The chairman of the Massachusetts Republican Party faces a lawsuit from a former employee at his software firm, who contends the company squandered money on political interests and illegally compensated employees for their campaign contributions to Republican politicians.
The suit, filed in Suffolk Superior Court on Friday, targets Robert A. Maginn Jr., the chief executive of the privately held education software firm Jenzabar, Inc., as well as his wife and several other corporate officers.
In the suit, former Jenzabar chief financial officer Alan MacDonald contends improper corporate spending reduced the value of his equity in the company, creating a breach of fiduciary duties for shareholders. He also asserts a breach of contract, saying the company did not allow him to cash out his options.
The interests of MacDonald and other shareholders are suffering while corporate leaders use the company “as a vehicle for their personal gains and ends, through multiple improper uses of money, personnel or other parties,” he said in the suit.
Jenzabar has become a significant player in Massachusetts politics since Maginn was elected chairman of the Republican Party in December 2011. The Massachusetts Republican Party, GOP presidential contender Mitt Romney, and Senator Scott Brown began reaping donations from Jenzabar executives — including some from out of state — and the company hired several Republican political operatives as Jenzabar consultants.
“These consultancies are a form of donation to a political party, and have no legitimate business purpose that is permissible under applicable law,” the suit says.
Jenzabar contributed $250,000 to Restore Our Future, a super PAC supporting Romney’s campaign for president. MacDonald said in his suit that such spending is not in the interest of shareholders.
“This donation does not appear to have served any corporate purpose, nor does it appear that any benefit redounded to Jenzabar or Jenzabar’s equity owners from that contribution,” the lawsuit alleged. “It is likely, however, that such a sizeable contribution did suit Mr. Maginn’s personal ends as an aspirant to the chairmanship of the Massachusetts Republican Party.”
The suit also contends — without offering evidence — that Jenzabar is compensating employees for their campaign contributions, a move that would be illegal.
“There seems to be a pattern whereby Jenzabar has compensated these executives for these donations through correlated bonuses,” the suit said. “Such a pattern, once established by proof, is improper and a waste of corporate assets.”
MacDonald left the company in 2009. It is unclear how he would have evidence to substantiate his allegations, which he says in the suit he is making “on information and belief.”
A spokesman for the Republican Party referred calls to Jenzabar. Michael D. Blanchard, a lawyer for Jenzabar, said the company had not seen the lawsuit and would not comment.
Maginn and his wife, Ling Chai, who founded Jenzabar, have faced numerous lawsuits and waged several countersuits in recent years.
In June, Chai faced another suit from a former employee of one of Jenzabar’s related charitable organizations, All Girls Allowed, alleging religious discrimination and that she was fired for refusing to pray at work.
Chai, who was a leader of the Tiananmen Square uprising of 1989, has also sued documentary filmmakers whose film on that conflict portrayed her in a controversial light.
MacDonald did not return phone calls for comment and his lawyer, David Shlansky, declined to comment.
A chief financial officer for six years, MacDonald was fired in 2006, then returned to work as a mergers and acquisitions researcher before his employment was terminated again in 2009, according to the complaint.
During his tenure, the suit said, MacDonald was granted preferred Jenzabar stock, as well as options, that vested during his time as CFO and are due to expire in 2014.
Since he left Jenzabar in 2009, he has tried to liquidate his equity in Jenzabar, but was “delayed and frustrated” by the company executives who tried to buy him out of the company for a drastically discounted price, he said.
After years of negotiations, the suit contends, MacDonald tried to exercise his options to buy his shares last fall, only to be told for the first time that he had lost his options in an unrelated employment release he signed in 2009.
In addition, he contends Jenzabar has not operated in the interests of its shareholders and instead has used corporate money “to pursue purely personal ends, such as excessive compensation, political advancement and reputational protection, and have mined Jenzabar’s corporate coffers for personal reasons.”