LeRoy Kay sold his 30-year-old construction business, Roy Kay Inc. of Freehold, N.J., to New York-based utility firm KeySpan in February of 2000. In the two years since, he's found himself and his family ousted from the company's operations, short of the full compensation promised, and embroiled in a $70 million lawsuit.
The sales agreement, as described in a press release issued by the Kays last July, included a three-year employment agreement for Kay and his son David Kay, during which time they would "earn out" the remaining compensation. Newsday reported last August that court papers submitted by the Kays claim KeySpan misled them by not disclosing that SEC regulations would prohibit them from doing general contracting work -- 30% of their business -- after the sale. They also claim that KeySpan withheld promised contracts from its subsidiaries in an effort to avoid paying Kay the remaining $12 million. As this situation became clear to the Kays, the press release states, KeySpan "ousted" the Kay family from the business in dramatic fashion, with security guards taking over the offices as KeySpan president William Feraudo served Kay termination papers over lunch.
Three months later, KeySpan filed suit against the Kays claiming that their mismanagement drowned the company and charging them with falsifying records and withholding documents to hide the mismanagement, Newsday reported.
Both LeRoy Kay and KeySpan spokesperson Bob Mahony, citing the pending litigation, declined to comment further.