OGDEN -- A Canadian business owner and an English broker have filed a civil lawsuit against an Ogden-based company that allegedly conned them into becoming business partners for a construction project in the oil fields of North Dakota, took their millions and patents -- and then fired them.
Kris Thorkelson and Englishman Kevin Fleury filed a civil lawsuit in 2nd District Court against Edward B. Welsh, owner of New Harmony Homes LLC, and Terry Goers for a breach of contract and fidiciary duty and wrongful termination, among other allegations.
Others also named in the suit are Welsh's wife, Stacey Welsh, Stephen Dredge, and T.J. Goers, along with several others.
"We are just trying to get to the bottom of what is going on," attorney Clay A. Alger, who represents Thorkelson and Fleury, told the Standard-Examiner.
Alger said the lawsuit's purpose is to "make these people whole that have been taken advantage of."
The 28-page complaint seeks $2.5 million in damages to be determined at trial, along with a return of Thorkelson's rights to intellectual property, including a patent of Thorkelson's, court records said.
The money obtained by Fleury and Thorkelson from investors was supposed to go toward completing a hotel project in North Dakota, but the hotel was never completed because the company ran out of money.
The suit said that, in 1995, Thorkelson co-founded a Canadian company named QB Technology Canada Corp. The company says it patented a technology to streamline onsite build times by 33 percent.
The prefabrication manufacturing process uses steel studs and foam wall panels already electrically wired for use in commercial and residential construction.
In 2006, Thorkelson started selling licenses to his patent and met Welsh through a mutual business associate from Iraq. Four years later, Thorkelson became the sole owner of QB Technology Canada Corp. and owned all the rights for the patent.
Around that same time, Welsh proposed a business venture in which the two would join forces to manufacture construction panels to an international market. The duo created QB Technology International Inc., with Thorkelson as president.
Welsh persuaded Thorkelson to move to Utah and open a shared 1st Bank checking account to start up business in Utah. Thorkelson initially put $100,000 into the account. Meanwhile, Welsh formed a new company and became the controller of New Harmony Homes after several months of not being able to raise funds for the venture, according to the suit.
Welsh also began hiring on friends and family, including his right-hand man, Terry Goers, according to the lawsuit. Together, the two began to lead the company.
Fleury, a London broker, invested into the company and became a director of New Harmony Homes. Fleury spearheaded a project to build housing and a hotel for workers of the Bakken oil fields of North Dakota. Fleury raised $8.5 million from investors to put toward the company project.
Thorkelson, Welsh, Goers and Fleury signed an agreement at Welsh's Mountain Green home in Morgan County that required a vote of 75 percent of the four directors to remove any director from New Harmony Homes.
The complaint alleged this never occurred, and Thorkelson and Fleury were fired from the company without explanation last summer. Welsh also added a new member, Dredge, to participate in the company because Thorkelson and Fleury were not U.S. citizens and Welsh and Goers said they had "poor credit," according to court documents.
Welsh and Dredge also "touted their membership in The Church of Jesus Christ of Latter-day Saints to convince the other parties involved that they could be trusted in this business transaction," the lawsuit said. Dredge is a Morgan LDS Seminary teacher.
As part of capital contributions, Thorkelson transferred his patent rights to the company. Eventually, Welsh appointed himself as president and took control of all of New Harmony operations and funds, and money began to go missing, court records said.
Welsh wrote a number of checks to himself and to his wife. Money was also allegedly used to buy personal vehicles and to get out of foreclosure by paying off Welsh's 6,775-square-foot home and property valued at nearly $800,000.
Welsh continued to create up to about a dozen more companies under the New Harmony name and spread the money over several more bank accounts.
About a year before Thorkelson and Fleury were fired from the company, they became aware of millions of dollars that were missing from the company that had been set aside to be used in the North Dakota hotel project.
Meanwhile, Welsh and Goers were buying personal cars, guns and land, according to the complaint.
In May 2013, Fleury tried to call a board meeting to discuss ways to keep the company financially afloat. One option was removing Welsh as president. At the end of July, Fleury and Thorkelson were terminated.
"It is really our view that this was (Thorkelson's) company," Alger said, alleging the defendants went rogue with the company and got rid of their primary funding parties.
"Most of the investor funds have been put in the company, and they were definitely enough to get the project completed," Alger said Monday. "And it is not. The project is not completed. And that is problematic."
The case could garner federal attention because of its nature. On Wednesday, the complaint was also emailed to the U.S. Securities and Exchange Commission in Salt Lake City.
The defendants in the case have not filed a response since the initial filing of the complaint on Dec. 31.
Welsh was asked several times this week to respond to the complaint. He said in an email Saturday, "The lies about me and my family are completely false ... They have made many wrong allegations that are unfounded and untrue, just to be mean and hurtful. ... We did not want our names to be published or this frivolous lawsuit to overshadow the innocent victims."
Thorkelson, 53, was arrested in August after police said he broke into the company building. He was charged with two counts of third-degree felony burglary and two counts of second-degree theft of New Harmony Homes at 194 W. 33rd St. in Ogden.
The business was found with the doors kicked in and about $40,000 of equipment stolen, including computers and phones, investigators say.
Ogden major crimes detectives tracked the stolen property to Thorkelson's home and recovered the equipment.
Thorkelson is a Canadian citizen in the U.S. on a visa. The criminal case against him is still pending.
Contact reporter Cimaron Neugebauer 801-625-4231 or firstname.lastname@example.org Follow him on Twitter at @CimaronNews.