Breakup of political consultancy linked to Missouri’s most prolific Republican donor plays out in court with charges that company founder used ‘bogus loans’ to steal hundreds of thousands of dollars to the company.

The consulting company, called Pelopidas, closed in September 2020. The Eastern District of Missouri Court of Appeals on Tuesday ruled that Pelopidas and its founder, Travis Brown, owed Rachel Keller, Brown’s former wife and business partner, $ 7.5 million.

In the unanimous decision, the court overturned a decision of the St. Louis County Circuit Court that Keller had violated the terms of a 2019 settlement in an earlier lawsuit and owed Brown and Pelopidas $ 408,326 in attorney fees.

The decision is a complete victory for Keller in the legal battle that has centered on delicate points of contract law, said John Kingston, Keller’s attorney.

“The only thing that comes up to the circuit court is the issue of legal fees” for Keller as the winning party, Kingston said.

Neither Brian McGovern, lawyer for Pelopidas, nor Ted Frappoli, lawyer for Brown, responded to requests for comment on Tuesday.

Founded in 2007, Pelopidas was the main strategic arm of Rex Sinquefield, the wealthy Conservative activist who donates millions each year to candidates and campaigns, usually Republicans. From 2016 to 2020, Sinquefield made $ 16.1 million in political contributions reported to the Missouri Ethics Commission.

Through Pelopidas, Sinquefield pursued a personal program that included the elimination of state-level personal income tax and income taxes in St. Louis and Kansas City.

After their divorce in 2014, Keller retained her stake, with Brown as a manager and Keller on the payroll receiving a salary and other benefits.

Keller filed a lawsuit against Brown and Pelopidas in 2016, notes the Eastern District opinion signed by Judge Kelly C. Broniec. She alleged “a variety of financial misconduct and breaches of fiduciary duty, including allegations that Brown used certain” bogus loans “to steal large amounts (of) reported illegal activity.

Kingston declined to comment when asked if Keller had spoken to law enforcement agencies about his allegations, citing nondisclosure and non-disparagement clauses in the settlement agreement.

While the initial trial was active, the St. Louis post-shipment reported that Keller accused Brown of taking $ 650,000 in unauthorized distributions and of diverting $ 600,000 from Pelopidas funds to Brown-owned businesses in Florida.

Sinquefield severed ties with Pelopidas in September 2020, shortly after ending a campaign to privatize Lambert-St. Louis International Airport. Pelopidas closed shop shortly after, with Brown taking a stand with another prominent lobbyist, Former Missouri House President Steve Tilley, immediately after the closure of Pelopidas.

Under the September 2019 settlement agreement, Brown and Pelopidas agreed to pay Keller $ 8.6 million in annual installments. The original lawsuit was dismissed in January 2020.

Brown and Pelopidas filed a lawsuit against Keller in February 2020, accusing him of failing to fulfill his part of the settlement by refusing to sign the documents necessary to complete it. A document was an acknowledgment that she had ceded her stake in Pelopidas on the date of settlement.

Keller filed a counterclaim, alleging that the deal was broken when she had not received the first installment of $ 1.1 million as of April 1, 2020. Brown and Pelopidas placed the money in receivership and refused to release him until the documents were signed as they requested.

In a footnote to the notice, Broniec noted that the date of the transfer of ownership appeared to be the main sticking point between the parties.

For Keller, the question appears to be whether the IRS would accept that the transfer took place on the date the settlement agreement was reached instead of the date the documents were finalized, Broniec wrote.

“On the other hand, Brown seems to be bogged down in his belief that the parties simply agreed to an effective date of September 30, 2019 and he is sticking to it at all costs,” Broniec wrote.

Keller, on the other hand, “seems convinced that he has a nefarious goal to insist on an effective date of September 30, 2019, which she says is a practice he has used in the past to steal hundreds of thousands. dollars to Pelopidas via fake “loans” from the company using backdated documents. ”

Opinion of Pelopidas against Keller