Convergint Alleged Acquired Integrator Tried To "Steal Back What He Sold"
Convergint has built its multi-billion dollar business based on acquiring over 50 integrators but now it faces growing pressure from those same integrators.
Recently, we covered Convergint being sued by an acquired company ex-president and in this report, we examine how Convergint sued another executive group they previously acquired and how this group touts great success.
In this report, we examine court filings, Convergint's arguments, details about the regional integrator and its founder, the case's outcome, and the integrator's response to IPVM.
For more on Convergint see:
- Heavy Debt Loaded Convergint Financials Analyzed
- Convergint Aims For $10 Billion Annual Revenue
- Convergint Hires Former Publicly Traded Company CEO
*** ********* ******* ** ~$*.* *******, Convergint *** ***** **** *** ** the *****'* ******* ******** ***********, ****** through ******** ************. *** ******* ********** ******** ***********,**** *******, *** ************* ********** ***** ****** ************ *** *******'* aggressive ****** ****** ********** *** ********* it *** ********.
******* ********* ********-************ ******** *******, ***** ********** *********** ******** ****. ********* ** **********'* complaint ******* ***, ******** ** **** from ******** ***** *****, *******, *** company, *** *** ** *** ********* violated *************** *** ***-******* **********.
********** ******* **** *** **** *** about "* ****** ****** ** ***** back **** ** ****." *******, *** complaint **** ******* **** ******* ******** R24 **** *** **** ****** *** 5-year-long ********** *********, ****** ** ********** with *** ******* ****, ******* ** December ****. *** ****-********** ******* $* million ** *******—* ********** ****** ******** with **********'* **** *** ************ ******* 15% ** ***'* ****** ******* **** year.
****** ***** ****** ** ****** *** suit ******* *** *** *******, ********** agreed ** ****** *** ****. *******, who *** *** **** * ******** to *** *********, ******** ** *******, citing *** *************** ** *** **********. A ************** *** ********** *** *** respond ** * ******* *** *******.
Background
****** ****** ********** ***** *** ******* in ******** ****,**** *********** *** ******* ************ *** ******* **** *** *** plans *** *** *** *******. ******* told **** **** ******* ********* $** million ** ******* **** * **% operating ****** ** *** **** ** the **** ** ********** ** ****. According ** **********, *** ******* *** 75 ********* **** ** *** ********.
************* **** ** *** ***** ** a *-**** ***-******* ********* ***** *** sale, ******* ********* ** **** **** it *** ******* **** ** ******** R24. ************, ** **** ****:
**** *** **** ******* *****, ** have *** ********** ** * ****** of ****** ********* *** * ****** of ********* ******: "*** ****, ** missed ***,when ***'** ******* **** **?" So we made that collective decision that we would do this again. Then we ******** ***** ********* ** *** * (****), ***** ** **** ***** ***** *** ***-*******. [Emphasis Added.]
Overview ** ********** *********
** *** *********, ********** ******* ****** ** ******** interference **** ******** *************, **************** ** trade ******* *** "************ ****-***," *** breaches ** ********* ****** ** **********.
*** ****-********** ******* ******* ** "****** to ***** **** **** ** ****" and ******* **** ** "*******, *******, and ***** ********** *** ******** ********." The ******* ** *** **** ******:
**** ** * **** ***** * sellertrying ** ***** **** **** ** ****. After beign handsomely rewarded for selling his shares of Genesis Security Systems ("Genesis") to Convergint, Kruglak plotted, *******, *** ***** ********** *** ******** ******** in violation of the Purchase Agreement between Convergint and Genesis. [Emphasis Added.]
********** ******* **** ******* ***** *** "not ******* **** **** *** **** competition" *** ******* **************** *** ******** confidential *********** *** ** ********** *** former ******* ********* ** ****. ********** alleged:
******* ***** *** ****** ******** ********, R24 ******** ***********, ***,not ******* **** **** *** **** ***********, *** ** ******** **** *** **** ******** *** **************** *** **** ***** ******* and confidential know-how for which Convergint paid him generously.
And ** ** *** ****** *****. He recruited at least two of his former Genesis employees away from Convergint — Garruto and Mooney — who each, in turn, have violated their own obligations to Convergint. [Emphasis Added.]
*** ****-********** ******* ******* **** ** attempted ** ******* *** ******, *** R24 "*******" ** ******* *** ********, "forcing" ** ** **** ****.
***********,Convergint ********* ** ******* **** ****** with R24 and its former employees on multiple occasions before filing this litigation. R24 and the former employees, however, refused ** ******* **********'* ********, ******* ********** ** **** *** ******* ******* to protect its confidential trade secret information. [Emphasis Added.]
Notice ** **********/*********
****** ***** ****** ** ****** *** lawsuit, * ********** ***** ******, ********** reached * ********** **** *** **********. The ***** ** *** **** **** not *********. *** ******* ********* * notice ** ***** ********* ********* ** Feb. **, ****.
*** ******, ********* *****, ****** **** a "********** *********" *** ******* ******* providing ********** *******.
*** *********** ********* **** *** ********* would ** "**** *********," ******* *** lawsuit ****** ** *******. ** **** states **** "**** ***** ***** **** its *** ***** *** ****."
*******, *******, *** ****** ******** ** comment ** *** **********. ********** *** not ******* ** * ******* *** comment.
Terms ** **********
***** ******* ********* ** **** ********** that ** *** *** ***** *** until *** ***-******* *******, **********'* ********* alleges *********. ************, *** ******* *******
********, ** ** ******* ** ************ of **** ******, *** ******** ***** included * *********** **** ******* **** an ********* *** ** ******* **** Convergint *** * ****** ** **** (5) ***** ***** *** ****...That ***-******* ****** **** ******** **, **** ***** ******** **, ****. The five-year term was reasonable in these circumstances to maintain the goodwill and value of the business Coinvergint has purchased. [Emphasis Added.]
***** **** *** *********, ********** ********* a **** ** *** ***-******* ********* — ***** ******** **, **** — to *** *****.
*** ******** ****** *******'* ********* ** the ***** ****.
******* *** *********, ********** ******* **** Kruglak "****** ******** ** ******* **** Convergint ** *** ***-******** ****** ** soon ** ********" *** "***** ******* to ******" ***** *** *****. *** mega-integrator ******* ******* ** *** *********:
** ****** ********* ** *** ***-******* agreement, ******* ******* * *******, ***, to ******* **** ********** ** *** Mid-Atlantic ****** ***** ** *** ********** of *** ***-******* ***********and ***** * ****** ***** ************ *** *** ** ******** *, ****. Kruglak then effectuated his plan by, as discussed herein, soliciting ******* *** ****** ** ****** ***** ********** **********, leave Convergint and begin working for R24. [Emphasis Added.]
More ***** ******* *** ***
********* ***** ******** *******,******* ********* ****** ** ********* ** R24. ****** ****, ** *** *** "Owner" *** "***" ** ******* *** more **** ** *****, **** **** through *** ****. ** ***** ********** is ******.
********* ** **********'* *********, ******* ****** as * ********** ******** **** ******** 2017 ** ********* **** ****. *** company ******* **** ** "************ **** Kruglak ***** **** ** ** * leader ** ********** *** **** **** the ********."
"Multi-Millionaire" **** ** ***** ** **********
********** ********* ******* ** *** ********* as * "*****-*********** **** **** ** years ** ******** **********" *** ***** "himself *** ** ** *** '****** guy'" ***** ***** * ****-*********** ******** professional.
************, *** ****-********** ****:
********* ******* **a *****-*********** **** **** ** ***** ** ******** **********. Despite holding ******* *** ** ** *** '****** ***' in a big business industry, Kruglak has established himself as a player in the industry and has ******* ******* ******** *** ***** ** *** ***************. [Emphasis Added.]
*** ********* **** *** ******* *** books ** ******** ** ******* **. Amazon ******** ***** ** *******, ******* ********* ********* *** ****. Google ***** ******** **** ** **************** ** **** **** ** *** currently ** *****.
"Electronic ******** ********* ** *** ** ****"
********** *** ************* *** ******** ********* ** *** "DC ****" *** ******** ****** ** federal ********** *********, **** ** *** White ***** *** *** ** ******* building.
***'* "***** **" **** ********** *** ********** ** Genesis, ***** *** **** "****** *** premiere ******** ***** ********** ** *** DC *****, ******* **** ****-*********** ****-***** organizations **** ****** **** ** *** customer-focused *******."
Kruglak ******** ** *******
**** ***** ***** *** **** *** whether ** *** **** ********, ******* told ****:
*** *** *******. ** *** *******. I ****** **** *** ******** ***** what ********, ** *** *** **********. [Emphasis *****.]
** *****, *******, **** *** *** "massive ****** ****** *** ***** ******** year (*** $*.***)."
******* ****: "** *** ****** ** comment. ***** *** *** *************."
****** ****: "****** *** ******** ***. I **** ** *******."
Alleged ****** *********
********** ******* **** *******, *******, *** Mooney ****** ** *************** ************ *********** from ********** ** ****** *** ***** major *********, ********* ***********, * ~$***+ billion ****** *** ************** *****.
*** ********* ******* **** ******* ***** soliciting *** ************** ******* *** *** while ***** ******* *** **********, ********* at ** "*********** *********" ***** ********** paid ***.
***** ********* ******* ** **** **** "stolen" ** *** ******* *** ******** Georgetown ****** *** ******** **************** ******* ******** *************** **********, **** ** ***** **** ****** Genesis *********.
*******
********** ******* ** ******** "**** ******** and ****** ******* ********* $* *******."
*** ****-********** *******:
R24's ****** ** **********'* ************ *** ***** ****** *********** ********* ** erode ** ***** **********'* ********** ** *** ***********. It allows R24 to *******-******** *** ********* **********'* **** ******** ******* ********, as well as streamline and improve its existing products and services. This also allows R24 to adust specific customer pricing strategies and contract terms to poach customers.
** * ****** ** **********' *******,Convergint *** **** ************ ******* **** *** **** ** *** *********, *********, **********, *** ********. [Emphasis Added.]
**********
******** *** ********** *** *** ******** disclosed, ***'* ********* ******** ** *** marketplace ******** *** ********** *** ***** than *** ******* *******. *** **** highlights * **** *** *********** **** seek ** **** ******* ************, ** Convergint *** ****.
******** *** ****** ******** ************* **** customers. *** ******** ** ***** **** that *** ******** ** ******** *********** can **** ***** ******* ********** ******** and ******* **** ********* ** ***** previous *******.
***** *** **** *** ******** ***** risks, ********** **** ***** *** ***-******* agreements, *** ***** *** *** ** enough ** ****** ********* *******. ***** Convergint's ****** *** *** ****** ** the ********** ******** *****, *** ******* could **** ******* *********** ******* *********, especially ** *** ******** ** *** acquisitions ***** ** *** **** *****, and ****, **** *******, *** ** will **** ***** ***-******** ********.
* **** **** **** *** ***** to ** ***** *******.
******** *** **** ************ ********* ***** him?
**** ******* **** ****** ***'* ***** me ** ***** ******* ** **** :)
**** ** * ***** ***, ******** one ** *** *** ** **** integrators *'** ****** **** **********. ** knows ****** ********** ***** *** ********, unless ** ******* ** ********* ***********. I'm **** ** ****** *** ** an ****** ******* *******. *'* *** saying ** ** ****** ** ******** like ****, **** *** ********, ** just ****** *****'* **** * **** what ****** ***** ** ***.
**** * *** **** ** *** his ******* **** ** ******* ** Convergint * ******* ** ***** **** be * ****** ** **** ***** he ******** ***** * *** ******. I ***'* ***** **** *** **** truly **** **** **, *** * was * ****** ********* **** **** Genesis ** *** ***** *****.
**'* ** ******** **** ****** ******* customers **** ** ** **** ** working **** ***, ******* ****** *** good **** **** **** * *** and **** **** ***** ******** **** taken **** **.
* *** * ****** ********* **** sold ******* ** *** ***** *****.
****** ********** **** ********** *** *******... Now ** **** ** ***** ** back ** *** **** ** ** the **** ** **** ******....
****** **** ******* **** **** ****** to ********** ** **** ** **** - ***** *** *********** ****** ** his *** ******* ****** *** **... because **'* ****** **** ****** ***** to ******* **** ** ** *****'** won *** ******* (** ** ****** waited *** **** * ***** ******** by *** ***-*******).
** **** ******** **** ********** **** unsolicited ****** ** ***** ***** ***** extending *** ****** ** ***** ***-******* agreements - ** ****** ******* **** they ***'* ******* *** ***** ******** entities ******* *** **** ****... ************* with *** ********.
***** ********* *** ****** ** ***** non-compete **********
**** **** * **** ****/*****, * is ******* * ****** **** ***-******* term. **********'* **** ** ************ ** way *** ***** **** **** **** acquired *******'* ****** ******* *** ***** are * *** **** *********** ****** to ******* *********** *****.
**** **** * **** ****/*****, * is ******* * ****** **** ***-******* term.
**** *** **** **... *** **** doesn't ****** *** ************ ******** * mentioned **** *** *** ********** ** customer *********** *** *********.
***, ********** ******* ************ **** ******* by ******** ******* *******.
** **** *** * ***** ***** that ******* ******** *** ***-******* **** would ****** **** ** ******** ** pursue ********** - **** ** ******** others *** ***** *** *** **** thing ** *** * **** ****.
*****, ***** * ***** ***'* **** enough ** ******* ***** *** *********.
***** * ***** ***'* **** ****** to ******* ***** *** *********.
*** ****, *******, * ***** ***** want * ** ** *****, ***. Still, **'* * *********** ******, ** if ********** ******* ********* *** ***** (to ** *****, * ** *** saying **** **, **** **************), ****'* risk ****** ***** ** ***** ********** roll-ups - ******, ******, ****** **, etc.
****'* **** ****** ***** ** ***** integrator ****-***
******.
*** ** *** ********** *** ***** of ********** ****-*** (** ********** ** alarm ******* ****-*** ** ** *******) what's '****' *** ***-******* ********** ** still ******* - ******* *** ******** relationship ******* ** **** **** ** play **** ********** ****-*** - ***** it ***'* ** **** ** *** alarm ******** ** **********.
** ***'* ** **** ** *** alarm ********
*** ***** ********, ************ *********** (***** most ** *** ******* ***** **** in ******), *** ****-**** ********* **** customers, *** *** ********* *** ***** per ********. **** ***** ** **** harder ** "*****" **** *** ******* you **** *** ******** **.
** ********, ** *** *********** ****, a **** ******* ****** ** ***** accounts ********** **** ** *** ******* and ****** *** *****-**** *********, ******* it ** **** ****** ** "*****" or **** ******* *** ****.
*** *** ****** ***-******* ********** ** April ** **** ****. **** ** not ***** ** ******** ************ ** well ** ********** *********.
"*** **********" *** ***** ** ********** by ***-******* ********** *** ******* **** reason. *** ******* *********** *********** **** not ***** ***** ********* ***, ****. Also, *************** ********** *** ***** ***********.
*** **** ** ***** **** ** these **'* *** ****** *******'* **** magically ******** **** **** ****** *******, its ****** *** ********'* *** ***** to **** ********* **** **** ** and ****** ** ***** ******** ***. I *****, ********* ** ** * risky *********. ********** ** ***** ***** not ******* ** ** ******* *** but ****** ******* **** ****** * crap **** ** ********** ***** ***** revenue *** **** ** ** * couple *******. ***** #* ********* ** they *** ***** * ****** ***** of ******* *** ********* ** **************, but **** ***** ******** **** *********** of *** ** ***** *********. *** you ******* ******* ***** ** ******* your *************/********, *** *** ********** ******* you *** ********** *** **** *** then ********** **** *** *** ********** starts ******* *****. *** *** * big ******, *** *** *** ***** of ******* **** **** ******* *** wall **** ********** *** ***** ********* of ******, ****** ******. **, *** wait ** *** *** *** **** to ****... **, *'* ****** ********* tropical **!
** ******** ** **********, **** *** describe ** ******** *** **** ** any ********** ****-**. ********** ** *********** in *** **** **** ******* ***** values *** *******, ****** **** ** they ****** ******* ** (*** **** who **** *** ******** **** **** us **** **), **'* ****** *** harder ** ** ** *** ****** they *** (*** ** **** *** thousand *********).
******: *** *** ** *** ************* ** ****** ******* *** **** ***** *****.
**** ********** ***** ** ******* ***** they ******** ****** *** * ********* were, ************, *** ******** ********** *** account ********* *** ***********:
** ** *** **** *** *** details, *** *** ** ****** *** legal ********, *** ** * ********* one, **** *********** *** **** ** mega-integrators ** ********* ** ***** ****. Despite ********** ***** ****** ******, **** some **,*** *********, *** ********* ** just * ** * ** **** lead * ******* *** ******** ** leave **********.
******* **** ** ******** ********, ******* the ******* ********* *** *** ********* person ******* *** ********** ***** *** goes ** * ***** *** ********, the ********** **** * ******* *** customer ****** ********** ** ***** *** since *** ********* ***** ** ****** to * *** ******** *** ***** high.
***, *** ***** *********** ******* ***** Convergint **** **** "******** [*******] ** continue ** ** * ****** ** Convergint," *** **** ******* *** *** "proverbial **** ** *** *******":
* ***** *** ****** **** **** want, *** **** ** *** * legal ********** (****** ***** ***** ********* are **** ******** ***** **** ***********). As *** *** "**** ** *** kingdom" *** *** "************ *** ***** secret ***********," ** **** *** *** question ** **** ** ***** * "trade ******" *** **** ******* ****** specific ********* ** *********** ************ ***** have. *** ****** ****** *** ** reasonably *******.
******, *.*.,*** ******** *** ****** ***** *********** Getting ********. * ***** **** ******* ****** who **** ****** / ***** ******* decades ** *** *********** ******** ** that ******* ******* ****-*** **** *** years, *** ************ **** ****** **, even **********, ** ** **** ****, people *** **** ***** ********** *** and **** ******* ************* *** **** business ** *** **** **** *** that **** ***** *****.
****'* ********* *** ** **** ******* equity *** ****** ***, *** ****** (across *** *******, *** **** *** security ********), ** ** *** **** buying ** *** **** *********** ** increasingly ****** ********* **** *** **** decade.
*** ******** ** *** **** ********** and ***** ***** **-******, ****-****** ******* can ******** *** ******* **** ****** versus ******, ** **********'* *****, "****** back."