Ruling expected in lawsuit over local investment firm


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Ruling notes lack of evidence supporting allegations by Holder

URBANA — A Champaign County judge Friday granted the equivalent of a corporate divorce for two long-time business associates whose personal and working relationship had deteriorated to the point they could no longer work together.

Judge Chase Leonhard ruled that the corporation formed in 2009 by Paul Ruedi and Dan Holder, the Champaign investment firm known as Ruedi Holder & Associates, be dissolved and the two men be allowed to go their separate ways in business.

"No court of mortal origin could possibly remedy this short of dissolution, sad though that may be," said Leonhard, who, while expressing respect for both men, took the opportunity to excoriate Holder for allegations made about Ruedi that were not backed up by evidence heard in a five-day bench trial last week.

Cynthia Ruedi, wife of Paul Ruedi and an equal shareholder in the firm with Holder, had sought last November to dissolve the corporation under the legal theory of "deadlock," meaning directors Holder and Ruedi could not agree on business practices, including quarterly distributions, compensation or marketing.

While agreeing they needed to separate, Holder sought to retain the corporation by buying out Cynthia Ruedi's shares and holding Paul Ruedi to a 2-year noncompete clause.

"Maybe you want the spoils of victory because this is a grudge match," Leonhard said to Holder. "It's a real shame the first (court) case was ever filed. It's got allegations that are really disturbing and that are reiterated in the counterclaim. There's not a shred of credible evidence to support any of the allegations."

Among Holder's claims was that Ruedi had "embezzled" money from the firm and "conspired with a Chinese national ... to fraudulently represent to U.S. Citizenship and Immigration Services that (the man) was an intern of Ruedi Holder when, in fact, he was not."

"Where is the evidence of felony immigration fraud?" Leonhard asked. "Conspiring with a Chinese national. What does that mean?"

When Holder's attorney, Ryan Bradley of Urbana, began his response with the words: "It was Mr. Holder's belief ...," Leonhard cut in.

"Perception is not reality. The court finds no dishonor in these people but you simply cannot view innocent facts through an emotional prism and immediately think the worst of the situation and the people with whom you are dealing," Leonhard said.

Leonhard said the allegation was that Ruedi was helping a graduate student who was assisting him with computer programming by somehow fraudulently extending a visa to enable the student to stay in the country.

Another of the allegations in Holder's counterclaim was that Ruedi engaged in "embezzlement" by issuing a cashier's check to himself from the firm to pay for his radio show "On The Money," knowing that Holder disapproved. Leonhard noted that as CEO of the firm, Ruedi had the authority to do that.

"You just can't go around saying things like that. People get hurt. This was less a legal pleading than an ad hominem rant," Leonhard said.

The judge also made the point that the $200 million belonging to their clients was never "in any way imperiled."

"They exude integrity," Leonhard said of Ruedi and Holder. "Both are incredibly gifted people who are extremely good at what they do. Even the best of men can grow apart. It's unfortunate that's what happened here and they didn't communicate and talk about it."

Ruedi and Holder had worked together since 2001, when Holder joined Strategic Capital Trust in Champaign. They left there in 2009 to form their own firm.

Kenneth Vanko, the Wheaton attorney representing Cynthia Ruedi, and other Ruedi Holder shareholders and employees Rose Ruedi and Laura Vollrath, argued that dissolution was the best remedy for the deadlock and likely the simplest since the corporation had no debt and its only asset is cash, which he said is easy to distribute.

"There's no need for a receiver," Vanko said, prompting Leonhard to interject: "I don't think an FBI hostage negotiator could get Ruedi and Holder to talk."

Vanko noted that allegations are merely allegations, and that it was hard to know what effect they could have on the firm's reputation and difficult for clients to know what to do.

"If we didn't separate them, I think we'd be doing a disservice to clients," he said.

But Bradley argued that dissolution was not the appropriate remedy.

"He offered to buy their shares because they don't want the company any more and he does," Bradley said, noting that Holder, who is also a lawyer and a certified public accountant, would suffer adverse tax consequences as a result of dissolution.

Leonhard repeatedly used the phrase "it's a shame" to describe the "irretrievably broken" relationship between the men, who used to take vacations together with their families.

"I don't know when Holder or Ruedi started their war against each other. The only hostage this war took was the corporation, and that corporation died in captivity and it's just a shame," Leonhard said. "It's evident that beneath the anger is profound heartbreak. Nobody saw this coming."

After the hearing, Ruedi said he felt "vindicated" by the judge's comments but felt no joy at the dissolution.

"I asked every client, 'Why didn't you leave?' And they all said, 'We know there are two sides to every story. We trust you,'" Ruedi said. "I'm amazed at the faith people have in me. This was a fight for my clients. They rely on me and I have their financial lives in my hands."

Leonhard ordered that a transcript of his ruling be included with the court file so that anyone interested could read what came out in court, as opposed to relying on a news summary of the allegations filed in Holder's lawsuit.

Holder said that while he disagreed with the judge's action, he accepted it.

"A lot of things were not brought out at trial that I thought should have been," Holder said. "The judge has ruled. I don't feel it's correct."

Both Ruedi and Holder said they would be contacting clients to let them know they'll be setting up individual businesses. They agreed that the dissolution of the corporation would have no apparent effect on clients, who would be able to retain their same accounts with Charles Schwab.

"It's a lot of work for us but not the clients," Ruedi said.


Mary Schenk is a reporter covering police, courts and breaking news at The News-Gazette. Her email is, and you can follow her on Twitter (@schenk).