Belinda Stronach files formal response to father’s lawsuit

Belinda Stronach, the chief executive of The Stronach Group, has filed a statement of defense and counterclaim to the blockbuster lawsuit filed by her father late last year that disputes his allegations of financial mismanagement.

The statement of defense, filed Monday in Ontario Superior Court, is Belinda Stronach’s first answer to the $400 million lawsuit filed by her father in October of last year. The initial suit claimed that Belinda Stronach and a former executive with the company mismanaged funds and sought to illegally appropriate control of family trusts within the company, which owns a variety of racing-related assets, including Santa Anita Park and Gulfstream Park.

Belinda Stronach’s statement of defense claims that Belinda Stronach “has engaged in no unlawful conduct” to dispute the allegations from her father, who has played an on-again, off-again role in managing parts of the company for the past five years. Frank Stronach, who is 86, amassed a fortune in Canada through an auto-parts company he founded, and he formed TSG in 2011 after the bankruptcy of two predecessor companies, both publicly traded.

Belinda Stronach’s suit claims that she “has taken steps to rectify the irregular affairs of TSG she inherited from Frank,” and it also alleges that her father’s lawsuit was filed only to take back control of operations that have been a drain on the family business.

“While Frank has had great success in creating one of the world’s largest automotive suppliers, he has also experienced significant failures in nearly all of his no-auto parts ventures and political affairs,” the suit alleges. “This lawsuit is an attempt to force TSG to fund Frank’s imprudent, and, in some cases, fanciful schemes to the detriment of TSG and its stakeholders.”

The claims and counterclaims illustrate the fractures that have built up over time within the Stronach family. Frank Stronach’s son, Andy, also has filed a claim against Belinda Stronach, alleging the same mismanagement as his father.

The statement of defense claims that the family members attempted to resolve their differences over control of TSG assets on multiple occasions, but it claims that those efforts have dissolved in the face of Frank Stronach’s suit.

“Rather than work constructively within the family, the plaintiffs have leveled unfounded allegations at the defendants in this lawsuit,” Belinda Stronach’s counterclaim states. “These allegations are known by them to be entirely untrue. . . . However, given the serious and personal nature of the allegations, Belinda has been given no choice but to defend against them vigorously.”

Following the filing of Frank Stronach’s lawsuit, company officials within TSG said that the claims did not put the company’s racing assets in jeopardy.

The suit by Belinda states that the company is generating “significant positive cash flow,” and it further states that revenue for the company has doubled from 2011 to 2017, rising from $550 million to $1.1 billion.

Any dissolution of the racing assets would have far-flung and serious impacts on the racing industry. In addition to Santa Anita and Gulfstream, TSG owns Pimlico Race Course, the site of the Preakness Stakes; Laurel Park, also in Maryland; Golden Gate Fields in Northern California; and a handful of other companies that provide the backbone to racing operations, including a bet-processing company, a simulcast-marketing company, and an account-wagering company. TSG, which includes 253 individual entities, also holds a number of other non-racing assets and properties around the world, as well as Frank Stronach’s racing and breeding operation.

In addition to disputing all of the allegations in Frank Stronach’s lawsuit, Belinda’s statement of defense also seeks $25 million in restitution from her father from funds provided by Belinda Stronach to pay debts related to Frank Stronach’s unsuccessful campaign for a seat in the Austrian parliament in 2013 and a tax dispute with Austrian authorities in 2017. Frank Stronach is a native of Austria.