Dayton company wants investigation of development executive

Credit: DaytonDailyNews

Conflict of interest allegations leveled

Credit: DaytonDailyNews

Executives at a Dayton company are accusing the Dayton Development Coalition of allowing one of its top employees to have at least two private businesses, creating what the couple says is a potential conflict of interest.

Coalition spokeswoman Shannon Joyce Neal said the allegations by the owners of Dayton-based CommuterAds were disproved in an independent review by a law firm the coalition hired after receiving the complaints.

Roger Edwards is a vice president who runs the coalition’s venture fund, called Accelerant. He is also owner of two local companies. CommuterAds Chief Executive Russ Gottesman and co-founder Katie Hill-Gottesman said those two roles raise questions since entrepreneurs using the coalition could also be part of the customer base of Edwards’ private companies.

RELATED: Accelerant funds two start-ups up to $250K each

“This could have far reaching implications beyond just our company,” the Gottesmans wrote in a Jan. 30 letter to Jeff Hoagland, president and chief executive of the coalition.

The Gottesmans have called for a full investigation and, pending that, have asked for Edwards to be removed as a coalition representative of any companies that receive funding through the coalition’s Accelerant and the Dayton Region Signature Fund programs.

RELATED: Money, power flows to secretive group

“Conflicts of interest that blur lines related to who a person works for, who makes and manages investments and where motivations lie are bad for everyone,” Hill-Gottesman said.

RELATED: Millions of dollars awarded to region to help startup companies

Neal said the coalition is unaware of anyone else in the entrepreneurial community who shares the concerns raised by the Gottesmans.

“The Gottesmans are the only ones who have made these claims and we have found no evidence of wrongdoing,” Neal said.

The Gottesmans say they are also concerned with Edwards’ behavior at their company’s Jan. 25 board meeting. Edwards serves as an observer and coalition representative to CommuterAds. In their Jan. 30 letter the couple accused Edwards of “bullying and manipulation” during the meeting.

They allege Edwards attempted to get the board to agree to expand its size and to seek additional capital despite the company board’s belief that those moves were not needed. The Gottesmans viewed it as an “apparent goal of taking control of the company.”

“Mr. Edwards’ role as DDC observer to the CommuterAds and other partner boards provides him with an advantage to potential new business and corresponding monetary benefit,” the Gottesman’s wrote.

They followed up with a March 8 letter to the board of trustees for another coalition affiliate, Development Projects Inc., asking that their complaints be escalated and expressing dissatisfaction with the coalition’s response to the January letter.

RELATED: Startup says Accelerant funds vital to success

Neal said the Gottesmans were asked to provide more details and did not.

The two private companies Edwards is associated with are Gem City Business Solutions, a business consulting firm, and the Wilderness Agency, a marketing firm. Edwards and Linda Terrill, who is the coalition’s entrepreneur-in-residence, are managing directors of Gem City Business Solutions and co-founders of Wilderness Agency, both located at 2555 University Blvd., Fairborn, according to web sites for the companies.

Edwards and Terrill have no “conflicts of interest” with the coalition, said their attorney, Jonathan F. Hung of Green and Green in Dayton.

And, he said, the coalition “has no conflicts that may arise from Mr. Edwards’ and Ms. Terrill’s involvement with Gem City or its affiliates.”

He said the Gottesman’s are on a “malicious crusade” and their accusations come as negotiations are ongoing for a “buyout of CommuterAds.”

RELATED: Oakwood company lands Water Street office

“We have strong reasons to believe the Gottesmans are using you as part of a media campaign to gain an advantage in the negotiations described above,” Hung said in an emailed response. “If not, their alternative, ulterior motive is to injure Mr. Edwards’ and Ms. Terrill’s reputation in the local community.”

The coalition’s most recent available tax forms are from 2015, when Edwards was the coalition’s entrepreneur-in-residence making base pay of $133,721.

CommuterAds is a digital transit media company that is proprietary owner of GPS-enabled digital media located on transit vehicles, said Hill-Gottesman. It was founded in 2009 in Dayton with help from the coalition’s DRSF, which assists entrepreneurs using a combination of public and private funding.

RELATED: Targeted messages help grow Dayton company

The coalition hired Taft, Stettinius & Hollister, a Dayton law firm, to review the Gottesmans’ conflict of interest complaints. In a March 31 letter to Hoagland, Taft attorneys David Reed and Jeffrey A. Mullins, wrote that the review found “no evidence of any conflicts of interest in relation to Rogers (sic)Edwards, Linda Terrill or other employees or representatives associated with the Dayton Development Coalition who are in any way involved with the Dayton Region Signature Fund.”

RELATED: State cuts funds from Dayton Development Coalition

The law firm also found that the “conduct of Roger Edwards at the Jan. 25 meeting was appropriate and consistent with his role as the observer for the Dayton Region Signature Fund, L.P.,” according to the letter provided by Neal.

“We believe it is important for you to know that all of these allegations arose against the backdrop of active business negotiations that were occurring between the Gottesmans and their company, CommuterAds and the Dayton Region Signature Fund (“DRSF”) and other Commuter Ads investors,” Neal said in an email.

“The proposal under discussion was initiated by the Gottesmans and would have resulted in various investors (including DRSF) being bought out of CommuterAds at a fraction of their initial investment,” Neal said.

She also said the Russ Gottesman’s now defunct ESET, LLC still owes a $916,864 judgment on an unpaid loan from the DRSF.

Russ Gottesman declined to comment on that October 2014 judgment made in Montgomery County Common Pleas Court in a lawsuit filed by the DRSF against ESET, which was an Internet-based commerce company where Gottesman was managing director.

Hill-Gottesman said the couple was never contacted by the law firm so she questioned how thorough the Taft’s review was.

The Gottesmans also said they are also concerned that the coalition would release to the media information about the company’s private negotiations.

Gottesman’s Dayton-based ESET, LLC is not the same company as ESET, a Slovakia-based internet security firm with North American headquarters in California, according to Anna Keeve, public relations manager for ESET North America.

RELATED: Fewer funds for high-tech startups in Dayton area

RELATED: Group touts Clinton’s small-business plan