Honey Dew Donuts, founder Richard Bowen and his brother yesterday sued the Ouroboros Group of Boston over a long effort by the private-equity firm to buy Honey Dew that the donut maker says it ended when it learned the reference letter from a financial company supplied by Ourboros was a forgery.
In the complaint, filed in Suffolk Superior Court, Honey Dew, based in Plainville, and the Bowens are seeking recompense for all the time they say they wasted preparing for a $25-million sale of the corporate assets - which includes not just stock, donut recipes and branding but buildings and property leased to some Honey Dew franchisees. At a minimum, they say they are owed the $200,000 Ouroboros put into an escrow account and agreed to pay should the deal fall through at the last minute.
Bowen, who started what is now a three-state, 120-franchisee chain in Mansfield in 1973, began to look for a possible buyer in 2019 as he began to get ready for retirement.
Approached by the Ouroboros Group, he began negotiations that he says then dragged on for a couple of years, to the point where he says he told Ouroboros founders Samantha Leigh Ory and Richard Seth Tannenbaum last fall he'd had enough, that generating all the detailed information they claimed to need to decide was getting expensive and that it was time to fish or make the donuts.
According to the complaint, on Oct. 5, Tannenbaum submitted a "letter of reference" from UBS Financial that verified Ouroboros had at least $25 million in UBS accounts, or enough to close the Honey Dew takeover. That satisfied Bowen and, over the next few months, he and his investment bank and other advisors began work even more earnestly to compile all the detailed information Ouroboros sought, including voluminous data on each of the 120 franchises - 240 pages of information in all - to lead to a final purchase agreement. In March, Honey Dew and Ouroboros signed a final purchase and sale agreement, with a final sign-off agreed to by July 31.
To get ready for the final handover, the complaint continues, Honey Dew and its financial advisors worked even harder on even more paperwork, in particular, related to the real-estate agreements between Honey Dew and its franchisees.
In May, things once again ground to a halt, this time over various documentation related to those real-estate agreements. The complaint says that while the two sides were working on these issues, Honey Dew somehow learned that the UBS Financial reference letter was a forgery, that, in fact, Tannenbaum authored it himself the day before he sent it to Honey Dew.
The conduct of Buyers' agent Ouroboros Group in using the forged UBS Letter of Reference in negotiations with Sellers demonstrated such a stunning lack of integrity that Sellers wanted nothing further to do with Ouroboros Group, Tannenbaum, Ory or the Other buyers for whom they were acting as agent.
Despite Tannenbaum's and Ory's reported entreaties, Sellers have no interest in resuscitating the negotiations. As far as Sellers are concerned, the Buyers' intentional use of a fake UBS Letter of Reference immediately disqualified Buyers as suitors for Sellers' Honey Dew Assets. In particular, there were no circumstances in which Dick Bowen would transfer Honey Dew Assets, which he had spent decades building, to anyone who had shown such dishonesty and untrustworthiness and such a fundamental lack of integrity.
The suit seeks a jury trial on counts of fraud, misrepresentation and breach of contract. The court docket does not yet show a date by which Ouroboros has to file an answer.