Dan D'Ambrosio

Free Press Staff Writer

©2016 Burlington Free Press

Raj Bhakta, the flamboyant founder of WhistlePig whiskey in Shoreham, has been thrown off the board of directors of his own company and dismissed as operating manager.

Or maybe not.

Bhakta, who says his whiskey company has been growing at 80 percent yearly, was forced out by two board members who accused him of fraud and criminal activity. They raised the allegations during a hastily called meeting in New York where Bhakta was prevented from voting.

Bhakta has responded with a lawsuit that seeks to overturn the board's action and is continuing to run his whiskey business as if nothing has changed. He returned recently from Paris, where he launched the brand in Europe.

As of Friday, the board members, Wilco Faessen and Christopher Evison, had yet to file a response to Bhakta's complaint. Their attorneys declined to comment.

Bhakta is negotiating for a "status quo" order in the Court of Chancery in Delaware, the oldest business court in the nation, where he filed his complaint. WhistlePig is a registered corporation in Delaware. Such an order would leave Bhakta at the helm of WhistlePig until the end of a trial. He hopes to secure the order by next week.

Six claims of wrongdoing

The dismissal of Bhakta took place at a special board meeting earlier this month in New York where Faessen and Evison leveled six charges against Bhakta to justify his removal from the board and as operating manager.

First, the board resolution stated that Bhakta "drove while intoxicated on April 26, 2015, and (pleaded) guilty to the criminal offense of negligent operation of a motor vehicle."

The Vermont State Police issued a statement April 27, 2015, saying the 39-year-old Bhakta was stopped for speeding on North Orwell Road in Shoreham, and cited on suspicion of driving under the influence of alcohol. Bhakta later pleaded guilty to the lesser charge of negligent operation of a motor vehicle.

The second claim against Bhakta brought by Faessen and Evison is that he "lied" to the arresting officer by saying he was not intoxicated.

In the Delaware complaint, Bhakta's attorneys say Faessen and Evison "blatantly mischaracterize" the offense.

"Mr. Bhakta was not intoxicated that night. ... In any event, such actions do not rise to the level of 'fraud' or 'criminal activity' contemplated by the Operating Agreement," the complaint states.

The agreement governing the board of directors allows the actions taken by Faessen and Evison only if Bhakta is shown to have committed fraud or engaged in criminal activity. His conduct has to be that egregious.

Faessen and Evison go on to accuse Bhakta of other offenses including smoking marijuana on company premises and secretly promising an equity stake in WhistlePig to Danhee Kim in 2011. Kim was then Bhakta's newly hired marketing director, and is now his wife. Bhakta is accused of concealing his "secret promise" to Kim in a subscription agreement dated Nov. 27, 2012.

In his complaint, Bhakta answers by calling the omission a "good faith oversight, not fraud."

"Upon discovering the mistake, Mr. Bhakta promptly alerted the Board, who approved and ratified the equity award to Ms. Kim," the complaint states. "Defendants' effort to ascribe ill-intent to Mr. Bhakta is unfounded and disingenuous."

Bhakta, who has three of the board's six votes, was absent from the meeting. So was the fourth board member, Jose Robledo.

In an interview with the Burlington Free Press, Bhakta said Faessen and Evison gave minimal notice for the meeting, and told him he had to recuse himself because his alleged behavior was at issue. In those circumstances, Bhakta said, two members of the board comprised a quorum.

"This is a bunch of stuff I didn't think about, but they had," Bhakta said.

This is war

Bhakta's attorneys use stark terms to describe their client's situation, writing that "the Defendants have declared war on Mr. Bhakta."

If it is war between Bhakta and his dissident board members, the sides appear to be grossly mismatched.

Bhakta founded the company in 2010 by buying more than 5,000 gallons of premium Canadian 10-year-old rye whiskey and bottling the beverage in Vermont. His dream is to produce WhistlePig entirely on his farm in Shoreham, where he is growing the rye he needs and making the barrels for aging from trees on the farm.

Whiskey maker tests VT's definition of farming

Bhakta owns about 50 percent of the business. He took on shareholders when the rapid growth of the company required an infusion of capital. That's where Faessen and Evison came in.

Christopher Evison is managing director and chief investment officer at Quadrant Capital Advisors in New York, a firm that oversees the estimated $15 billion fortune of the Santo Domingo family of Colombia. As the Financial Times reported in October, the Santo Domingos are the second largest shareholder in SABMiller, with a 14 percent stake and two board seats.

SABMiller is a global brewer with U.S. offices in Miami and Chicago. The company had $22.1 billion in revenue in 2015. SABMiller and AB InBev are in the midst of a merger attempt that would create a behemoth in control of about one-third of worldwide sales of beer. AB InBev already is the biggest brewer in the world, with revenue of $43.6 billion in 2015, down from $47 billion in 2014.

The Santo Domingo family owns about 12 percent of WhistlePig through an investment arm known as WP Holdings, LLC.

Wilco Faessen, a Dutch investment banker, is a managing director for Barclays in New York. Faessen owns a 15 percent stake in WhistlePig. On his LinkedIn profile, he identifies himself as a co-founder of the company — a claim Bhakta disputes.

"The only thing Wilco ever co-founded was his daughter," Bhakta said.

Bhakta met Faessen and Alejandro Santo Domingo, the 38-year-old scion of the powerful Colombia family, nearly two decades ago when Bhakta was working in finance in New York. Bhakta remembers Santo Domingo as "down to earth, for a billionaire at least, and a decent guy."

In 2011, because of WhistlePig's "quick growth," Bhakta hired Faessen, by then with Barclays, to help him raise capital, according to the complaint filed in the Delaware court. It was then that Faessen secured a stake in WhistlePig for himself, and also brought in the Santo Domingo family.

A classic case of greed?

Asked why he believes Faessen and Evison have gone after him the way they have, Bhakta offers greed as the motive.

"This is a classic case of a founder being shoved off the thing he created for it to be put on the block, sold and turned into a commodity," Bhakta said.

Bhakta said Faessen and Evison will try to make the trial last as long as possible, and cost a fortune.

"They already hired private investigators to find out everything they can about me. This is real. They've called out the dogs," he said.

A Google search would reveal to any investigators a 2006 article in People magazine in which Bhakta admitted to two past arrests on drunken driving charges, dating to 1997 and 2004. Bhakta was running for Congress in 2006 in suburban Philadelphia as the Republican challenger to U.S. Rep. Allyson Schwartz.

Bhakta's campaign included his riding an elephant across the Rio Grande River to draw attention to illegal immigration. The elephant nearly drowned, despite assurances, Bhakta told the Burlington Free Press in 2014, that the pachyderm would have no problem swimming the river. At the time, Bhakta also had just been fired by Donald Trump during the second season of "The Apprentice," the NBC reality show.

Bhakta's current travails began in late April, when he was called to a meeting in the Park Avenue boardroom of Quadrant Capital Advisors by Faessen and Evison. Bhakta said he thought the meeting was going to be friendly. He was wrong.

"They marched in six people," Bhakta said. "They said, 'Listen, you have two options: You resign, and we put the company on the block and sell it. You walk away with a lot of money. The second option is we file this complaint ... and we'll bankrupt you in court and destroy your reputation.'"

Bhakta claims he could walk away with as much as $50 million if he took option A. But he took option B, he says, because he won't be bullied.

"I wasn't raised a man who's going to be thrown off his farm and out of the company he started," Bhakta said. "This is a clear fight between our vision — a long-term family company that builds enormous value — and selling out to big alcohol, who will destroy the brand."

This story first appeared online on May 20, 2016. Contact Dan D’Ambrosio at 660-1841 or ddambrosio@freepressmedia.com. Follow him on Twitter at www.twitter.com/DanDambrosioVT.

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