Menard fires back in court fight with Hilberts

Tomisue Hilbert made “spurious” claims that John Menard tried to extort sex from her as a strategy to help her and her husband get a leg up in a business dispute.

That’s the argument that Menard, CEO of hardware store chain Menard Inc., made in an Aug. 27 document filed in answer to a lawsuit filed by Tomisue Hilbert in Hamilton Superior Court.

Menard

Hilbert’s lawsuit, filed May 29, alleged that Menard pressured her to have sex and, because she refused, he launched a series of legal actions against the company she and her husband, Steve Hilbert, own and manage.

But Menard, 73, has now countersued Tomisue Hilbert for “abuse of process,” saying she filed her lawsuit only after companies controlled by Menard removed the Hilberts as managers of a private equity firm and sued to recover millions of dollars in fees paid to the Hilberts.

“This lawsuit was designed to punish Defendant John Menard Jr. with false and defamatory allegations calculated to inflict maximum personal embarrassment on the Menard family,” wrote Jerry Padgett, an attorney for Menard, in a motion to dismiss the case. He also claimed Hilbert’s lawsuit is designed to “achieve some perceived advantage or leverage” in other cases pending between Menard and the Hilberts.

Tomisue Hilbert, 43, claimed that, during a May 2011 stay at the Hilberts’ home on the Caribbean island of St. Martin, John Menard touched her inappropriately several times and asked her to have a threesome with his wife, Fay.

Menard threatened then and in later conversations that, if Tomisue Hilbert did not have sex with him, there would be “financial consequences,” according to Hilbert’s lawsuit. And now he is simply “bullying” the Hilberts and their friends with a series of lawsuits, said Tomisue Hilbert’s attorney, Linda Pence.

“Menard uses litigation as a tactic to destroy people,” Pence said.

The litigation started in November when Merchant Capital LLC filed suit in Wisconsin against Steve Hilbert. Merchant Capital is the entity created by John Menard to invest in a private equity firm called MH Private Equity.

MH Private Equity was formed in 2005 by the Hilberts and Menard to acquire and invest in businesses. Menard supplied the money and Steve Hilbert the management. Menard owned 80 percent of the firm and the Hilberts owned the other 20 percent.

But after spending $495 million, the companies MH Equity purchased declined in value 70 percent, according to Menard. In addition, Menard and Merchant Capital claim that Steve Hilbert engaged in fraud during the formation of MH Private Equity and in taking nearly $35 million in management fees.

For all those reasons, Menard and Merchant Capital sued in November 2012 to remove Steve and Tomisue Hilbert’s company as the manager of MH Private Equity.

Steve Hilbert, 67, fought back, claiming the companies owned by MH Private Equity were worth far more than Menard claimed and that Merchant Capital had failed to pay all the management fees it had agreed to under contract.

But a judge in Menard’s hometown of Eau Claire, Wis., sided with Menard in February, issuing a temporary injunction against Hilbert. That allowed Merchant Capital to take control of the companies MH Private Equity had purchased, including Indianapolis-based New Sunshine LLC, a suntan lotion firm.

Since taking over in March, Merchant Capital has fired several executives at New Sunshine and filed lawsuits against some of the Hilberts’ friends.

In June, Steve and Tomisue Hilbert’s company, which is called MH Equity Managing Member LLC, filed for Chapter 11 bankruptcy reorganization, claiming $10 million in assets and $1.5 million in liabilities.

That move stayed litigation in Wisconsin, where Menard’s attorneys were seeking repayment of $3.7 million in fees the Hilberts were paid last year.

Menard’s attorneys are now seeking to get the bankruptcy case dismissed, arguing that the Hilberts are “forum shopping.”

Before their recent falling out, the Hilberts and Menard had been good friends for two decades, beginning when Steve Hilbert was CEO of Carmel-based insurance giant Conseco Inc. Menard’s filing, however, claims that as far back as 2003, the Hilberts’ interactions with Menard were business “under the guise of socializing.”•