Two former executives of Modami Services Inc. are under federal investigation on allegations they diverted $1.3 million in corporate funds to their own use, Modami’s successor company said.
AppleTree Cos., a frozen-yogurt maker with headquarters in Boca Raton, said the Securities and Exchange Commission also is looking at allegations that Michael Salit and David Lobel lied about their control of the company’s chief yogurt supplier.
“We expect the SEC investigation to be over by the end of the year,” AppleTree spokeswoman April Spring said.
Salit, who was fired as Modami chairman and chief executive last spring, and Lobel, the former chief financial officer, played key roles in founding the company in 1988.
An attorney for Salit said neither Salit nor Lobel did anything improper. Attorney Henry Handler said the two executives properly paid $1.3 million in company bills to Nutrix Ltd., a closely held, Israel-based company that supplied Modami with dehydrated yogurt, yogurt candies and yogurt milkshakes.
He said that, contrary to AppleTree’s allegations, Salit and Lobel had no ownership stake in the supplier.
“From the facts we’ve seen, the company’s findings aren’t true,” said Handler, of the Boca Raton-based firm of Weiss and Handler.
Modami changed its name to AppleTree Cos. last summer after an internal inquiry found alleged abuses by Salit and Lobel. The company, whose yogurt is sold under the name Fresh-n-Easy, sued the two for misappropriation of funds and was counter-sued for libel by Salit.
Lobel couldn’t be reached for comment.
AppleTree’s operating losses, $1.1 million working-capital deficit and $1.3 million note obligation “raise substantial doubt about the company’s ability to continue as a going concern,” the firm said.
It reported a loss of $9.2 million, or $5.76 a share, on revenue of $13.0 million for the fiscal year ended Aug. 31. The year before it lost $3.8 million, or $6.15 a share, on $351,000 in revenue.
