Investors sue Aroma Coffee Co.

Santa Fe’s Aroma Coffee Co. LLC is facing a lawsuit from minority investors who want a judge to authorize a possible sale of the company to cover what they say are debts and help them recover at least some of their investment.

The lawsuit filed in state District Court by Richard and Kathleen Abeles says Aroma Coffee LLC is “failing financially” and seeks “judicial dissolution” of the limited liability company.

Howard Stone, identified in the suit as Aroma’s manager and majority shareholder, couldn’t be reached for comment the past couple of days. A staffer at the company said he was out of town and that she would try to pass on a message from the Journal.

The Abeles say in their suit that they have about an 11.6 percent interest in the Aroma limited liability company, based on an investment of about $162,000. They first invested in 1996, their suit says.

The suit says that Stone, through the corporation Aroma Coffee Co. Inc., has a 55 percent interest in the LLC. It’s the LLC, the lawsuit says, which is the well-known local business that’s engaged in roasting, blending and selling specialty coffees. Aroma’s products have been popular offerings at coffee shops and restaurants around town for years.

The suit alleges that Stone has repeatedly promised distributions to company members, but has never authorized any distributions to minority investors like the Abeles, justifying that by “pointing to business imperatives” and the need to make investments toward growth.

In a January 2011 letter, according to the suit, Stone reported that because Aroma LLC is experiencing “a major crisis in the coffee industry… there will be no distributions now, or in the foreseeable future.” Meanwhile, Stone authorized $1.5 million in salary for himself from 2000 to 2009 and his wife received $614,00 from 2004 through 2009, the last year for which the Abeles have numbers, the suit states.

In 2009, the Abeles asked Stone and his wife to cut their salaries by 50 percent and use the savings to make distributions to company members like themselves, but that didn’t happen, the court complaint alleges.

The Abeles say the last financial report they received for Aroma LLC was in September 2010.

In maintaining the company is failing financially, the suit says total equity dropped from $182,874 in December 2004 to negative $399,323 in July 2010. The LLC’s assets dropped from $3 million to $1.9 million over the same period, the suit says.

“Upon information and belief, Aroma LLC has been kept afloat financially by infusions of cash from investors like the Abeles, and from Stone’s refinancing already-existing loans,” the suit says.

The suit seeks judicial dissolution of Aroma LLC; authorization of minority investors to seek a replacement for Stone as manager; and authorization to “seek sale of Aroma LLC or its assets at a level sufficient to cover Aroma LLC’s debt and permit the minority shareholders to recover all or some of their investment.”

The suit also seeks damages “to be proven at trial.”