Sears sues Mnuchin alongside former CEO for alleged multi-billion dollar robbery

Sears Thursday appointed trustee Steven Mnuchin in a lawsuit against former company president, Edward Lampert, alleging that Mnuchin was part of a group of board members who have helped Lampert and his hedge fund to strip over 2 billion assets.

Lampert and his hedge fund, ESL Investments, were the largest shareholders of Sears, holding between 47.8% and 62% of its shares during the period of alleged violations, from 2011 to 2015, according to the lawsuit. According to the complaint, they benefited, along with two other major shareholders named in the suit, from the vast majority of the benefits of splitting five different assets of the company.

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Prior to becoming a treasury secretary, Mnuchin was an investor in ESL and "a member of ESL's board of directors at all relevant times," the document says.

"By far, most of the diverted value of the company went to Lampert himself, to ESL … and to other insider defendants," says the lawsuit. "These transfers were undoubtedly intended to hinder, delay and defraud creditors and / or occurred when the Corporation was insolvent and did not have sufficient capital to continue operations and repay its billions of dollars in debt."

The lawsuit, filed on behalf of Sears' creditors, also states that Sears "repeatedly produced financial plans reflecting fanciful and bad faith predictions that the company would experience an immediate and dramatic turnaround of deep and growing losses to profitability. sudden ".

As a roommate of Lampert at Yale University and working with him at Goldman Sachs, he is one of four Sears board members who "aided and abetted" shareholders by voting for spinoff approval.

Sears declared bankruptcy last October and was acquired by an ESL group member, Transform Holdco, in February.

A spokesperson for ESL Investments said the fund "vigorously disputed claims" against ESL, Lampert and ESL President Kunal Kamlani, another member of the Sears board of directors.

"The claims of the debtors are misleading or simply false," he said, stating that the company was solvent when the spin-offs took place and that ESL was a "constant source of funding" for Sears for many years .

"In addition, the company received over $ 3.0 billion in proceeds from these transactions, all of which were used to reduce debt and fund transactions, and all referenced transactions treated each shareholder of the same amount. economically, "said the spokesman.

"All transactions were made in good faith, on fair terms, to all Sears stakeholders and approved by the Sears Board of Directors, consisting of a majority of independent directors, and the Sears Board of Directors. transactions with related parties, itself constituted. independent directors and advised by independent financial and legal advisers, "he added.

The Treasury Department has not responded to a request for comment.