A Wendy’s franchisee group was ordered to pay $7.1 million in damages to a former employee after a lawsuit accused leadership of sexually harassing her and pressuring her to commit PPP fraud.

Sandi Adler, who worked as vice president of legal affairs and human resources from January 2019 to June 2020, filed the complaint under Florida’s Private Whistle Blowers Act. Florida-based Starboard Group franchises McAlister’s, Wendy’s, Subway, Applebee’s, Fuzzy’s Taco Shop, and Cicis Pizza.

In the legal documents, Adler accused CFO Kevin Holbrook of ongoing sexual harassment and unwanted attention. She stated that during a meeting in late fall 2019, which involved herself, Holbrook, and CEO Andrew Levy, she expressed her objections to Holbrook’s advances. However, instead of addressing the issue, Levy dismissed it and condoned Holbrook’s behavior.

Additionally, Adler asserted that Levy instructed her to contact creditors, landlords, vendors, and suppliers, claiming that the company couldn’t fulfill financial obligations due to not receiving PPP funds. Yet, Adler contended these statements were untrue as Starboard had indeed received around $9 million in PPP loans. She further alleged that approximately $1 million of these funds were diverted to Levy for his personal use in purchasing a house in Montana. The lawsuit asserted that Levy instructed Adler to list certain individuals in Montana as corporate employees.

When Adler raised concerns about these actions to Holbrook, she was terminated on June 1, 2020, according to court documents.

A final judgment issued on March 14 awarded Adler $7.1 million, consisting of $640,000 in lost wages, $2 million for future lost wages, $1.5 million for emotional pain and mental anguish, and $3 million for future emotional pain and mental anguish.

Starboard filed for bankruptcy in November 2023 due to COVID-related issues such as changing consumer habits, rising business costs, and higher interest rates. Levy also blamed the bankruptcy on a joint venture to build Wendy’s stores in Brazil that went south, Wendy’s ordering the group to sell profitable restaurants in Virginia, and the significant cost of remodels. In December 2020, Starboard received $49.8 million in loan proceeds. Starting in 2022, the company began making monthly interest-only payments. These costs, in addition to lower sales and higher interest rates, put pressure on Starboard’s portfolio, Levy said. At the time of bankruptcy, the company owed $48.8 million to one group and $2.8 million to another lender.

Levy told the South Florida Business Journal that the bankruptcy ate into the company’s legal defense fund. He noted that “The bankruptcy made it impossible to fund a defense. We are confident, however, that had the funds been available, our defense would have been successful.”

Levy remains as CEO, but Holbrook is no longer in his position. Dawn Jones Leung, who has brief experience from McDonald’s and Bloomin’ Brands, took over as acting CFO in February, according to LinkedIn.

Fast Casual, Fast Food, Legal, Story, Wendy's