Former execs sue Sino Swearingen

 - September 20, 2006, 7:55 AM

Former Sino Swearingen president and CEO Carl Chen and former senior v-p of sales and marketing Gene Comfort are, in separate lawsuits, suing the company for wrongful termination and other alleged offenses.

In a lawsuit filed February 24 in the U.S. District Court for Bexar County, Texas, Chen alleges breach of contract, interference with a contractual relationship and slander. Comfort filed his lawsuit February 9 in a California Superior Court claiming he is owed promised bonuses and vacation pay, in addition to compensation for economical and emotional damage.

Comfort, who joined the company in 2002, said he was fired for the “false” reason of “insubordination” due to allegedly refusing “to obey a directive to attend a business meeting.” The suit also asserts that Comfort “was responsible” for the sale of 361 aircraft for which he is owed bonuses and commissions of an unspecified amount.

The lawsuits come as San Antonio-based Sino Swearingen prepares to start delivering its SJ30-2 light jet following a bumpy development program launched nearly 23 years ago.

Sino Swearingen officials declined to comment on the merits of the lawsuits, but CFO Kelly Simmons denied they have had any “impact on the company, internal or external.” He told AIN, “We are as focused as ever. Dr. [chairman and CEO Ching-Chiang] Kuo is a strong leader. I think it’s a non-event to the people within the company.”

Chen, who was named Sino Swearingen president and CEO in 2002, is seeking $300,000 in what he said was a promised bonus for leading the company to achieving FAA certification three years later. The lawsuit claims that Kuo used his ties with Taiwan’s president to take over the company last year, first as chairman and later as CEO, before placing Chen on a “leave of absence” on January 13 and “terminating” him in February.

The lawsuit also asks for damages for alleged slander “with malice” by Kuo. According to court papers, ever since taking over as CEO Kuo has “embarked on a course of conduct to attempt to discredit [Chen] and interfere with his contract and business relations” with Sino Swearingen. Kuo has made “false and slanderous statements about [Chen] to others inside and outside the company in his effort to undermine [Chen] and to ruin his reputation.”

These actions are the latest distraction for a program that has been delayed and troubled by financial, technical, safety and legal issues since it got under way in 1982. Perhaps its lowest point was in April 2003 when the conforming prototype SJ30-2 crashed, killing chief test pilot Carroll Beeler.

The NTSB’s investigation revealed a history of stability issues and concluded that the accident was the result of “the manufacturer’s incomplete high-Mach design research, which resulted in the airplane becoming unstable and diverging into a lateral upset.”

At around the time of the accident, the SJ30-2’s U.S. and international distributors filed a lawsuit seeking repayment of money they claim to have spent marketing the SJ30-2. The lawsuit was filed on Feb. 28, 2003, five months after Chen replaced Jack Braly, who had served as president and CEO since 1996.

Chen and Comfort came to Sino Swearingen from beleaguered AASI, where they had worked together for 12 years on the AASI Jetcruzer. Under the leadership of Chen, AASI projects also suffered delays and financial problems. The two men claim they were fired shortly after the SJ30-2 received type certification on October 27 last year– an accomplishment for which they take credit.

Problems notwithstanding, Sino Swearingen beat the odds, as the SJ30-2 is the first clean-sheet business jet from an independent, start-up company in more than 40 years to be FAA type-certified. Now, no other start-up will ever have bragging rights to that distinction.

At press time, Sino Swearingen had finished icing tests required for FAA approval for flight into known icing and was preparing for its next big step–starting deliveries to meet claimed orders for nearly 300 aircraft. But deliveries won’t begin this month, as the company said they would at NBAA 2005.

Simmons would not provide a new date but did say, “We are making sure that when we deliver that first aircraft we have really delivered the first aircraft. We are going to be very cautious in the timing of that event. We want to do it when we can look forward to delivering several after that.”

The company has not yet received a production certificate, but Simmons said it would probably start deliveries without one.