After Michael Jr. died in August 2018, his daughters Nancy and Mary were encouraged by company representatives as part of estate proceedings to say their share of Leprino Foods was worthless, according to the lawsuit. They were told James Leprino would pay any bills incurred to fight the Internal Revenue Service in connection with that claim.
Leprino Foods doesn’t pay a regular dividend, and rarely declares shareholder distributions, opting instead to reinvest profits in expansion, according to the lawsuit. That means that shareholders don’t normally receive regular income as a result of their ownership.
Nancy and Mary, however, allege that James and his own daughters have found a way around that.
According to the lawsuit, the company had a shareholder distribution in 2017, which resulted in James and his children receiving $400 million, and the minority shareholders being paid $90 million. James and his children then immediately loaned money back to the company, under terms resulting in Leprino Foods paying them $28.3 million annually in principal and interest.