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 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.