Ed Keiser alleges he’s been obstructed from making management decisions.
By Gail Geraghty
Staff Writer

PARIS – Ed Keiser of Paris is suing his former business partner and the partner’s accountant in the new KBS Building Systems Inc. modular housing plant, claiming fraud and breach of contract.

In a complaint filed May 8 in Oxford County Superior Court, Keiser alleges that his former business partner, Robert Farnham Jr., and Farnham’s accountant, Faris Saba, KBS’ vice president, have squeezed him out of the multimillion dollar joint venture on Route 26, despite assurances that Keiser would run the operation and have a 50 percent voting interest in it.

Keiser was dismissed from the company at least a month ago, and is charging wrongful discharge.

Neither Farnham, a resident of North Andover, Mass., or Saba, of Tewksbury, Mass., could be reached for comment at the KBS Building Systems plant Thursday.

Keiser alleges that Farnham and Saba have obstructed him from making management decisions ever since the 80,000-square-foot plant was completed last July. The plant, designed to manufacture upscale custom-built modular homes for New England customers, began operations last October. It currently employs around 55 people.

Keiser acted as general contractor for the project, drawing on 30 years’ experience in the manufactured housing industry. The plant was built on land Keiser purchased using $320,000 of his late uncle’s money.

Keiser said in his complaint that he and Farnham agreed to become business partners in the project in early 2002, and created a limited liability company, Paris Holdings, LLC, in which Farnham would have 75 percent ownership interest and Keiser would have 25 percent ownership interest.

Keiser claims Farnham created the limited liability company “without the necessary documentation” establishing Keiser’s 50 percent voting interest, as promised.

He also alleges that he and Farnham agreed that the operating company, KBS Building Systems, would place Keiser in charge of the corporation’s business operations, but that never happened.

Keiser alleges that Farnham and Saba have mismanaged the company, and have caused it “to sustain significant business losses, threatening the company’s financial solvency.”

Brett Doney, chief executive officer of the Growth Council of Oxford Hills, said Thursday he has met with Farnham, and “from what we can see the company’s moving along fine. Obviously the most important thing for the region is the jobs it brings, and it appears from the outside that everything is going well.”

Doney, whose agency helped Keiser with site selection and job training, said Farnham has not discussed the details of his problems with Keiser. “He just said it was management differences,” Doney said.

The company’s business plan calls for job growth to 90 workers by the end of this year, and to eventually employ 150 people. The town of Paris assisted the project by securing state funding for a nearly $1 million water and sewer main extension, of which $578,000 was financed by a bond approved by voters. Tax revenue from a tax increment financing district encompassing the KBS plant is being used to repay the bond.

Keiser’s suit calls for the dissolution of both Paris Holdings, LLC and KBS Building Systems, Inc. because he and Farnham, as sole shareholders, are so divided “that the business and affairs can no longer be conducted to the advantage of its shareholders.”

Keiser seeks punitive and compensatory damages in whatever amount deemed reasonable by the court, but does not name an amount.

This isn’t the first time Keiser has been ousted by majority investors. After moving to the area in 1974, he worked his way up to become head of Burlington Homes in Oxford until he left to start his own company, Keiser Homes of Maine, also in Oxford, in 1992.

Two years later, Keiser was removed by majority investors of Keiser Homes, and the company folded in 1990 when Oxford Bank and Trust Co. foreclosed on the property. He then began Keiser Industries on the Mechanic Falls Road, and said he sold his interest in that company in June of 1997.

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