A former director is suing Minneapolis-based RSP Architects, saying he was fired after he complained about financial mismanagement uncovered while running to become its new CEO.
In September, the former director, Todd Novak, filed a whistleblower lawsuit in state court in Minneapolis, accusing his former employer of firing him in retaliation after he raised concerns about the accounting and the supposed millions of disappeared.
Since then, Novak has held a position as a commercial study leader at Duluth, Minnesota-based AE firm LHB. But the lawsuit has just begun, with a plan for trial discovery as the final step.
About a month after Novak filed his lawsuit, RSP announced a new CEO, Andrew W. Burnett, succeeding CEO Dave Norback.
The new leadership and retaliation charges come at a time of apparent prosperity for the 330-person practice. Its projected revenue for 2024 is $88.5 million.
Hired in late 2019 to be a senior associate on RSP’s retail and multi-use projects, Novak in July 2021 was promoted to national market sector leader and director, where part of his compensation would be based on a bonus pool . His annual salary, the company said in a response to the lawsuit, was $160,000.
But after RSP had two years of turnover in the financial controller position, Novak said, he became concerned.
Then, about a year ago, when Norback announced he was stepping down, Novak applied for the job along with other internal and external applicants and began taking a closer look at the company’s finances. Financial items such as overhead, indirect wages and employee benefits were not “aligned,” Novak claimed, “by an amount in the millions.” He further alleged that the funds could be spent by a handful of firm directors, although he did not allege any personal use of the money.
Last December, just before starting the interview process for the CEO job, Novak raised his financial concerns with other directors and they promised to look into the matters, but said little else, according to his complaint judicial After raising the issue several times, Novak was notified by RSP that he was no longer a candidate for CEO, his lawsuit claims.
About a month later, in March, Novak says Norback notified him that the board had decided to fire him because of softening economic and market conditions, according to the lawsuit.
In its response to the lawsuit, RSP denied the general allegation of firing Novak in retaliation and the specifics of his court complaint. But he also attacked her account of her work and career at the company, saying she worked on projects but did not earn commissions for RSP as she claimed in the lawsuit.
RSP said all bonuses and contributions to the ESOP were made in accordance with company plans and were properly made based on RSP’s profitability and an employee’s individual performance. In addition, RSP claimed that some of the documents referred to by Novak were not financial reports.
In its broader response to Novak, RSP stated in its response to the lawsuit that the company’s financial statements are routinely reviewed by a third party, RSP has never made material changes to them and “has never maintained any hidden account for the discretionary use of RSP executives.” as Novak charged.
All of the company’s actions, it claimed, were conducted for legitimate business purposes and without retaliation.”
