Dakota Beef files federal lawsuit in South Dakota against former chief executive officer

Dakota Beef suing former CEO

SIOUX FALLS, S.D. — A South Dakota organic beef company has sued its former chief executive, accusing him of profiting from side ventures, running up more than $67,000 in personal charges on a company credit card and forming a competing company.

Howard Venture LLC, doing business as Dakota Beef, filed the lawsuit in U.S. District Court last week against Scott D. Lively and his Lively Foods LLC.

It accuses Lively of trying to embezzle from and sabotage the operations of Dakota Beef, and of forming his new venture in violation of a noncompete agreement.

The suit also said Lively is responsible for more than $67,000 in undocumented credit card charges to his American Express account, including nearly $1,700 for skiing lessons, $260 for sunglasses and more than $3,300 for a two-night stay at an upscale Chicago hotel.

“Lively also used Dakota Beef’s funds for extravagant expenditures such as $7,000 per night hotel stays and ski lessons that he charged to the Company even while Dakota Beef continued to suffer losses,” the lawsuit said.

A telephone message left for Lively at his Edgartown, Mass., home was not immediately returned. Attorney information was not provided in court filings.

According to the suit, Dakota Beef was financially distressed around 2006 when Lively induced some investors to create One Dakota LLC.

Lively used One Dakota, the suit said, to infuse millions of dollars of cash into Dakota Beef and expand the breadth of its operations while profiting from side ventures such as Sunny Day Organic, Black Hills BBQ Sauce and selling the company’s organic cattle.

According to the suit, Lively approached a Dakota Beef employee in 2008 and sought help in a scheme to sabotage Dakota Beef operations, resulting in a lower price at which One Dakota LLC would be willing to sell its interest in Dakota Beef. During a discussion about new investors, Lively stated that “now would be a good time” for a positive E. coli test result, the suit said.

Dakota Beef in 2009 fell into foreclosure, and its assets and name were purchased by Howard Venture LLC.

The company’s Howard plant was also the scene of an immigration raid in which Immigration and Customs Enforcement agents executed arrest warrants and several Hispanic employees ran out of the plant.

Dakota Beef in February 2009 pleaded guilty to federal charges that it knowingly hired 15 illegal immigrants in 2007 and 2008 to work at its organic meatpacking plant. The company was sentenced to five years of probation and a $45,000 fine, the maximum allowed under the law.