Glock v. Glock

247 F. Supp. 3d 1307, 2017 WL 1049448, 2017 U.S. Dist. LEXIS 39311
District Court, N.D. Georgia·Decided March 20, 2017·No. CIVIL ACTION FILE NO. 1:14-CV-3249-TWT·Published·Cited by 2 cases

Opinion

OPINION AND ORDER

THOMAS W. THRASH, JR., United States District Judge

This is a RICO action. It is-before the Court on the Defendants Gaston Glock Sr., Glock Ges.m.b.H., Glock, Inc., Glock America S.A., Glock (H.K.) Ltd., CON Holding GmbH, Joerg-Andreas Lohr, Lohr + Company GmbH Wirtschaftspriingsge-sellschaft, Rochus GmbH, and Karl Walter’s • Motion to Dismiss [Doc. 187],. the Defendant Hubert William’s Motion to Dismiss [Doc. 191], and the Defendant Peter Manown’s Motion to Dismiss [Doc. 192], For the reasons set forth below, the Defendants’ Motions to Dismiss are GRANTED.

I. Background

In 1963, the Plaintiff Helga Glock and the Defendant - Gaston Glock, Sr. (“Glock Sr.”) founded Glock KG, an Austrian limited partnership.1 In the beginning, Glock KG was a- small manufacturing business that-sold “curtain rods and brass fittings for doors and windows, as well as machine gun -belts and knives for'-the Austrian army.” 2Later, Glock Sr. developed a pistol with the hopes of winning a gun supplier contract with the Austrian army,3 His pursuits were eventually -successful: Glock Sr. patented the Glock 17 semi-automatic pistol and signed a contract with the Austrian army to supply the pistol.4 In 1983, Glock KG became Glock Ges.m.b.H. (the “Parent Company”).5 While producing pistols for the Austrian army, the Parent Company discovered it could produce more pistols than could be sold in Austria.6 Thus, in 1985, Glock Sr. turned his attention to the American gun market, creating a subsidiary—Glock, Inc—in .Smyrna, Georgia.7 Glock, Inc,, which was a wholly-owned subsidiary of the Parent Company, distributed pistols that were manufactured by the Parent Company in Austria.8 Glock, Inc. quickly became very successful in the U.S.9 As the Plaintiff explains, “[i]ts high degree of success in penetrating the world’s largest gun market, combined with an estimat[1311] ed profit margin per pistol of 68%, made Glock, Inc. a cash cow and extraordinary wealth-generating machine.”10

Originally, the Plaintiff owned 15% of the Parent Company.11 But, in 1999, the Plaintiff began transferring her Parent Company shares into a private Austrian foundation called the Glock Privatstiftung (the “Glock Foundation”).12 After transferring the vast majority of her shares into the Glock Foundation, the Plaintiff was left with only a 1% interest in the Parent Company.13 While the Plaintiff and Glock Sr. were joint founders of the Glock Foundation, “Glock Sr. retained, for himself only, the ability to ... change the terms of the deed that created the foundation.”14 As a result, after the Plaintiff and Glock Sr. divorced in 2011, “Glock Sr. unilaterally changed the deed for the Glock Foundation so as to remove Ms. Glock and their children (Brigitte, Gaston Jr., and Robert) as beneficiaries of the foundations.”15

This action arises out of certain business transactions involving the Parent Company and Glock, Inc. Specifically, the Plaintiff contends that the Defendants orchestrated a series of fraudulent transactions involving the Parent Company and Glock, Inc., which ultimately depressed the value of her 1% ownership interest in the Parent Company.16 First, the Plaintiff alleges that Glock Sr., with the help of his co-Defendants, “hatched the theft of 50% of the ownership of Glock, Inc.,” which was the Parent Company’s most valuable asset.17 She alleges that, shortly after Glock, Inc. was incorporated, Glock Sr. ordered that 50% of Glock, Inc. shares be transferred to a company called Unipatent, which was owned by a company called Reofin.18 “Glock Sr. owned 100% of the shares of Reofin. Accordingly, Glock Sr. controlled and indirectly owned 100% of Unipa-tent.”19 Second, the Plaintiff alleges that the Defendants siphoned money from the Parent Company and Glock, Inc. to Glock Sr. through licensing and royalty payments. For instance, she contends that Glock Sr., with assistance, charged Glock, Inc. for using the Glock logo.20 But, according to the Plaintiff, these licensing and royalty payments should have been paid directly to the Parent Company.21 Third, the Plaintiff alleges that the Defendants set up a series of shell corporations that allowed them to appropriate funds and assets of Glock, Inc. for themselves. Specifically, she alleges that the Defendants “set up a multistage, fraudulent billing program that artificially reduced the stated profits of Glock, Inc., and diverted these monies to Glock Sr.”22 Fourth, the Plaintiff asserts that, through fraudulent loans, the Defendants used Consultinvest to siphon funds from Glock, Inc.23 Fifth, the Defendants allegedly used monies from Glock, Inc. to set up sham real-estate holding companies.24

[1312] Based on these allegedly fraudulent transactions, the Plaintiff brought suit against multiple parties, including Glock Sr., the Parent Company, Glock, Inc., and the Glock Foundation. She asserts that the Defendants executed a scheme in order to misappropriate assets from the Parent Company and Glock, Inc., and that this amounted to a violation of the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”). To show that she personally suffered an injury, the Plaintiff states “Glock Sr. purposefully and improperly reduced the value of assets held by [the Parent Company], the value of [the Parent Company] and Ms. Glock’s ownership interests in [the Parent Company] and Glock, Inc. (the cash cow of the “Glock Group”).”25 According to the Plaintiff, although her divorce from Glock Sr. took place in 2011, and the alleged misappropriation began in the mid-1980’s, she was the intended victim of the scheme.26 In addition to her federal RICO claim, the Plaintiff asserts that the Defendants violated the Georgia RICO statute.

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Glock v. Glock, 247 F. Supp. 3d 1307, 2017 WL 1049448, 2017 U.S. Dist. LEXIS 39311 (N.D. Ga. 2017).

247 F. Supp. 3d 1307 (Glock v. Glock) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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