• Ex-FML executive found to have ‘abandoned’ post
• Move followed probe into purported ‘irregularities’
• Same-day deposits/withdrawals inflated earnings
By NEIL HARTNELL
Tribune Business Editor
Craig Flowers’ FML web shop chain has defeated a $1m constructive dismissal claim by a former senior executive who was found to have “abandoned” his post following a probe into “irregularities”.
Justice Keith Thompson, in an April 20, 2021, verdict found that Deyvon Jones, FML’s former chief operating officer, was not terminated but instead “never returned to his employment” after an investigation was conducted into a scheme to allegedly inflate his compensation payments from the web shop chain.
The ruling details how Mr Jones and two colleagues obtained permission to form a company, Blue Star Holdings, which was to manage FML’s 19 “express stores” from November 1, 2017.
The performance-based compensation agreement struck with Mr Flowers and FML meant that the higher the daily amount/volume of customer deposits at those “express stores”, the greater Mr Jones’ share of daily profits.
However, FML launched an investigation after realising that deposits made in the morning were being withdrawn that very same evening. Suspecting that this was a scheme to unduly inflate compensation paid to Mr Jones and Blue Star, FML ultimately terminated the latter’s management agreement for the “express stores” via a February 23, 2018, letter.
This prompted Mr Jones, who helped bring the former Fantasy web shop chain to Mr Flowers and integrate it into FML’s business, to file his claim for constructive dismissal on the basis that the latter had stopped paying his monthly $30,000 salary as of November 2017.
Mr Jones also alleged that he was unable to perform his job from February 23, 2018, because he was “locked out” of the web shop’s computer system while FML had also “started an unsubstantiated rumour” that he “was engaged in fraudulent activity”.
He claimed damages that included $720,000, or two years’ salary; some $120,000 in unpaid wages between September 2017 and February 2018; and other sums that included accrued vacation and three months’ termination notice. The total amounted to more than $1m.
FML, though, countered with a defence that asserted Mr Jones’ computer access was only restricted “in order to facilitate an investigation of irregularities involving the operation of the ‘express stores’”. The probe “disclosed unauthorised behaviour and internal fraud taking place..... that would benefit [Mr Jones] under the new compensation arrangement”.
The web shop chain added that apart from the restricted computer access, Mr Jones was never barred from coming to the office, but instead he “never returned to his workplace after the investigation started” and therefore “abandoned his job” without notice to FML.
The scheme to inflate deposits was reported to the Gaming Board, with FML alleging that - at the time - it had already incurred $50,000 in legal and accounting costs for doing so and these were continuing to mount. These claims, though, were vehemently denied by Mr Jones who alleged that Fantasy’s eight outlets increased FML’s footprint by one-third, taking it from 16 to 24 stores.
He also claimed that the same-day deposit and withdrawal of monies at FML’s express stores “was a feature I had asked several times to be addressed, as based on the compliance rules under the Gaming Board this is not permitted”.
Asserting that he was “blindsided” after being informed that an investigation had already been underway into these transactions for two to three weeks, Mr Jones alleged: “I asked Mr Flowers to give me a few days to get to the bottom of what was going on, as I am sure there had to be a logical explanation.
“At the surface, and to be absolutely clear, there was no win or loss to FML as a whole as no funds would have been gained or lost in this exercise.” FML, though, in its original defence did not see it that way by alleging that the “overpayment” of compensation to Mr Jones was still being determined.
Justice Thompson determined that the case centred around the November 1, 2017, “letter of understanding” whereby Blue Star, a company for which Mr Jones acted as president, was to take over management of FML’s “express stores”.
Describing Blue Star as being “in somewhat of a quandry”, because it was only incorporated 19 days’ later, Justice Thompson agreed that this - together with the fact the arrangement had not been approved by the Gaming Board - meant the arrangement with FML was “void”.
However, describing the case as an employment issue, he said that neither Mr Jones nor FML produced any evidence or testimony confirming the former was terminated from his post. Rather, “the undisputed evidence is that the incentive-based agreement was terminated,” the judge added.
Justice Thompson, having heard evidence from Philip Galanis, the HLB Galanis & Company managing partner, about “the gush of deposits and withdrawals at the express stores”, also backed FML’s decision to lock Mr Jones and others out of the web shop chain’s computer system while it conducted its investigation.
“The evidence does not disclose that the defendant terminated the plaintiff,” Justice Thompson found. “What it does disclose is that an extremely thorough investigation was carried out once the suspicious activities were brought to its attention.”
This resulted in Mr Jones receiving the February 23, 2018, letter from Mr Flowers’ son, Jason, which said the Blue Star management agreement - and not his employment - were being terminated.
“It has come to my attention that there has been a falsification of the accounting system operating under the 1Click Platform, which handles the day-to-day operation,” Jason Flowers wrote. “Further that, based on this falsification, percentages have been manipulated to benefit [Blue Star]. Furthermore, your company has admitted to and acknowledged that this has occurred.”
Finding that Mr Jones never returned to work after the investigation began, Justice Thompson ruled: “The fact is that there was no termination of the plaintiff by the defendant. The plaintiff just never returned to his employment right up to the time of trial.”