Forced Out: Former CEO Says Hunt Snatched Firm's Reins

by Mark Friedman  on Monday, Feb. 27, 2012 12:00 am  

In the second half of 2008, Hunt suggested that the company needed a consultant, and she wanted Walter Smiley, the Little Rock entrepreneur who founded Systematics Inc. of Little Rock in 1968. Systematics provided financial software and services to the banking industry and was sold to Alltel Corp. of Little Rock in 1990 and ultimately to Fidelity National Financial Inc. of Jacksonville, Fla., in 2003.

“He was suggested to me because [Phillips and I] were disturbed about how BioBased was being run,” Hunt said during the December 2009 hearing.

Muccio didn’t have a problem with the suggestion but wanted to wait until the beginning of 2009. He said he’d been working 20 hours a day trying to run the company and meet with venture capitalists.

Hunt and Phillips “pushed back very hard and said, ‘No, we want to bring someone in now,’” Muccio said. So he agreed. In September 2008, Smiley arrived.

“I believe he was put in the company as a Trojan horse,” Muccio said. “I think his ultimate role was to take control of the company, to get rid of me, and to deliver the company on a platter to Ms. Hunt.”

At the first meeting with the shareholders, Smiley “trashed” Muccio and said he wasn’t qualified to be the CEO, according to Muccio. “He knew he had the votes between Hunt and Phillips, so that whatever he recommended was going to get voted for,” said Muccio.

On Dec. 23, 2008, Smiley recommended that Muccio be fired as CEO. Muccio made an emergency call to Phillips to see if Smiley could be suspended. “I outlined what was going on with Walter,” Muccio said.

Phillips said that Smiley couldn’t be suspended because he was going to be the chairman of the board.

That was news to Muccio. “So obviously there was discussion that had taken place with Phil [Phillips] and with Ms. Hunt or with their team,” he said.

By the end of 2008, Muccio had been suspended as CEO and told not to come back into the building. Within days, however, Muccio was allowed back in the building but demoted to sales and marketing manager. He was fired from that position in January 2009.

Bounced Checks

In the summer of 2009, BioBased bounced some $180,000 worth of checks. Even under Smiley’s leadership, business wasn’t improving. Through the first seven months of 2009, BioBased lost $360,000 on revenue of $9.8 million.

 

 

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