Rent-A-Wreck, family owners struggle through legal disputes

Others spent time staffing other Blum private ventures. One employee, Kathy Incaprera, was even responsible for selling Blum Sr.'s condo, Ghahramanlou wrote.

Ghahramanlou also alleged Blum family members and friends drove, but did not pay for, Rent-A-Wreck cars. Blum Jr.'s girlfriend, for example, ran up a tab of about $8,000 during the course of a year. On another occasion, Ghahramanlou was asked to sign a $259 corporate check for the repair of Blum Sr.'s personal car.

She said Blum Jr. and William Richter, a director who owned 24 percent of the company's common stock as of 2002, bought automobiles - Richter a $163,000 Austin Mini and Blum Jr. a $60,000 Mercedes Benz - and titled them under a company name to avoid the state sales tax.

When Ghahramanlou raised questions about the misuse of employees and the car purchases, she was threatened.

I told [the corporate attorney] that the Blums were using our employees for their private companies all the time. On the same day, Ken Sr. came from Florida and called Lori and me to his office and gave us a warning. He told me if I didn't stop what I was doing, I would have 'very high consequences.' I told him I was doing my job, Ghahramanlou wrote in the letter to Grant Thornton.

According to a letter she wrote to Richter in August 2002, the situation became intolerable.

The pressure has reached a level that I am no longer willing to accept. I am concerned about my mental and physical well being; and therefore, I made an agreement with Ken Sr. to stay for three months to train someone to take my place. During this period, I am not functioning as our company's CAO, Ghahramanlou wrote.

Ghahramanlou did not sign financial reports submitted to the Securities and Exchange Commission during her last quarter as an employee with the company.

William McDaniel Jr., an attorney for the company who spoke on behalf of the Blums and the board, said Ghahramanlou's allegations were investigated and found without merit though he declined to elaborate on the details of the investigation.

The downward spiral continued, accented by dissatisfaction amongst franchise owners.

Discontent

As Rent-A-Wreck's popularity grew, so too did Bundy's desire to control franchises, franchisees said.

Using audits and other measures, the Blums tried to put certain franchisees out of business - a motive McDaniel, who represented Bundy in various court cases, denies.

The goal, according to court documents, was to make other franchises more valuable. Bundy could then sell those franchises for exponentially higher prices.

According to a countersuit filed last year in a New Jersey Federal Court, the Blums harassed H-Quad Leasing Inc., a successful New Jersey-based franchisee with locations in New Jersey and Florida owned by the Hanley brothers, with the intent of putting the successful franchisee out of business.

Among other tactics, the Blums used unreasonable audit demands and unfounded termination notices to drive the Hanleys out, the suit said.