In July, Prime Automotive CEO David Rosenberg sued the owner of his dealership group, GPB Capital Holding. Now, two months later, the prominent New England dealer has been removed as GPB seeks a fresh start for the 56-store portfolio.
GPB of New York last week appointed Kevin Westfall, co-founder of online used-vehicle retailer Vroom and a former AutoNation Inc. executive, as interim CEO of Prime Automotive after Rosenberg "was relieved of his duties," Westfall said. Rosenberg also was removed as CEO of Prime Motor Group, part of the Prime Automotive umbrella.
In July, Rosenberg in Massachusetts' Norfolk County Superior Court sued GPB, which is embroiled in regulatory investigations and lawsuits by investors. He alleged GPB failed to make a July 1 payment of $5.9 million to him in "an act of retaliation" against his efforts to address fraudulent activity at the firm. Rosenberg's lawsuit claims he exercised his put option to sell his $23.6 million stake in the company.
His lawsuit includes allegations of impropriety such as questionable transactions involving principals and falsely inflating revenues. Rosenberg also provided information to the U.S. Securities and Exchange Commission, which has inquired about the company, according to the lawsuit.
Rosenberg's lawyer, Jack Pirozzolo of Sidley Austin in Boston, said last week's move by GPB represents more retaliatory action against Rosenberg.
"Company leadership not only ignored Mr. Rosenberg's initial call for corrective steps within GPB's legacy auto dealership operations, they attempted to silence him and other members of the Prime Automotive Group team when misconduct was discovered," Pirozzolo said in a statement. "Now they have wrongfully terminated Mr. Rosenberg for acting responsibly and ethically and in the best interests of the dealerships and GPB investors, and for asserting his rights to certain payments that GPB was contractually obligated to make to him by July 1 — but which Mr. Rosenberg has not received to date."
GPB spokeswoman Nancy Sterling said Rosenberg was not let go because of his lawsuit. GPB Capital lawyer Tab Rosenfeld, in a statement, denied there was any retaliation against Rosenberg and rejected "the false narrative that his attorney is trying to portray through the media. The parties are involved in litigation and the matter will get resolved as it should through the system. We have proper grounds for his termination and all that will become apparent over the course of time."
Sterling declined to comment on whether Rosenberg still owns a stake in Prime Automotive.