Last year, three CohnReznick CPAs—two partners and its chief operating officer—started new jobs as partners at Mazars USA. You would have thought Mazars would’ve sent out a press release about its new haul, like it did last September when it poached two people from KPMG, but the firm kept the CohnReznick poaching a secret. No press release was written; no mentions in the press.
And now we have a good idea why Mazars kept its poaching of CohnReznick on the down low. Law360 reported:
CohnReznick LLP has hit a competing firm and three former employees with a suit in New York federal court accusing them of using confidential trade secrets to solicit clients and employees, seeking at least $3.1 million in damages.
CohnReznick alleges a former partner, Robert DeMeola, who left and joined Mazars USA LLP, conspired with his new firm to encourage other colleagues, including partners Alan Wohl and Howard Leung, to join Mazars. CohnReznick said in a complaint filed Tuesday [Jan. 14] that the three former employees violated terms of a partnership agreement that barred them from using confidential information from their firm at another employer or encouraging CohnReznick employees to leave the company for a competitor within two years.
Either Mazars offered these guys the moon to come there and (allegedly!) break their partnership agreements or the three amigos really wanted to stick it to CR. According to their LinkedIn profiles, DeMeola spent nearly 15 years at CohnReznick, the last seven as the firm’s COO, while Wohl worked at CohnReznick for 18 years and Leung 14 years. All three put down November 2019 as to when they left CohnReznick and started at Mazars, according to LinkedIn.
And the poaching didn’t stop with DeMeola, Wohl, and Leung, according to CohnReznick’s complaint:
DeMeola lured Wohl and Leung away from CohnReznick and to Mazars in breach of the Partnership Agreement. In fact, prior to Wohl and Leung announcing their withdrawal from CohnReznick, DeMeola confessed to soliciting Wohl and Leung to join him at Mazars in breach of the Partnership Agreement.
Undeterred, however, DeMeola, Wohl and Leung, at Mazars’ instruction, doubled down by poaching two additional CohnReznick employees to join them at Mazars in further breach of the Partnership Agreement. Moreover, on the date of this filing, CohnReznick also learned that Mazars lured a third employee away from CohnReznick to Mazars.
CohnReznick alleges that the scheme between DeMeola, Wohl, and Leung began before they all left the firm at different points in 2019, also in breach of their partnership agreement, Law360 reported.
Wohl, while still working at CR, is accused of sending confidential information and trade secrets to DeMeola and other employees at Mazars, according to the complaint:
As partners, DeMeola, Wohl and Leung also had access to information of a confidential and proprietary nature concerning CohnReznick and its clients, including client lists, client history and service reports detailing, client points of contact, budgets, accounts receivable history, customized pricing models used by CohnReznick on a customer-by-customer basis, client pitch information, client service and operation strategies, marketing strategies and techniques, and detailed service models.
Now that it had this stable of ex-CohnReznick employees, as well as CR confidential and proprietary information and trade secrets in its possession, Mazars solicited longtime CohnReznick clients and tried to convince them to switch over to Mazars, the lawsuit alleges:
Mazars’ scheme has been successful: as of January 2020, at least 49 CohnReznick clients—representing over $1.5 million in revenue over the last 12 months alone—have already decided to retain Mazars.
The lawsuit also states that CohnReznick sent Mazars a letter late last year to, in essence, cut this shit out and give us back our stuff:
CohnReznick sent a letter to Mazars on November 27, 2019, citing to and quoting the provisions of the Partnership Agreement, and demanding that Mazars: (a) immediately cease and desist from aiding and encouraging DeMeola, Leung and Wohl to breach the Partnership Agreement; (b) search for and provide CohnReznick a list, in writing, of each individual and entity that received documents and information concerning CohnReznick or its clients including, but not limited to, budgets and customers lists; (c) return all copies of any documents within Mazars’ possession, custody or control concerning CohnReznick or its clients including, but not limited to, budgets and customers lists; and (d) represent, in writing, to CohnReznick that all such documents have been returned.
Mazars refused to comply with any of CohnReznick’s demands. In fact, as of the date of this Complaint, Mazars has not formally addressed the issues that CohnReznick raised in its letter. Even more alarmingly, even after receiving CohnReznick’s November 27, 2019 letters (again citing to and quoting the Partnership Agreement), Mazars has knowingly caused more clients and employees to leave CohnReznick for Mazars in breach of the Partnership Agreement.
As a result, CohnReznick brings this action to enforce its statutory, contractual and common law rights. Unless Mazars is stopped, CohnReznick will continue suffering substantial damages, including loss of goodwill, business opportunities and reputation caused by Mazars’ misconduct.
As compensation for lost clients, DeMeola, Wohl, and Leung are required, per their partnership agreements, to pay CohnReznick either:
- 50% of the gross fees from the initial date of new service with the client until three years after; or
- 150% of gross fees collected by CohnReznick during the last 12 months preceding termination with the client.
Specifically, DeMeola, Wohl or Leung are required to compensate CohnReznick if: (a) they engage in business activities similar to those conducted by CohnReznick—either individually or as a partner, shareholder, member, employee, consultant, contractor or affiliate of some other entity (collectively, the “Servicer”); and (b) the Servicer provides any type of “service” to a “client of the Partnership.”
CohnReznick may elect its compensation on or before the 60th day after CohnReznick learns the Servicer is serving a client of the Partnership.
As Law360 points out, CohnReznick is seeking at least $3.1 million in damages, and preliminary relief ordering Mazars to return the alleged illicitly acquired information and to restrain Mazars from using the confidential information further.
Mazars hasn’t returned an email seeking comment about the lawsuit.
UPDATE: Oh look, Mazars USA finally gave DeMeola, Wohl, and Leung the press release treatment on Jan. 23. No mention though of who their previous employer was.