U.S. Commerce Secretary Wilbur Ross and the company he founded, WL Ross & Co., were sued by three former managing directors who claim the corporate entities created to handle equity funds were improperly charged millions of dollars in fees.
David H. Storper, David Wax and Pamela K. Wilson allege that the firm wrongfully charged the entities at least $48 million in managements fees.
According to the suit in state court in New York City, WL Ross employees were required to make significant investments in return for rights to a share of the profits and other gains, which were a "significant part" of their compensation. The plaintiffs say they collectively invested millions of dollars in the entities and together own about 20% of each one.
Mr. Ross and his firm "blatantly violated" their obligations to make sure the entities received the appropriate benefits, charged them millions in fees at rates that exceeded what they could charge investors, took the fees for themselves and "completely concealed their conduct," the three said in the suit.
Mr. Ross didn't immediately respond to a request for comment made through the Commerce Department. Jeaneen Terrio, a spokeswoman for Invesco (IVZ), which purchased WL Ross in 2006, declined to comment on the suit, which was filed Wednesday.
Mr. Storper, a founding member of the firm who left in 2012, sued Mr. Ross last year, claiming he improperly withheld more than $800,000 from him. Joseph Mullin, a former executive, sued Mr. Ross in January, alleging he wrongfully seized $3.6 million belonging to him.
Mr. Ross, who made his fortune buying distressed companies and flipping them for billions, started his firm in 2000. He continued to oversee WL Ross after selling it to Invesco.