D. Stephen Sorensen, who steered the fortunes of Santa Barbara-based Select Staffing through explosive growth, bankruptcy and a merger that closed on Feb. 9, has been terminated for cause.
A press release from New Koosharem Corp., the parent company of both Select and merger partner EmployBridge, said the board of directors dismissed Sorensen after “initial findings of an ongoing independent investigation” into his conduct. The release said the board believed that Sorensen has “orchestrated the improper diversion of $2.7 million” to an entity he controlled and then attempted to cover up the activity.
A Feb. 17 statement by Sorensen’s attorney Russell Wolpert said the actions by New Koosharem board amounted to retaliation. On Feb. 13, the statement said, “Steve Sorensen filed a multi-million dollar federal court lawsuit against New Koosharem Corporation for its actions in driving him out of the business he founded,” the statement said, adding that the board meeting at which he was fired was called with 24-hour notice. “It is transparently obvious that this action was retaliatory,” the statement said adding that Sorensen believes the board’s allegations are “entirely without basis.”
New Koosharem said the New Koosharem board was “exploring all remedies to recover these misappropriated funds.”
The press release said it did not believe there were any others involved in inappropriate conduct. As reported earlier, Sorenson led the company into a merger with EmployBridge that was the culmination of a year-long effort to shed debt and restructure the finances at one of the nation’s 10 largest staffing companies.
One of the most successful family-owned businesses in the Tri-Counties, Select had about $2 billion in revenue but it was hobbled with debt taken on at the height of the financial bubble. At one point, the company paid an $80 million dividend to the Sorensen family.
In recent years, the company’s debt traded hands, and eventually the Sorensen family was forced to relinquish control. The decision to undertake a Chapter 11 reorganization to settle with a number of hedge funds that owned Select debt was “all about the financial crisis,” Sorensen told the Business Times in 2014.
Sorensen, who holds a MBA from the University of Chicago, worked in finance before joining Select, which was founded by his in-laws. He helped launch an office in Thousand Oaks, then went on an aggressive deal-making spree that saw the company expand into a staffing powerhouse.