This week, the Utah Supreme court heard arguments from a group of investors who are challenging a ruling that dismissed a case they had filed in 2006 and 2007 against six of the founding members of XanGo, LLC.
The investors, identified in documents as Angel Investors, LLC and as “a few neighbors and friends” are a group of friends and neighbors who say they pooled together their savings to invest in the nutritional juice company. Apparently, the Angel Investors grew concerned about the way the founders were spending money.
The legal issue that the justices will consider is whether 4th District Judge Fred Howard rightfully dismissed the case and correctly applied Utah Rules of Civil Procedure when the case was originally brought before a judge.
While original court documents concerning the complaints are sealed, the attorney for the investors, Mary Anne Wood, said the investors “became concerned by evidence of extravagant lifestyle and compensation” of the six founders — Aaron Garrity, Bryan Davis, Gary Hollister, Gordon Morton, Joseph Morton and Kent Wood. Investors, uneasy with the usage of investor funds began questioning spending. It was then that XanGo’s founding members apparently began buying minority interest from the original investors by taking loans from XanGo, instead of the company buying back the interests. The investors want more of the profits distributed to them.
14% percent of the company is owned by minority investors, the remaining 86% percent is controlled by the six founding members. The Angel Investors who brought forth the suit apparently only own 1% percent of the company at most.
The suit was originally dismissed when it was ruled that the Angel investors did not represent the other minority investors, and those other founding members signed affidavits saying that they did not wish to be involved in the suit.
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