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Splash of Color Partnership Implodes into Lawsuit

Jack Behlmer, the former owner of Creative Imaginations, filed suit on May 13th against Leslie Ohnstad, founder of LuminArte, alleging in nine wide-ranging causes of action that she committed fraud, misappropriated jointly-owned company assets, and violated the operating agreement governing the Splash of Color partnership.

Splash of Color booth art, CHA Winter 2013

Splash of Color booth art, CHA Winter 2013

Splash of Color debuted at CHA Winter 2013, and was founded of the melding of the remnants of Creative Imaginations and LuminArte. Creative Imaginations had long been an industry staple primarily for its licensed lines and for the work of designers like Marah Johnson and Samantha Walker.  LuminArte was known for its various color mediums like Twinkling H20s. Under an agreement inked in April 2011, Behlmer purchased 50% of LuminArte from Ohnstad for $100,000, and then Splash of Color was formed by both Behlmer and Ohnstad contributing their 50% interest in LuminArte to the new company. Johnson, who is also Behlmer’s fiance, joined Splash of Color as Vice President and Brand Manager.

The new company sought to capitalize on the growing mixed media trend in the industry by combining artist trading card and collage products from the company’s Creative Imaginations heritage with color mediums from the company’s LuminArte heritage. However, Behlmer acknowledges in the lawsuit filing that despite the niche popularity of the products, sales did not live up to expectations and that he was forced to personally loan the company money to keep it afloat.

Cracks appeared in the partnership this spring, first via increasingly less cryptic blog posts from Marah Johnson alleging many of the same things contained in the lawsuit. Then on April 8th, a notice appeared on the company’s blog from Splash of Color’s Huntington Beach office (where Behlmer and Johnson worked) that said that the company was closing due to an inability to fulfill orders out of the Fresno office (where Ohnstad worked).

In the lawsuit filing, Behlmer goes into extensive detail about allegations that Ohnstad violated their partnership agreement and misappropriated company assets:

18. From May 1, 2013 through March 31, 2014, Ohnstad took actions that harmed Splash of Color. She withdrew approximately $36,464 from Splash of Color accounts for personal expenses such as rent, medical bills, food, etc. She made changes to the Splash of Color website so that all visitors would be automatically transferred to Ohnstad’s Dreaming of Color website. She changed the Paypal account so that all payments would be made to her, rather than to Splash of Color. She took the Splash of Color domain registration. She removed all raw materials, packaging, and LuminArte product from the Splash of Color warehouse. She arranged to manufacture and ship LuminArte products from her home, using Splash of Color employees, without any reference to Splash of Color. She accessed the Splash of Color account on Constant Contact and changed the user name and password, preventing Splash of Color from accessing its account and using its customer information. She conspired with the Splash of Color employees to create the illusion they had been terminated by Splash of Color and were unemployed. However, the truth was they continued work on LuminArte products under Ohnstad’s supervision at her residence. Basically, she sought to eliminate Splash of Color’s involvement, returning things to a time before execution of the Licensing Agreement, the Purchase Agreement, and the Operating Agreement. She treated the LuminArte and related products as if she alone owned them, without regard to the existence of Splash of Color or the agreements she executed.

Behlmer is asking the court for at least $2 million in damages, plus attorney’s fees, plus for the appointment of a receiver to take control of the company’s affairs and liquidation. In addition, he is asking for restraining orders and injunctions preventing Ohnstad from using the LuminArte product lines.

Ohnstad has yet to respond in court to the lawsuit, and no hearing date has been set. No response has been received by Scrapbook Update to a request for comment from Leslie Ohnstad.

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20 Responses to Splash of Color Partnership Implodes into Lawsuit

  1. Wendy Senger June 3, 2014 at 11:10 am #

    Well before we all pass judgment I would like to hear Leslie’s side of the story. I have no interest in either party. I thought we should all wait to see what comes of this mess before taking sides.

    • Nancy Nally June 3, 2014 at 12:10 pm #

      I would imagine your personal experience with selling your own company makes you more anxious than most to hear Leslie’s side.

  2. Christina Messina June 3, 2014 at 11:35 am #

    I agree that before we all pass judgment I would like to hear Leslie’s side of the story. I have no interest in either party. I thought we should all wait to see what comes of this mess before taking sides.It is sad that art and scrapbooking and creativeness is turning into such nastiness, very sad indeed!

    • Nancy Nally June 3, 2014 at 12:03 pm #

      Business deals go bad all the time no matter what business you’re in. Which is why lawyers make so much money, and you should always make sure you have a good one working for you no matter how small your business.

      • amanda June 3, 2014 at 3:17 pm #

        True. I think we take it a bit personally when it happens within the scrapbook industry because it’s *our* hobby. :(

  3. cheryl mezzetti June 3, 2014 at 12:45 pm #

    Unfortunately there has been other companies {and individuals}that have had to walk down this very same path as Splash of Color {thank goodness for public records}. It is my prayer that this never happens to another person or company in the future.

  4. scrappinsmart June 3, 2014 at 1:09 pm #

    Splash of Color did their own fact finding mission and has allegedly discovered that Ohnstad has done the same thing to her other partners that she’s doing to Jack Behlmer. She allegedly has a history of taking advantage of people and ruining them financially. I look forward to seeing the court finally stop her from hurting so many people.

  5. Viv Prad June 3, 2014 at 2:13 pm #

    No surprises here except that it took her so long to go to her established patterns. May take time off work to see these proceedings. Mark me as one of her suckers to the tune of thousands.

  6. itsnotthatimportant June 3, 2014 at 5:22 pm #

    I’m just glad to see that Marah got her stuff off of Dreaming Color’s website (and I thought she had a heck of a nerve putting it up there to begin with).

  7. Sherry Rogers-Harrison June 3, 2014 at 8:19 pm #

    I personally have never met someone as evil and as cold hearted as Leslie O. Fortunatly, I washed my hands of her long before she could take advantage of me and or my business. I cannot fathom the path of destruction this horrible person has passed on to other innocent people and businesses and pray that the good people shine in the end.

  8. Addie June 4, 2014 at 9:48 am #

    Most puzzling to me is the collusion of the Splash of Colors employees who agreed to work with Leslie. Are they then liable too?

    • Nancy Nally June 4, 2014 at 10:00 am #

      Potentially, yes. The employees are named as “Does 1-20″ in the lawsuit.

  9. Jeannie Havel June 4, 2014 at 2:09 pm #

    Is Jack Behlmer the same partner she had in 2005? I thought she sold the company to his straight out? What a mess.

    • scrappinsmart June 4, 2014 at 3:54 pm #

      Jack Behlmer became partners with Leslie Ohnstad in 2011, from what I heard. Leslie Ohnstad had another set of partners in 2005 and she allegedly ruined them financially. It’s a pretty sad situation. I just hope that the lawsuit that Behlmer put in to action can stop Ohnstad in her tracks so she can’t hurt anyone else in the future. It seems like an ongoing problem with her.

  10. Kimberly Madrigal June 4, 2014 at 5:50 pm #

    This is very sad that Leslie is doing bad things again in the business world. She is putting a bad name on good product. But as a former employee it doesn’t surprise me at all that she is up to her old tricks.

  11. gabmcann June 5, 2014 at 5:59 am #

    What a very sad mess. No winners here

  12. Tammy Sides June 9, 2014 at 5:51 pm #

    I had been an employee of Jack for over 15 years. I can tell you that Jack had in fact used his personal funds to try and make Splash of Color a success. It saddens me that Leslie could do this to him. Jack has done alot for Leslie over several years and even helped her financial before they where partners out of his own pocket. I hope that she gets everything she has coming to her. Jack deserve alot better then this. I was very lucky to have gooten such a great boss and friend.

  13. Jamie Jackson June 11, 2014 at 3:25 am #

    Good to know. No more Twinks or Silks for me (well, I think I have all of them already.) Given Marah’s initial huge sense of enthusiasm about working with the company, I was wondering what happened? I had initially bought a lot of Viva Decor product on the site, and went back several month later to find that they had all been taken down (along with most of that former CI product). Such a shame that there are people who use their “business” to try to screw over those people who are sincere, honest, and talented.

    I hope they can receive something for their hard work from someone who seems to have a pattern of deceitful business practices. Luminarte has morphed so many times since I was “in the industry (I worked at a store for my second job, the benefits (discounts) were too good to pass up), I can remember 2001, everyone was into them, they still didn’t sustain that momentum.

    Karma comes back around, I hope Ms. Ohnstad is ready for hers.

  14. Anna June 17, 2014 at 12:04 am #

    Before talking about Karma in an open place, we all should think first. Excellent products often ‘earn’ a lot of jealousy. Many outstanding and really new creations or creators are abused in a weak or changing state. When I was googling Creative Imaginations to see who that was, I knew right from the start of that of that so ‘balanced’ contract, that this company had nothing new to say and was already on its way to the end. They tried to safe their business with the help of a creation, which they did not invent, nor create. Giving money, making a ‘generous’ contract, which should be difficult to cancel, is merely a clever action. Nothing in comparison to the work Leslie Ohnstad did in that time, with the new Silks, the new colors, AND her presence. Maybe she felt the ‘spirit’ in time, which now turns in evil attacks against her. Creators have more senses, we all should think of that. She must have saved her creation from worse than just loosing some money. I would have done the same. I own a creative and innovative place and have seen some of these ‘flowers’ myself. Many outstanding people have. They get punished for their sight.

  15. Marg K June 18, 2014 at 10:20 am #

    I think Wendy Sanger is Anna is right we should wait and see how this plays out. If Leslie is guilty of anything it is picking lousy business partners. I think it is sad a such creative person trusted someone to help run the business so she could create more products. It is an old story greedy people wanting to shoot the goose and keep the golden egg.

    I have known Leslie over 14 years. What I heard about the 2006 partnership is Leslie trusted 3 businessmen to invest in Luminarte. In 90 days they voted her out as CEO of her own company stating they could do a better job. Leslie was told to create more products. After Fourteen months the company owed the IRS over 100K. Leslie had no choice but to fire the CEO to save Luminarte. If someone invests in a company, appoints themselves in charge, then ruins the company financially they only have themselves to blame for losing the investment.

    In this current partnership promise after promise to move production out of her home was broken which forced to Leslie to work out of her house and pay for 2013 Luminarte paint production out of her own pocket draining her of any cash that originally was paid to her.
    In November 2013 both locations moved into one facility only to have Jack threaten the employees on a regular basis with chaining the doors or filing bankruptcy.

    In January 2014 Jack called the landlord stating the partnership was splitting up. The worst part is Mr. Behlmer’s refusal to pay the employees overtime accumulated during the move in November 2013. March 2014 Jack was served paperwork stating the asset, (employees and Luminarte paint brand) were being moved out of the facility before jack could sell it off for parts to pay off his old debt.
    I mean no offense but past employees have no place taking sides based on hearsay, they were not privy to the partnership agreement. just saying there are 2 sides to every story…

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