NEWS

Did Tami Longaberger quit or get fired?

Kent Mallett
Reporter

NEWARK – Tami Longaberger's leadership of basket-maker the Longaberger Co. ended abruptly this year, but the reasons for her departure, and even the date, are in dispute.

CVSL, parent company of the Longaberger Co., stated Monday it terminated her employment May 27 because she had an inappropriate personal relationship with a subordinate Longaberger executive, refused to work with the sales field and rarely showed up at the Newark corporate office.

Tami Longaberger stated in April 28 and May 29 resignation letters that CVSL cut her salary by $600,000, reduced her responsibilities, gave another executive authority over her and caused Longaberger to fail to pay taxes to several states, forcing some to seek payment from her personally.

She joined her father's company in 1984, became president in 1994 and led the basket-maker since her father died in 1999. It was a $1 billion business in 2000, when it employed more than 8,200 people.

CVSL officials have said they inherited a company in steep decline with fundamental problems. The parent company stated it has narrowed the product line, reduced back orders and inventory, and eliminated bank debt.

CVSL, which purchased controlling interest in the Longaberger Co. in March 2013, stated in the Monday filing with the Securities and Exchange Commission that its internal investigation uncovered substantial misconduct by the former CEO.

The direct-selling conglomerate alleges her April 28 and May 29 resignations were improper and she was terminated for good cause on May 27.

"Your lengthy absences from the company's home office became so frequent and egregious that you made yourself an absentee CEO," wrote CVSL General Counsel Heidi Hafer.

Tami Longaberger responded to The Advocate in an email from her attorney, John Zeiger, of Columbus firm Zeiger, Tigges and Little.

"I am saddened that the people brought in to help lift The Longaberger Company up have chosen instead to try to tear me down," she stated. "In a transparent attempt to evade their responsibilities under my contract, they have chosen to spin innuendo and false charges to justify their default.

"Instead, CVSL should be concentrating on preserving the jobs of Longaberger associates and our sales force, and on protecting and growing shareholder value. Attacking me will do neither."

Tami Longaberger alleged in a Friday letter to John Rochon, CVSL president, chairman and CEO, that CVSL requested she withdraw her April resignation to work out an agreement, then on May 18, she received a letter from a Kansas taxing authority demanding $32,000 in delinquent Longaberger Co. taxes from her personally.

"The only reason CVSL asked me to withdraw my resignation was to delay its SEC disclosure obligations and advance its own interests," Tami Longaberger wrote.

Russell Mack, CVSL executive vice president and director, said, "We are paying our taxes. The Longaberger Company is completely current on its Ohio state sales and use taxes."

She states her April 28 resignation as a CVSL director and Longaberger director was immediate, but her resignation as Longaberger CEO was effective within 30 days, according to to her employment agreement.

"During the 30-day period following my resignation, CVSL made no attempt to cure any of the circumstances that gave rise to my resignation," she states in her May 29 letter.

She wrote when CVSL's counsel raised allegations against her, her attorneys asked for details so they could address the issues.

"Instead, 15 minutes later, we received a letter from you purporting to terminate my employment as The Longaberger Company CEO even though I had already resigned and you had no basis for terminating my employment," Tami Longaberger wrote.

CVSL states that upon learning of her intention to leave the company, it put a transition team in place.

"That team has uncovered evidence of your misconduct harmful to The Longaberger Company, which made it necessary to terminate you," CVSL stated.

"Your extensive misconduct that we continue to uncover has undermined the possibility of CVSL and The Longaberger Company reaching an agreement with you."

CVSL denies the allegation that any Longaberger executive was given authority over her; states her salary was reduced from $850,000 at the insistence of Longaberger Company's bank, with Tami's consent; and that CVSL forwarded the state tax notices to Longaberger Co.

"With respect to your job responsibilities, you were asked to focus on strengthening relations with the sales field and agreed to do so," CVSL states.

"Unfortunately for the company, you showed an unwillingness to perform this important work consistently, or even spend time at the company's principal office, which directly impacted your job performance."

Longaberger sales have plummeted to roughly $100 million annually and employment dwindled to 230 employees, including 68 at its Newark corporate office, which had 500 employees shortly after it opened in 1998.

The Longaberger Co. reported some positive news Sunday on its Facebook page.

"Just received an update on May sales, and I am ECSTATIC!," wrote Longaberger chairman, president and CEO John Rochon Jr., who is vice chairman of CVSL and the son of CVSL head John Rochon. "Jumping on a plane (after church) headed to the Big Basket to celebrate this PHENOMENAL month end!!!!"

One of the Facebook comments on Rochon's post, from Jim Milnor, stated it will be critical to reduce long waiting times for orders.

"Strong fiscal guidance and positive encouragement can turn years of negatives into positives," Milnor wrote.

Carol Ann Brown commented, "The Longaberger Sale Field and Employees are hard workers-there's no one like us! It just goes to show when you listen to us and give us the products we need, WE WILL PERFORM!!! Thanks for listening!"

kmallett@newarkadvocate.com

740-328-8545

Twitter: @kmallett1958