Frank Stronach, the man who started the auto-parts business Magna International, and his wife Elfriede have launched the lawsuit in Ontario Superior Court and say they have done so as a last resort.
Frank Stronachs $520M lawsuit against daughter Belinda reveals dispute over control of family firm
Stronach says in a statement that the couple has made "considerable efforts" over the last two years to resolve the matter.
Six weeks ago, advisers and friends to both sides said Ms. Stronach, 52, chairwoman and president of the family company, and TSG chief executive Alon Ossip tabled what they called a non-negotiable offer to resolve the dispute. They sought sole ownership of the horse-racing and gambling operations, which posted US$1.1-billion in sales last year. These sources were granted anonymity because the Stronach family has not authorized advisers to discuss a dispute that is now before the court.
Belinda Stronach offered to settle TSG dispute weeks before fathers suit
Thoroughbred Daily News reports the couple have accused Belinda Stronach, the chairman and president of The Stronach Group that runs horse racetracks around the world, of conspiring by "unlawful actions" against the best interests of other members of the Stronach family.
"Family relationships within a business can be challenging," she said in a statement Wednesday night.
"My children and I love my father. However, his allegations are untrue and we will be responding formally to the statement of claim in the normal course of the court process."
The family company owns breeding stables and facilities in Ontario and Florida that rehabilitate thoroughbreds when their racing days are over. TSG also runs three media and gambling businesses rooted in horse racing, including a service called Monarch Content Management LLC that broadcasts races to outlets around the world, including casinos, off-track betting facilities and internet gambling companies.
A spokesperson for The Stronach Group CEO Alon Ossip, who is also named in the suit, called the allegations "baseless and are not grounded in fact or reality."
"Alon has always honoured his obligations and acted in good faith to preserve and grow the Stronach family's assets and to protect the interests of all members of the family," Paul Deegan said in a statement.
Mr. Stronach turned down the settlement offer and instead launched a lawsuit demanding full control of the family business, the removal of his daughter and Mr. Ossip, and $520-million in damages. The claims have not been tested in court, and Ms. Stronach and Mr. Ossip have denied allegations that they mismanaged the family business.
"This is a dispute between Stronach family members that should be resolved between family members."
While we regret the tension that exists within the Stronach family, it remains business as usual for [the] Stronach Group, Ms. Steers said. We will continue to exercise professionalism, diligence and care in the management of TSGs businesses as we work to support the needs of stakeholders across our operations.
It is a priority for CBC to create a website that is accessible to all Canadians including people with visual, hearing, motor and cognitive challenges.
Belinda Stronach spent tens of millions of dollars belonging to her familys companies on personal expenses, according to a legal filing from her parents.
The allegation is one of many set out in a statement of claim filed Oct. 1 by Frank and Elfriede Stronach against their daughter and several other people, including Belindas adult children and family friend Alon Ossip.
The Stronachs are best known for their connection to auto parts behemoth Magna International, which was founded by Frank Stronach.
The legal action relates not to Magna but to The Stronach Group, an umbrella organization for more than 250 of the familys trusts and businesses in horse racing and other industries.
The Stronach Group has been performing very well in a number of its core businesses, including our largest business, racing [and] gaming, which has seen revenue increase from US$600-million in 2013 to over US$1.1-billion in 2017, TSG vice-president Tiffani Steers said in an e-mail.
In the court documents, Frank Stronach alleges that Ossip and his daughter worked to freeze him out of The Stronach Groups operations and take control of the businesses for themselves.
Belinda has taken advantage of her close relationship with her father and has wielded inappropriately her relationship with him, including by misleading Frank into believing that he could trust her to run the family enterprise on a fair, proper, sensible and business-like basis when, in fact, she was entirely unwilling or incapable of doing so, the statement of claim reads.
None of the allegations in the filing have been tested in court. Belinda Stronach has called the claims untrue.
Family relationships within a business can be challenging, she said in a statement. My children and I love my father. However, his allegations are untrue and we will be responding formally to the statement of claim in the normal course of the court process."
A spokesperson for Ossip echoed that sentiment, saying in a statement that Frank Stronachs allegations are not grounded in fact or reality.
Alon has always honoured his obligations and acted in good faith to preserve and grow the Stronach familys assets and to protect the interests of all members of the family, the statement said.
If you would like to write a letter to the editor, please forward it to [email protected] Readers can also interact with The Globe on Facebook and Twitter .
Alon created huge wealth for the family, and he has always operated in a prudent and commercially-sensible manner. Frank Stronach was a great auto parts entrepreneur, but his recent excessive spending and numerous failed ventures put his familys wealth at risk. This is a dispute between Stronach family members that should be resolved between family members.
The statement of claim alleges a complete breakdown in the relationship between Belinda Stronach and the rest of the family as a result of a years-long battle waged behind closed doors.
Ossip, a longtime friend and adviser of Frank Stronach, was named CEO of The Stronach Group in 2013 at a base salary of $1 million per year. According to the statement of claim, he was appointed on the understanding that he would look out for the best interests of the entire family.
Instead, the filing alleges, Ossip worked with Belinda Stronach to manoeuvre Frank Stronach out of his control of the family business while hiding their efforts from the rest of the family.
Ossip and Belinda Stronach routinely failed to report to work for days or weeks at a time during this time, according to the filing.
Matters apparently came to a head in late 2016, when Ossip and Belinda Stronach told Frank Stronach that their companies were facing cash challenges.
The filing alleges that Ossip and Belinda Stronach were confrontational, disrespectful and insubordinate when they approached Frank Stronach with concerns about the amount of money he was spending on an agricultural business and golf club in Florida.
They also informed him, the filing claims, that he was no longer legally in control of the family empire.
Frank Stronach subsequently attempted to have Ossip fired as CEO of The Stronach Group, according to the filing. Ossip was instead suspended from the position, although the claim alleges that Ossip continued to be involved in company-related decisions, without Frank Stronachs knowledge.
The filing further claims that Belinda Stronach diverted millions of dollars in family money to Ossip and his outside business ventures, and that Belinda Stronach has taken more than $70 million in company money for purposes of maintaining her extravagant lifestyle.
That lifestyle allegedly includes parties, vacations and limousine rides expensed to the company as well as more than $10 million spent on an office near Belinda Stronachs home.
To the extent that Belinda uses this office at all, she does so for purposes that are largely unrelated to the business and affairs of The Stronach Group, the filing reads.
Also alleged in the filing is that Belinda Stronach appointed unqualified friends to various positions of authority within The Stronach Group and to sell potential development lands in Ontarios Greenbelt for less than what the family paid for them.
More recently, the claim alleges, Belinda Stronach moved to sell the Florida golf club at a steep discount and get rid of the companys private jet.
Despite these oft-cited financial pressures, the statement claims, Belinda Stronach demanded that $19 million in company money be distributed to her and other trust beneficiaries.
Members of the Stronach family had strong and legitimate concerns throughout the relevant period concerning Belindas lack of business acumen and experience, including because of her unenviable track record of participating in failed or problematic business investments, the statement reads.
Ossips spokesperson had a different version of events, saying it was Frank Stronach who was putting the fortune in jeopardy.
Frank Stronach was a great auto parts entrepreneur, but his recent excessive spending and numerous failed ventures put his familys wealth at risk, the spokesperson said.
The claim also seeks to remove Belinda Stronach, her children and Ossip as trustees of various family trusts and force them all out of various positions they hold within the Stronach empire
Frank and Elfriede Stronach are seeking $520 million in damages, as well as a full, detailed and proper accounting of all money Belinda Stronach, Ossip and the others have received from the family business.
Frank and Belinda Stronach chat at Magna International Inc. annual general meeting in Markham, Ontario on Thursday May 6, 2010. (THE CANADIAN PRESS/Frank Gunn)
Did you capture some amazing images or video? Share it with CTV News and it could appear online or on-air!