A legal brawl ensues between Black Rifle Coffee and one of its OC investors – Orange County Register

A conservative-leaning coffee company that gives back a portion of its profits to veterans is at the center of a nascent legal battle between two Orange County investment firms, alleging stock manipulation, fraud and harassment.

The nasty row, which also includes allegations of a bogus law firm and a shady website, has also spawned a defamation lawsuit and a request for an injunction from fearful employees.

At the heart of the conflict is 1791 Management LLC, run by former Laguna Niguel City Council candidate and actuary Jonathan Wallentine. In 1791, the Salt Lake City-based Black Rifle Coffee Co. and one of its major shareholders, the Newport Beach hedge fund Engaged Capital, sued.

The civil lawsuit, filed in Orange County Superior Court in May, alleges that Black Rifle and Engaged have violated securities laws, fraud, breach of contract and negligent misrepresentation. It is seeking more than $5 million in damages.

Black Rifle and Engaged declined to comment.

Black Rifle was founded in 2014 by former Army Green Beret Evan Hafer with a “mission to serve coffee and culture to people who love America.” It gained national attention three years later when it employed about 50 people and pledged to eventually hire 10,000 veterans in response to Starbucks’ announcement that it would hire 10,000 refugees.

Black Rifle is pro-gun, pro-military and pro-police and has supported former President Donald Trump’s policies.

Much of the company’s business revolves around its online coffee subscription service and merchandising. Black Rifle plans to open up to 25 retail stores, known as outposts, by the end of the year.

Black Rifle revenue for the second quarter of 2022 increased 27% to $66.4 million from $52.4 million in the second quarter of 2021, the company said in a statement. Wallentine, 40, said 1791 invested at least $20 million in Black Rifle, but those numbers couldn’t be immediately verified.

Stock manipulation suspected

1791 alleges Black Rifle officials defrauded shareholders out of billions of dollars in February by delaying a filing with the Securities and Exchange Commission, keeping available shares artificially low and leading to a so-called “squeeze” so that executives of the Company could issue exempt shares to themselves and reap huge profits.

“We believe your plan was designed to artificially inflate your stock price by keeping Black Rifle stock availability off the market,” Wallentine wrote in a May 17 letter to Hafer. “Their official response was that Black Rifle is currently awaiting SEC comment and would put the (filing) into effect as soon as possible. We have our own documented communications with the SEC leading us to believe your statements were false.

“Are we really to believe that Black Rifle’s recent meteoric share price rise and eventual collapse were just natural forces in the collective assessment of Black Rifle’s business prospects?”

According to financial experts, the SEC — not corporations — decides the filing schedule.

1791 also targeted Engaged Capital, more specifically Chief Executive Officer Glenn W. Welling, and linked him to 1791’s inability to source and trade Black Rifle stock before prices plummeted.

“Glenn Welling steals millions from public $BRCC shareholders,” 1791 said in a July 26 Twitter post. “Mr. Welling, it must be nice for you to have the money in the bank while you’re enjoying the sun in Newport Beach. Where’s the justice?”

Welling said Friday he could not comment on pending litigation.

Another Twitter post dated August 11, 1791 shows a photo of Welling under the caption “Greed & Lies.”

Engaged filed a libel lawsuit in July against 1791 and Wallentine and his 74-year-old father, Roger Wallentine, a wounded and decorated Army veteran, over a series of “false and defamatory internet attacks.”

The lawsuit states the Wallentines are known for their “hyperaggressive, hypercombatant approach to perceived adversaries” and frequently used the 1791 website to publish so-called Black Riffle research, “full of negative headlines and unsubstantiated derogatory claims.”

A bogus law firm

The Wallentines are also behind a website for a fake legal services firm called Hittelman Strunk, which urges investors to file claims against Black Rifle and has said it is staffed with “experienced investment fraud attorneys,” according to the lawsuit.

“The non-law firm of Hittelman Strunk LLP is a fiction invented by the Wallentine defendants and management of 1791,” the lawsuit states. “There are actually attorneys named Hittelman and Strunk practicing in different law firms in California, but they had nothing to do with the website. The Wallentine defendants appear to have chosen their names because they also had personal disagreements with them.”

Steven G. Hittelman, a Newport Beach attorney who once represented Jonathan Wallentine’s ex-wife in a divorce case against him, said in an email that 1791 appropriated his name and that of his former legal partner, Kerri Strunk.

“My name and law firm are in no way affiliated with 1791 Management, nor is my former legal partner,” Hittelman said. “I sent you cease and desist letters (1791) months ago; this apparently prompted them to include a statement on their website that they are not a law firm.”

The younger Wallentine said some of his employees bought the hittelmanstrunk.com domain in 2019 to cheer him up after his ugly divorce, with a plan to collect and publish unflattering customer reviews about Hittelman from around the web.

“I said, ‘No, you can’t do that because it would only hurt the horrific situation I was in (and) the last thing I wanted was to upset the other attorney,'” he said. “I didn’t even leave my house at the time. My family, friends, and former employees worried about what a horrible thing I was going through. You were just trying to cheer me up.”

After 1791 became involved in the stock dispute, it decided to use the Hittelmanstrunk domain to gather information from other Black Rifle investors who might have been harmed, Wallentine said.

In another twist, a shady website called 1791 Management Facts lives on the internet, detailing Wallentine’s “dirty divorce,” his failed 2016 bid for Laguna Niguel City Council, and alleged legal troubles.

Although the website doesn’t mention who is behind the content, Johnathan Wallentine is convinced that Black Rifle and Engaged are responsible.

Injunction applied for

On Sept. 15, Welling sought an injunction against Wallentine in Orange County Superior Court, alleging that 1,791 employees were “hanging around” in Engaged’s office and that 1,791 social media posts threatened possible gun violence.

“He (Wallentine) is obviously unbalanced and irrational and has a personal vendetta against Engaged,” Welling wrote in the request for the restraining order. “I and other Engaged Employees don’t feel safe going to work.”

Orange County Superior Court Commissioner Glenn Mondo denied Welling’s request pending a hearing scheduled for Thursday, saying the social media posts were irrelevant and would not fall within the scope of an injunction.

Meanwhile, Wallentine described Welling’s allegations against him as pure fantasy.

“It seems they are trying to discredit me with my staff,” he said. “My dad and I, including the lawyers, laughed out loud just because it’s so ridiculous.”

https://www.ocregister.com/2022/10/02/legal-brawl-erupts-between-black-rifle-coffee-and-one-of-its-oc-investors/ A legal brawl ensues between Black Rifle Coffee and one of its OC investors – Orange County Register

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