Last week, as the Louis DeJoy testified before the House of Representatives about mail slowdowns around the country, the Republican congressman Jim Jordan praised the embattled postmaster general’s career as the chief executive of New Breed Logistics, saying DeJoy had an “amazing record in business”.
But court documents reviewed by the Guardian allege that as DeJoy expanded his father’s shipping company into a logistics empire, he alienated his own family, pushing his brother Dominick out of the company and triggering an acrimonious legal battle with long-lasting consequences. The lawsuit and its outcome provide new insight into how Louis DeJoy came to control the company that made him wealthy and put him in a position to become a top Republican donor and, later, the postmaster general.
A complaint filed by Dominick DeJoy in North Carolina state court in January 2000 alleges that Louis DeJoy:
forged his brother’s signature to establish joint bank accounts in both of their names.
forced his brother to sign away his ownership stake in New Breed.
restructured New Breed’s ownership to exclude Dominick from the profits.
concealed evidence of the new ownership structure from his brother.
Family patriarch Dominick DeJoy Sr founded New Breed in 1968 as a small-time trucking concern in New York and New Jersey. After suffering a debilitating injury in 1977, he passed control of the company to his sons Dominick Jr and Michael; Louis, the eldest, was in college at the time, studying to become an accountant. Dominick did not go to college, instead taking over New Breed’s operations after graduating from high school.
Louis graduated the following year and became a certified public accountant shortly after, and returned to New York to join his brothers at the helm of their father’s company. For the next decade, Louis was New Breed’s chief financial officer, handling the company’s bank accounts and tax filings.
Together, the three brothers reincorporated New Breed with Louis as president and each brother owning a third of the company. They then pushed business outward from the New York area, expanding operations nationwide and moving the headquarters to North Carolina; according to the court filing, the brothers only held one in-person board meeting over the course of more than 15 years, despite Dominick and Louis living just a few miles apart in Greensboro.
“Dominick Jr trusted Louis, believed he was a capable [accountant], and believed that Louis would responsibly look after all three brothers’ interests,” said the court filing.
Some time in the 1990s, Louis and his brother Michael allegedly executed a kind of financial shell game to deprive Dominick Jr of his stake in the family business, according to the complaint. Michael established a new set of holding companies that did business with New Breed’s clients, and Louis allegedly told his brother Dominick multiple times that he would be entitled to a third of the proceeds from these new companies.
In fact, according to Dominick’s complaint, the new arrangement gave Dominick no equity in the companies whatsoever.
It wasn’t until April 1998, when Louis undertook to reorganize the entire company once again, that Dominick alleges he became aware of what he claimed was a scheme to defraud him. The ownership structure of the reorganized company would reduce Dominick’s share in New Breed by more than half, giving him a 15% stake instead of the one-third stake he thought he had. According to the court documents, Louis and Michael “conspired and did force” Dominick to sign the agreement.
The following year, according to the court documents, Dominick made an even more shocking discovery: Louis had established multiple accounts in his name at local banks and investment trusts, forging Dominick’s signature in order to set up accounts of which they were supposedly the joint owners. Louis then deposited Dominick’s New Breed earnings into these accounts and either spent the money on his own personal expenses or funneled it back into New Breed, according to the court documents. When certain employees tried to send evidence of these fake accounts to Dominick, Louis allegedly sent his own employees to intercept the documents and prevent Dominick from seeing them.
No sooner did Dominick sue Louis than New Breed sued Dominick on Louis’s behalf, demanding Dominick drop his lawsuit. Court records show that the cases were consolidated in a state business court later that year. Records also show that the presiding judge arranged in January 2001 for Dominick to depose an employee of Wachovia Securities, a bank that was considering an outside investment in New Breed. But later that month, just two days before the deposition was scheduled to take place, the brothers reached a confidential settlement and the judge dismissed the case.
Even before Dominick’s departure from the company, his relationship with Louis was a contentious one, with the brothers often getting into heated arguments during meetings, according to two people who worked at New Breed. As tensions rose, Louis and Michael held a board meeting where they voted Dominick out of the company, and later had security escort him from the building. One person remembered a group of police officers standing outside the door of New Breed headquarters the next day to bar Dominick from coming back into the office.
According to a person familiar with the family, Dominick has not spoken with either of his two brothers since he left New Breed. He now lives in La Jolla, California, and leads a small company that produces an “inertia drive” propulsion technology that creates a “constant steady state acceleration force due to an imbalance in angular momentum”.
Another person familiar with the lawsuit who declined to be named said the resolution of the lawsuit was favorable to Louis. This person also said that the dispute behind the lawsuit had to do not just with Dominick’s financial stake in New Breed but also with the brothers’ competing visions for how the company should grow.
“I think in the end Dominick wanted to cash out, and Louis was happy for him to cash out, they were just arguing over the price,” this person said.
But another person who was familiar with the situation said that while Louis was the “brains” of the company, Dominick had been the one who had been in charge of building dozens of equipment sorting centers around the country. It was these centers that made the company so valuable to the US Postal Service, which awarded it millions of dollars in logistics contracts over the years.
“Dominick spent years building out the logistics side, and then once we rolled out all those sites, it was like we didn’t need him any more,” this person said. “He was gone pretty soon after that.”
After Dominick’s departure, Louis became the controlling shareholder of New Breed rather than one partner among three. As a result, when Louis sold New Breed to XPO Logistics more than a decade later, for a reported price of $615m, he got the lion’s share of that payout. If Dominick had still been an equal partner in the company the brothers would have had to split the sale price between them.
It is unclear whether Michael received any money as part of the XPO deal, but for Louis the windfall helped catapult him into the top ranks of Republican donors. He funneled at least some of this payout to Republican candidates and pacs, donating almost $3m to the Trump campaign alone over the next five years and endearing himself to the party establishment.
The Postal Service’s board of governors nominated DeJoy to serve as postmaster general in May after a months-long search spearheaded by the treasury secretary, Steven Mnuchin, according to the New York Times. Robert Duncan, a former Republican National Committee chairman who Trump appointed to the board of governors in 2017, was the first to suggest DeJoy for the position.
The board’s vice-chairman, longtime postal executive David Williams, told Congress in a testimony earlier this month that DeJoy “didn’t strike [him] as a serious candidate” for the job. Williams resigned from the board, whose members are all Trump appointees, when it became clear that the board intended to approve the selection of DeJoy.
Since taking office, DeJoy has been criticized by postal workers, union leaders and Democratic politicians for implementing policies that have slowed down mail delivery, including by limiting overtime work and removing mail-sorting machines from postal stations.
Amid intense public pressure, DeJoy recently said he would suspend some of these changes until after the election, and recent data suggests that service has rebounded in recent weeks, but Democrats in the House of Representatives this week announced their plan to subpoena DeJoy over the changes.
A spokesperson for DeJoy’s family foundation said that the postmaster general “is extremely proud of the logistics and shipping company that he and his leadership team, including family members, built over decades of hard work”.
The spokesperson said: “The DeJoy brothers amicably settled these issues and all civil actions were dismissed by agreement of all the brothers. Mr DeJoy continues to honor the terms of the agreement to not disclose additional details.
“Immediately following the settlement, New Breed began a 15-year period of substantial growth supported by both public and private investors who embraced the company’s commitment to the highest standards of financial discipline and ethical operations.”
Dominick declined to comment for this article. Michael did not respond to multiple requests for comment.