1st Servall Kicks Marcone to Curb. Steps on Neck.
Submitted by advisor on Wed, 03/30/2011 - 3:10pm.
We do not often reprint press releases without research and editing, but this is a special occassion. We find this Servall release too much fun to mess around with.
NEW YORK STATE APPELLATE COURT MODIFIES TRIAL COURT DECISION IN ANTI-COMPETITIVE LAWSUIT INVOLVING NATION'S TWO LARGEST APPLIANCE PARTS DISTRIBUTORS
Appellate Court Also Fast-Tracks Servall's Appeal
BUFFALO, NEW YORK – The New York State Appellate Division, Fourth Department, recently granted 1st Source Servall two key victories in its defense of a lawsuit brought by its chief competitor – Marcone APW, LLC. By an Order dated March 10, 2011, the Appellate Court first granted a significant reversal of a February 8, 2011 decision by New York Supreme Court Justice John Michalek and then expedited the balance of Servall's appeal of the trial court's preliminary injunction against the company. As a result, Servall is now free to sell its products to customers in the appliances industry despite Marcone's efforts to stop it from doing so.
“The Appellate Division's order represented a significant victory for 1st Source Servall and we look forward to having the rest of the trial court's decision reversed when the appeal is heard in May," said B. Kevin Burke, Jr., a partner at Jaeckle Fleischmann & Mugel, LLP in Buffalo, New York representing 1st Source Servall. "This latest decision gives Servall immediate relief from Marcone's unfounded attacks and will allow Servall to continue growing its business in the Northeast, and specifically, in the Buffalo area. We also appreciate the Appellate Division's decision to consider the surviving portion of the trial court's order on an expedited basis and see that as an important step toward the eventual dismissal of the frivolous claims in this lawsuit," Burke went on to explain.
According to Burke, the lawsuit was commenced by Marcone to stifle competition in the Northeast and prevent 1st Source Servall from serving those customers impacted by Marcone's recent poor service and price gouging following Marcone's take-over of Buffalo-based business AP Wagner. "Marcone's sloppy take-over annoyed many customers, causing them to seek other supply sources, such as Servall,” said Burke. “Marcone is now seeking to re-claim its lost customers through litigation rather than by earning their business back in the market."
Burke also responded to an accusation made by Dave Cook, a senior officer at Marcone, regarding Servall's supposed "dishonesty." "It is dumbfounding that anyone at Marcone would venture an opinion about whether its competitors are acting ethically, since it was this time last year that Marcone pled guilty before a federal judge in Florida to a charge that it knowingly bought and sold more than 100,000 kilos of a banned substance" known as HCFC-22 "and that Marcone remains on probation as a result of its admission of criminal activity."
Burke continued to explain how “customers that formerly did business with AP Wagner are saying that they left due to Marcone's increased pricing on appliance parts - in some instances as much as 200%, the lack of the availability of many parts from Marcone and Marcone's lack of professional customer service,” Burke said. “Instead of addressing a flawed business model and problematic operations, Marcone chose to start a lawsuit so that it can point to its groundless claims as an explanation for why it is losing major market share in the appliance parts industry.”
"None of the information that a rogue former employee of Marcone sent to a few of his former colleagues now employed by Servall was 'confidential' or 'trade secret' under New York law," Burke went on to add. “It’s clear that Marcone wants a monopoly in the appliance parts industry in the Northeast and is trying to scare customers away from 1st Source Servall. We are confident that 1st Source Servall’s customers are seeing right through this charade,” Burke said. On this topic, Burke took issue with what he called "Marcone's ongoing smear campaign" against Mark Creighton, who is a former AP Wagner employee that Servall hired in April 2010. "Mr. Creighton did nothing more than delete or destroy some Marcone computer files that he retained after Marcone forced him out of his job in the early spring of 2010. The fact that Marcone has continued with its quest to destroy this man's reputation only reveals that Marcone will stop at nothing to maintain its stranglehold on the Northeast market."
Founded in 1929, 1st Source Servall (www.1stservall.com) is a third-generation family-owned and operated distributor of appliance parts. With branch offices and call centers located throughout the Midwest, Southwest, Southeast and Northeast, 1st Source Servall is the country's second-largest distributor of appliance parts.
Marcone Involved in Smuggling Controlled Substances
Following up the press release from Servall, we did a fast Google search to confirm their claim about illegal activity at Marcone. Wow. These 1 year old charges are very big.
PRESS RELEASE OF UNITED STATES ATTORNEY'S OFFICE OF
SOUTHERN DISTRICT OF FLORIDA
INTERNATIONAL PRODUCT SUPPORT COMPANY CONVICTED AND SENTENCED FOR THE ILLEGAL PURCHASE AND SALE OF SMUGGLED OZONE-DEPLETING REFRIGERANT GAS
March 19, 2010
FOR IMMEDIATE RELEASE
Jeffrey H. Sloman, United States Attorney for the Southern District of Florida, Maureen O’Mara, Special Agent in Charge, U.S. Environmental Protection Agency (EPA), Criminal Investigation Division, Atlanta Area Office, and Anthony V. Mangione, Special Agent in Charge, U.S. Immigration and Customs Enforcement (ICE), Office of Investigations, announced that defendant Mar-Cone Appliance Parts Co. (Marcone), a Missouri corporation with its headquarters in St. Louis, was convicted and sentenced today in connection with the illegal receipt, purchase, and sale of ozone-depleting refrigerant gas that had been smuggled into the United States contrary to the Clean Air Act, in violation of Title 18, United States Code, Section 545.
Marcone pled guilty before U.S. District Court Judge Alan S. Gold this afternoon to a one count Information, charging it knowingly receiving, buying, selling and facilitating the transportation, concealment, and sale of approximately 100,898 kilograms of the ozone-depleting substance hydrochlorofluorocarbon - 22 (“HCFC-22"), which had been illegally smuggled into the United States contrary to the Clean Air Act. HCFC-22 is a widely used refrigerant for residential heat pump and air-conditioning systems.
Immediately following the guilty plea, Marcone was sentenced to five years of probation and ordered to pay a $500,000 criminal fine. Marcone was also ordered to perform community service by making a $400,000 payment to the Southern Environmental Enforcement Training Fund, a not-for-profit training organization. In addition, as a special condition of probation, Marcone was ordered to implement and enforce a comprehensive Environmental Compliance Plan. Finally, Marcone was ordered to forfeit to the United States $190,534.70, which represents proceeds received as a result of the crime.
The Federal Clean Air Act regulates air pollutants, including ozone-depleting substances such as HCFC-22. The Clean Air Act and its implementing regulations established a schedule to phase out the production and importation of ozone-depleting substances beginning in 2002, with a complete ban starting in 2030. To meet its obligations under an international treaty to reduce its consumption of ozone-depleting substances, the United States issued baseline allowances for the production and importation of HCFC-22 to individuals and companies. In order to legally import HCFC-22, you must hold an unexpended consumption allowance. This matter, as well as others involving the smuggling and distribution of ozone-depleting substances, are being investigated through a multi-agency initiative known as Operation Catch-22, following in the footsteps of Operation Cool Breeze, which targeted illegal trafficking of CFC-12 in the mid-1990's.
According to court records, Marcone is a product support company serving customers throughout the United States and 117 countries worldwide. The investigation determined that between July 2007 and April 2009, Marcone engaged in a pattern of conduct to purchase and sell black market HCFC-22. Over the years, a Senior Vice-President of the Heating and Cooling Division, working within the scope of his employment, would routinely negotiate for the purchase of HCFC-22 from various suppliers that was not legally imported. Marcone then distributed the product throughout the United States. In this way, Marcone purchased HCFC-22 from various importers, who did not hold the required unexpended consumption allowances, totaling approximately 100,898 kilograms, or 7,419 cylinders, of restricted HCFC-22, with a fair market value of approximately $843,291.00.
U.S. Attorney Jeffrey Sloman stated, “The defendant jeopardized the global effort to protect the ozone layer for its own financial benefit. Such conduct is short-sighted and inexcusable. We will continue to aggressively enforce federal laws that seek to protect our environment.”
EPA Special Agent in Charge Maureen O’Mara said, “HCFC’s deplete the stratospheric ozone layer, which is critical to life on earth and protecting people from the harmful effects of ultraviolet radiation, including cancer. EPA is committed to working with ICE and other agencies to combat such criminal conduct and preventing flagrant violations of our Nation’s environmental laws. Those who jeopardize public safety to make illegal profits will be vigorously prosecuted and punished.”
“This HCFC enforcement case under existing EPA regulations demonstrates our serious domestic and global commitment to protecting the ozone layer,” said Drusilla Hufford, Director of EPA’s Stratospheric Protection Division.
“The unlawful importation of goods pose a triple threat to the national security, public safety, and economic well-being of the United States,” said Anthony V. Mangione, Special Agent in Charge of ICE’s Office of Investigations in Miami. “This case demonstrates ICE’s partnership and aggressive approach with the U.S. Attorney’s Office and EPA to protect the American public from inferior and unsafe products that illegally enter the United States and combat those who exploit our commerce system and compromise the safety of our citizens.”
Mr. Sloman commended the investigative efforts of the EPA, ICE’s Office of Investigations in Miami, the Florida Department of Environmental Protection, Criminal Investigation Bureau, and the Miami-Dade Police Department, Environmental Investigation Unit. The case was prosecuted by Special Assistant U. S. Attorney Jodi A. Mazer.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.