Buz Mills has made it clear he’s ready to spend a boatload of cash on his campaign to become Arizona’s next governor, but eight years ago a judge in Florida ruled that Mills cheated a business partner out of millions of dollars by withholding information about the sale of a company both of them owned.
According to court documents, Mills bilked John Mortellite out of several million dollars by arranging the sale of OPM-USA, Inc. without telling Mortellite, then buying out Mortellite’s 10-percent share of the company for much less than it was worth. Mills and his wife, Sonja, owned 90 percent of the communications company.
It all started in 1997 when Mills began talks with American Tower L.P. to sell OPM-USA, which he ultimately sold for $105 million. But he bought out Mortellite for just $1.5 million, according to court documents, without telling him about American Tower’s offer or disclosing OPM’s full value. Mills even told Mortellite to extend a vacation for several weeks to keep him from finding out about the negotiations with American Tower.
When Mortellite returned from vacation, Mills fired him. Later, at an Aug. 1997 board meeting, Mortellite agreed to leave the company and take the buyout based on an incorrect assumption about the company’s value, according to court documents. Mills didn’t tell Mortellite about American Tower’s offer, even when Mortellite’s attorney asked at the board meeting whether OPM was involved in any pending transactions.
Mortellite filed suit in Florida’s 12th Judicial Circuit, where a trial court judge ruled that Mills fraudulently induced Mortellite to sign away his shares of OPM.
“Mills, as the majority shareholder of OPM, did owe a fiduciary duty to Mortellite, the minority shareholder, which required Mills to act in good faith. Mills breached this duty and acted in bad faith toward Mortellite when he received the offer from American Tower and intentionally did not disclose the offer to Mortellite,” the trial court judge ruled. “Mills deceived Mortellite into thinking that there were no pending negotiations to purchase OPM stock and with the further intention that Mortellite would act to his detriment.”
According to the documents, Mills told an American Tower executive that he had a 10 percent shareholder to buy out but said it would not be a problem “Don’t worry. He has no idea what this is worth,” Mills told the executive, according to court documents.
Camilla Strongin, Mills’ campaign manager, said Mills did not make the comment about Mortellite that was attributed to him in a deposition. She said the case was vacated after Mills and Mortellite reached a settlement, which included a confidentiality agreement.
“They clearly had a difference of opinion, which is not unusual between a majority and a minority stockholder on the value of the stock. And they sat down and resolved the differences via a settlement, and the case was vacated,” Strongin said.
A state appellate court ruled that Mills did not follow the terms of his 1995 purchase agreement with Mortellite and that Mills owed his old partner more than the $1.5 million he paid for the shares. The appeals judge remanded the case back to the trial court.
“We conclude Mr. Mortellite will ultimately be entitled to a punitive damage award,” appellate Judge Virginia Hernandez Covington wrote in a 2002 ruling.
Mortellite was a neighbor of the Mills’ in 1995 when the three of them formed OPM, which was created to build cellular towers and sell them to communications companies. Mortellite bought a 10 percent share of the company for $100,000.
Mills initially opened talks with American Tower in an attempt to secure financing for OPM, but the talks devolved into an outright offer to buy the company. Mortellite was not involved in previous financing discussions with other companies and was on vacation when Mills began his talks with American Tower.
After selling OPM, Mills moved to Arizona in 1999 and bought Gunsite, a tactical firearms training school in Paulden. Mills said it was a longtime dream to move to Arizona, and the sale of OPM – which got him out of the telecommunications business for good – gave him the opportunity to do so. He became a candidate for governor earlier this year, and so far has put $2 million of his own money into the campaign.
“I just figured I can do this and live here on the ranch and finally get to Arizona, where I always wanted to get it. Everything just lined up right,” Mills said.