Running a small print services company is tough. Running for high public office against a richer opponent is tougher. Now imagine trying to do both under pressure from a civil lawsuit by an unhappy business partner.
That, according to press reports, is the can of worms confronting Dave Westlake, a co-owner of High IQ in Watertown, WI, and a Republican candidate in Wisconsin’s U.S. Senate primary election next month. According to a story in the Milwaukee Journal-Sentinel, Westlake’s partner, Fawaad Khan, alleges that Westlake mismanaged the business and improperly drew on a line of credit based on a federal Small Business Association (SBA) loan.
Khan also says that Westlake owes him more $15,000 in unpaid personal loans and has failed to disclose business records as required by law. In the Journal-Sentinel story, Westlake is quoted as calling the allegations “patently false.”
The lawsuit was filed last week in Wisconsin Circuit Court, and the Journal-Sentinel story contains links both to Khan’s complaint and to supporting exhibits including transcripts of e-mail exchanges between the partners. These documents tell a tangled story of ongoing disagreements about Westlake’s compensation by High IQ and Khan’s increasing disillusionment with the way the business was being run.
In an exchange from July of 2008, for example, Khan states, “I noticed that we're very rapidly and significantly drawing down on our line of credit as well as starting to carry a heavy balance on the credit card due to A/R's running on average of 20 days or more. I am sure you understand what this does to our margins in the immediate term and the overall financial viability of High IQ in the near term (note the absence of ‘long run’).”
In the transcript, Westlake replies that the accounts receivable issue “needs to be pursued with more vigor” and promises to do so. In the Journal-Sentinel story, he is quoted as saying that Khan misunderstood the risks of the business and failed to hold up his end of the partnership.
Westlake and Khan launched High IQ as 50-50 partners in August of 2006. The company sells printer supplies and provides outsourced print management and procurement services.
The lawsuit’s August 5 filing does not give Westlake much time to respond between now and September 14, the date on which he will face two Republican opponents in a primary election to determine who will challenge Wisconsin Sen. Russ Feingold in November. Westlake is campaigning as a “consistent conservative” who takes reliably hard-right to extreme-right positions on a variety of political and social issues.
The stronger of Westlake’s Republican rivals is Ron Johnson, a businessman who grew wealthy in the plastics industry. Westlake’s campaign derides him as a “convenient conservative” whose right-wing credentials are questionable.
But indications are that Johnson has pulled ahead. A recent poll of Wisconsin voters by Rasmussen Reports shows Johnson with 48% support from likely voters vs. 46% for Feingold. The incumbent gets 49% support in a matchup with Westlake, who gets 39% of the vote. The Rasmussen poll also found that while voters in the state tend to view Westlake as a conservative, 30% don’t know enough about him to venture an opinion on his ideology.
One way in which Westlake states his political bona fides is by color-coding his campaign “blaze orange.” Blaze orange, he explains while wearing a shirt of that vivid color in a video at his campaign web site, stands for “the antidote to fraud, waste, and abuse” he means to bring to Washington if he wins.
Those who want to send him there can download PDFs of blaze orange “I AM DAVE WESTLAKE” signs (pictured above). These, says the web site, are suitable “to hang in your window, your office, or to bring to a TEA Party or rally.”