Massachusetts has seen its fair share of high-profile family feuds: The Demoulases of Market Basket supermarkets, the Berkowitz clan of Legal Sea Foods restaurants, Shari Redstone and her late father, media mogul Sumner.
Here’s a new one: the Sheehans of Sheehan Family Cos. You may not know the name, but the Massachusetts beer distributor is one of the largest in the country, with about $1 billion in annual revenue. If you’ve bought a Bud in the Boston area, chances are good a Sheehan truck delivered it to the restaurant, bar, or packie.
The enterprise is nearly 100 percent owned by the eight children of Gerald and Maureen Sheehan, a result of estate planning by the parents decades ago. But the old man, who goes by Jerry, remains firmly in charge even at 89, thanks to his control of the company’s voting shares. By all accounts he’s a hard-working boss who demands the same from his 2,000 employees, family included.
In recent years, Jerry has been at odds with the two siblings most deeply involved in the business, Tim, 62, and John, 59, over his control of Sheehan Family Cos.’ finances. A few days before Christmas, the brothers took the fight public in Suffolk Superior Court, with a lawsuit alleging financial misconduct by their father.
The complaint, which runs 92 pages, lays out two long-simmering grievances: Jerry shifted money around Sheehan entities to “level the stacks” among the eight siblings — “redistributing wealth” to himself, his wife, and other siblings who weren’t as involved in the company as Tim and John. By “effectively misappropriating” company funds, the lawsuit says, Jerry was able to pay himself and Maureen inflated salaries, make tens of millions of dollars in personal purchases of art, antiques, and other items, and donate millions in their names to their favorite charities.
Tim and John say in the filing that they tried to work things out with Jerry for several years. While mediation was pending in 2018, Tim was suspended from his most recent family post, running the company’s flagship distributorship on the South Shore, amid a dispute over when he changed his legal residency to Florida, a move Jerry believed could have threatened the company’s South Shore deal with Anheuser-Busch, according to the lawsuit. He was fired the next year, the complaint says. John remains with the business as a manager of its Wisconsin wholesaling unit.
“After years of concerted and good-faith efforts to resolve this family business dispute, Plaintiffs are forced to bring this action as a last resort to put a stop to the unlawful behavior of the family patriarch . . . who is abusing his fiduciary powers over businesses owned by his children,” according to the complaint.
The lawsuit doesn’t specify damages. But the legal filing alleges Jerry was responsible for more than $80 million in “fabricated ‘management fees’ unsupported by formalized agreements and documented only through a one-line invoice, as well as millions of dollars in interest on intercompany loans.”
While Jerry’s actions are the focus of the claims, Maureen, 88, is included as a defendant because of her role as a trustee. In other words, she, like Jerry, had a fiduciary duty to protect the interest of all the company’s owners.
Also named as defendants are Margaret Sheehan, 64, the oldest sibling and a company director, and Charles E. Clapp III, a trustee of trusts established for Margaret and her sisters Anne Landers and Susan Sheehan. The lawsuit was brought by Tim, along with George Cushing, a trustee of trusts established for Tim and John.
The brothers, through their spokesman, Casey Sherman of Regan Communications, declined a request for an interview. The same goes for Jerry, but a statement from his spokesman, Peter Mancusi of Weber Shandwick, didn’t pull any parental punches.
“Timothy’s and John’s jobs and other benefits have provided them with tens of millions more than the amounts received by their siblings, and now each have net worth well in excess of a hundred million dollars due to their father’s largesse,” the statement says.
“Despite all that they have been given, and all they continue to take from the company, the sons want more, at the expense of their siblings, company employees (whose benefits they see as overly generous) and charitable causes the company supports. In an attempt to get it, they have filed this ill-conceived and inaccurate lawsuit. That they did so just days before Christmas and even included their own mother as a defendant shows just how misguided their actions are.”
The Sheehans, through Maureen’s father, Domero Cortelli, got into the beer game during the Depression, delivering Budweiser in Southeastern Massachusetts, according to a company history on its website. (Domero’s father, Luigi, who emigrated from Italy in 1898, started as a grocer. He called himself Louis Knife in his new country; cortello, an alternative spelling of the family name, means knife in Italian.)
Jerry joined L. Knife & Son in 1956 as a route salesman. When Domero, who went by Tim Knife, died in 1963, Jerry took over the Kingston company. He’s remained at the top, as CEO or chairman, ever since.
Today, the rebranded Sheehan Family Cos. is a collection of 19 regional beer distributors in 13 states, plus an importing company and a craft spirits division. While it is one of the largest distributors of Bud and other Anheuser-Busch labels, the company went big into craft and foreign beers, stocking everything from Abita Turbodog to Zundert 8 Trappist Ale.
According to the lawsuit, Jerry’s early expansion ambitions were hampered by Anheuser-Busch rules that made it tough for a distributor in one state to open up in another. Overly simplified, the manager of a Bud franchise had to live in the area and own a stake in the operation.
The complaint says that to encourage siblings to relocate outside of Massachusetts, the family reached what they called the 60/40 agreement. The arrangement gave “active siblings” — defined as a full-time employee willing to relocate and manage new distributorships — the opportunity to buy a combined 60 percent of any out-of-state distributor the family acquired, with the remaining 40 percent available in equal shares to all eight kids.
Mancusi, the spokesman for Jerry, said there was no such formal agreement. Instead, he said, “there was a one-time allocation of equity to [Tim and John] in several of the 19 distribution companies that diluted their siblings’ shares. The brothers still hold that greater equity.”
According to the court filing, only Tim, John, and a third brother, Chris, were willing to uproot their families and invest in and manage out-of-state distributorships, including in New York City, upstate New York, and Wisconsin. Chris, 54, didn’t join the lawsuit.
In the lawsuit, Tim and John assert Jerry siphoned off company funds, in some cases at the expense of all eight siblings, and in other cases with a disproportionately unfair impact on the two brothers.
Jerry’s compensation — which he set “unilaterally and arbitrarily” — totaled more than $45 million from 2015 to 2019, according to the complaint, far out of line with peers in the beverage industry. Maureen took home more than $400,000 a year from 2011 to 2017, even though she “did not provide any professional services” to the business during that period, the filing says.
The brothers claim the parents used corporate funds to buy art and antiques, at one point valued at $30 million, as well as furniture, vintage cars, jewelry, clothing, and real estate. Mancusi said the purchases were investments made on behalf of the company.
According to the lawsuit, at least $33.5 million of company money was contributed to a charitable-giving account at Fidelity Investments from 2012 through 2018. The account, which is separate from the Sheehan Family Foundation, then made donations in the parents’ names to Jerry’s “pet charities.”
Jerry also structured management fees, cash flow, and shareholder distributions to financially favor L. Knife, an entity owned equally by all the siblings, over the 60/40 companies, according to the complaint. The actions enabled Jerry to steer more money to nonactive siblings as part of his effort to “level the stacks,” the complaint says.
The statement issued on behalf of Jerry says: “Throughout his long stewardship, Jerry has always operated the companies to advance core Sheehan family values of generosity to employees and philanthropy. The two sons have a history of opposing both . . . Jerry receives no personal benefits from such decisions [to be fair to all eight children]. His only compensation is a salary set by independent directors based on expert input — which he then donates entirely to charity. He does not benefit personally from any of the business decisions described — often inaccurately — in the suit.”
Then comes the kicker: “Jerry and Maureen Sheehan will defend the litigation; their only question is why these two sons are so ungrateful for having been given a life of almost unparalleled privilege.”
Correction: An earlier version of this story misidentified the trust controlled by Gerald Sheehan. He is trustee of a voting trust to which all of the company’s voting equity has been assigned.