also provided with a vehicle, it was stated.
Mr. Hopkins claimed he worked "tirelessly" through the pandemic and loaned the company $497,000 to keep it from folding.
He said he "could not continue, in good conscience, to operate in a capacity to expose third parties to financial risk and ruin due to the actions of Warren Barnett."
The counter suit claimed that Warren Barnett "was often intoxicated and drunk at Barnett & Company offices and during company events, and engaged in harassing and unprofessional behavior" while at the office.
The suit says Mr. Hopkins helped grow the company and was given a $200,000 salary. It says Mr. Barnett was paid $600,000.
It says Mr. Barnett in 2015 invested in five Hilton Head properties that were "saddled in debt."
The counter complaint said Mr. Barnett "received public praise and recognition for the charitable contributions that were made by Barnett & Company. This resulted in Warren Barnett developing an insatiable desire to maintain a heightened social status and to continue to be viewed as a wealthy individual and owner of a financially thriving investment firm." The firm was giving away at least $200,000 per year, it was stated.
It was claimed at Barnett & Company was forced in 2018 to enter into some high-interest loans and by 2019 the financial condition of the firm "had reached dire straits." It says the SEC launched an investigation of the firm in August 2019 and in September issued a deficiency letter.
The SEC found that Barnett & Company "defrauded former clients and breached its fiduciary duty because it failed to refund to those clients unearned pre-paid advisory fees." Instead, it said some company funds went to country club memberships for Mr. Barnett.
Mr. Barnett pledged to the SEC that he would sell his investment properties in behalf of the company and would undertake no additional high-interest loans.
It says due to the financial straits that Barnett & Company was unable to renew its errors and omissions issue policy and had to drop out of the Charles Schwab advisory group.
The suit by Warren Barnett says, "Under cover of the global COVID-19 pandemic, and while employed by Barnett & Company, defendants Christopher Andrew Hopkins, George Thompson Bryant, and Jennifer Kay Hairston plotted to form, and did form, Apogee Wealth Partners, LLC, in direct competition with their employer.
"While society was sheltering in place, they quietly operated Apogee Wealth Partners, LLC in direct competition with Barnett & Company for 10 months before their betrayal was discovered. Barnett & Company seeks relief for the defendants' breaches of their contractual and legal duties and injunctive relief to prevent them from profiting further from their treachery."
It says the three employees set up Apogee Wealth Partners and began operating it without the knowledge of Mr. Barnett.
The suit says they were all under non-compete agreements.
It says they were receiving full pay from Barnett & Company, while stating on documents they were devoting 40 percent of their time to it.