Santa Fe VIPs sue former state House leader and wife

Feb. 11—A first-in-the-Southwest high-pressure food-processing facility. Investors who included noted Santa Fe philanthropists and leading businessmen and women. The involvement of the then-Speaker of the New Mexico House, whose entrepreneurial wife would serve as CEO.

What could possibly go wrong?

The mix proved combustible. The entity New Mexico Fresh Foods LLC collapsed amid the financial crunch of the COVID-19 pandemic. And a group of investors who say they unfairly lost nearly $4 million in the venture are crying foul, according to a state court lawsuit filed against former state legislator and lawyer Brian Egolf and his wife, Kelly Egolf, who headed the firm that had specialized in juice.

The lawsuit filed last week in 1st Judicial District Court in Santa Fe contends the Egolfs misled investors and formed a new business, Invictus Unlimited, to own with assets of the juice company without disclosing the arrangement to the investors in time for them to stop it. It accuses the Egolfs of breaches of fiduciary duty, constructive fraud and fraudulent concealment, among other acts.

But an attorney for the Egolfs denies any wrongdoing, describing the legal action as a "grudge match driven by the same people who kept their boot on New Mexico Fresh Food's neck."

"This is a frivolous case and the plaintiffs know it," said Mark Baker, an attorney for the Egolfs. He maintained in a statement provided to the Journal that the claims are based on a story Dan Perry, who controls Rowdy Investments, Bob Vladem and other plaintiffs invented to try to "embarrass my clients."

The plaintiffs are: Gail "Peaches" Gilbert Revocable Trust, Ed Berman, Dalicious Concepts LLC, Lustig-Groothuis Revocable Trust, Ellen Vladem Revocable Trust, Robert J. Vladem Revocable Trust and Rowdy Investments.

Their lawsuit alleges that they invested a total of about $3.9 million in the fresh foods company and "lost it all" as the result of actions by the Egolfs. The initial start-up expense of more than $8 million was to turn into about $28 million in net revenue from 2019 to 2023, the lawsuit states. The venture increasingly incurred debt and other financial obligations, requiring a $3.5 million loan for capital expenditures from Wintrust.

The alleged conspiracy involved Egolf setting up a new company, Invictus, finding new investors to pay off the Wintrust loan, and the foreclosure sale of Fresh Foods assets from Wintrust to Invictus in June 2023, all the while getting the couple's personal guarantees of the loan released. The lawsuit states that Invictus has been using the Fresh Foods assets and confidential information obtained from the failed juice venture.

All the while, the lawsuit contends, Kelly Egolf led the investors to believe that she, on behalf of the juice company, was still working out the loan for the benefit of the company.

But Baker, representing the Egolfs, countered in a statement, "The plaintiffs decided to kill New Mexico Fresh Foods, and they used their power to do it. Now they want to blame Kelly and Brian Egolf for events the plaintiffs caused by their own conduct."

The investors, who combined had nearly 60% control, blocked efforts by Kelly Egolf to allow her to raise outside funding and save the company, Baker said in a Nov. 22, 2023, letter to Cliff Atkinson, the plaintiffs' attorney. They also wouldn't contribute the needed money for the loan themselves, he added.

Meanwhile, Invictus is the new owner of Fresh Foods, which is still in business.

"Your clients are, by their own admission, wealthy, sophisticated, experienced investors," Baker said in the letter. "They chose to put their money into what they acknowledged they knew was a high risk start up company."

In filing a public lawsuit, Baker said, the plaintiffs also violated a pre-existing agreement to take any disputes they had to arbitration, a private legal process.

Egolf, a Democrat who resigned as House Speaker last year, served in the Legislature from 2009 to 2023. The Vladems are known in part for paying $4 million for perpetual naming rights to the New Mexico Museum of Art Vladem Contemporary, which opened last fall in Santa Fe.

Kelly Egolf started the juice business as Verde Food Co., the assets of which were bought in 2018 by New Mexico Fresh Foods, which she also founded, according to the firm's website.

New Mexico Fresh Foods, once touted by state economic development leaders and the Bernalillo County Commission, purchased a high-pressure food-processing machine to extend the shelf life of its products and planned to offer high-pressure processing services to customers.