A Westchester-based operator of famous brand concessions at O’Hare International Airport, Union Station and other prominent airports and train stations across the country has accused its longtime chief operating officer of artificially inflating earnings estimates for years to boost his bonuses, among other allegations of fraud.

The Grove Inc. (TGI) and its president and CEO Michelle Dukler made the accusations last month in counterclaims it brought against TGI COO Paul Loupakos as part of their response to an action he filed in October over claims the company owes him a $270,800 bonus based on its 2013 earnings performance.

In Loupakos' complaint, he alleges a similarly derived 2013 bonus was paid to Dukler, despite company concerns over the veracity of the earnings calculated by former TGI Chief Financial Officer Robert Ireland.

Responding to Loupakos' lawsuit, TGI asserts there were a number of reasons for withholding his bonus, including a litany of allegations that Loupakos, on his own and in conjunction with Ireland, manipulated earnings data to improperly boost his and Ireland’s pay, while also using his position to broker personal business deals on the side and negotiate contracts in ways that allowed him to personally profit at the TGI's expense.

The dealings at TGI first came to public light in October, when TGI filed suit against Ireland, accusing the terminated CFO of abusing his position within the company to alter his employment agreement and inflate earnings to put himself in line to collect hundreds of thousands of dollars in allegedly improper bonuses.

In its Jan. 9 filing in Cook County Circuit Court, TGI levied similar allegations against Loupakos.

Ireland served as CFO at TGI since 2000, while Loupakos served as COO since 2008, his most recent promotion over a career at the company dating back to 1982.

TGI operates concessions as franchise operators of such ubiquitous brands as Wendy’s, Dunkin Donuts, Jamba Juice, Red Mango, Rocky Mountain Chocolate Factory, Auntie Anne’s and others in transportation hubs in more than a dozen of the largest cities in the U.S. Here in Chicago, the company operates three concessions at O’Hare and a Dunkin Donuts in Union Station.

According to court filings, both Loupakos and Ireland had terms in their contracts guaranteeing them annual bonuses equal to a percentage of the company’s earnings.

Loupakos’ contract, for example, provided he would receive a bonus of 3 to 4 percent of TGI’s earnings. TGI alleges that Loupakos, over at least a decade beginning in 2004, routinely worked to inflate company earnings estimates.

Among other actions, TGI alleges Loupakos, as chief operating officer, would prepare documents regularly underestimating expenses and overestimating expected revenues at potential new concession sites, persuading Dukler to sign off on those expansion plans, and, in turn, boosting the company’s gross earnings and thus, inflating his bonuses.

The company also accuses him of working with Ireland to improperly capitalize certain company expenses, again artificially inflating TGI earnings and as a result, the bonuses payable to him and Ireland.

Such actions, TGI asserts, resulted in substantial payments made to Loupakos over the years, boosting his annual earnings from $160,070 in 2004 to as much as $695,582 in 2012, and a total of $4.03 million between 2004 and 2014.

The company further claims that Loupakos' actions prompted it to make potentially poor business decisions in that span.

At the same time, TGI contends Loupakos worked side deals on company time to benefit his personal real estate company, while also securing a personal cut in some deals negotiated with TGI vendors and landlords.

In its counterclaim filing, TGI asked the court to not only deny Loupakos the $271,000 bonus he is seeking, but strip him of at least the $4.03 million the company paid him over the last decade, order him to repay the bonuses paid to him and Ireland under the artificially inflated earnings reports, and reimburse TGI for all the company has spent to investigate and remedy his and Ireland’s alleged actions.

TGI is represented by attorney Michael D. Karpeles of Greenberg Traurig LLP in Chicago. Loupakos's lawsuit was submitted by Carrie A. Herschman of Karr, Herschman & Eggert in Chicago

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