Bakery fraud dispute ends in settlement

Carol Ostrow Apr. 3, 2015, 12:54pm

A legal dispute between an investor and a Chicago bakery owner has been settled, according to Cook County Circuit Court records.

An order issued Aug. 27 by Cook County Judge John C. Griffin declared the two parties and their attorneys had told the judge "all matters in controversy between them have been settled and compromised." Griffin dismissed the case with prejudice, by agreement between both parties, with both parties bearing their own costs and attorneys fees.

The order did not discuss or disclose any other terms of the settlement.

The parties in the case had each sued the other over the collapse of their business relationship.

Crumbs Sweets Treats & More, formerly known as ML Sweets and as a shareholder for Little Miss Muffin, had filed suit March 10 in Cook County Circuit Court against Kenneth H. Munic, alleging Munic made material misrepresentations and omissions when he induced ML Sweets to buy shares in his company, Little Miss Muffin Inc. Munic founded Little Miss Muffin (LMM) in the early 1990s as a private label and contract bakery, the suit states, and its last known location was 4014-4022 N. Rockwell Ave. in Chicago.

The suit stated the company was failing by early 2014 and in June 2014, Munic approached Marcus Lemonis, owner of ML Sweets, who loaned Munic $925,000 to prevent his business property (Rockwell) from foreclosing. The loan was made in exchange for a majority interest in the business, the suit stated.

In April, Munic countersued, alleging Lemonis had approached him about investing in LMM. Then, the suit alleged Lemonis and his associates, once they held a majority stake, raided LMM's recipes and records, and began shifting LMM resources to Lemonis' other bakery ventures. Munic alleged he was then transferred to help open or rebuild struggling bakeries, and ultimately fired amid acrimony.

For his part, Lemonis' suit stated Little Miss Muffin’s financial statements were misleading and inaccurate. 

Lemonis also alleged Munic violated his contract by siphoning funds to a separate and struggling bakery business in Maryland, and made other attempts to manipulate the company financially. The plaintiff cited fraud, misrepresentation and omission and breach of fiduciary duty.

Crumbs Sweets Treats had sought damages of more than $50,000, plus attorney fees and costs. Crumbs was represented by attorneys Rick Del Guidice and Jeffery Heftman of Gozdecki Del Guidice, Americus, Farkas & Brocato in Chicago. 

Munic, who was represented by the Fucco Law Group, of Highland Park, and attorney Elliott Richardson of the firm of Korey Richardson LLC, of Chicago, alleged breach of his employment agreement, breach of fiduciary duty and defamation, among other allegations. Munic had demanded damages of more than $50,000, plus punitive damages.

Cook County Circuit Court case number: 15-L-2431.

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