For 15 years, brothers Chris and Phil Mittleman worked amicably together as partners at Mittleman Investment Management.
Once they had gained control of Toronto-based investment firm Aimia Inc. AIM-T in 2020, however, their relationship was quickly torn apart. Chris was fired as the company’s chief investment officer in March, 2023, just weeks before Phil – the CEO and a company director – narrowly survived an attempt by Aimia’s largest shareholder to oust the entire board.
Now, the two brothers are locked in a dramatic litigation against each other, with the future of Aimia at stake. Phil claims his older brother engaged in an “unlawful conspiracy” with dissident shareholders to take over the company, according to his statement of claim, which was most recently amended on Nov. 13.
Chris, in a counterclaim and statement of defence filed with the Ontario Superior Court of Justice on Nov. 2, calls the case brought against him an act of “oppression, fraud” and “retribution.” He is seeking to be reinstated as a member of Aimia’s board of directors and to have Phil, who Chris notes in his filing is 2½ years his junior, removed. He also wants damages of US$5-million.
“Phil was enabled by a careless board, stacked with neophytes and cronies, that was delusionally deferential to its novice CEO,” the counterclaim alleges.
Chris points specifically to Mike Lehmann, whom Phil hired as president shortly after becoming CEO in 2020, as an example of cronyism. Mr. Lehmann, Phil’s prep school roommate, had been unemployed for more than five years before joining Aimia with an annual salary of $810,000, according to Chris, and was a member of the board of directors until last month.
Phil should personally be responsible for paying “at least” half of the damages sought by Chris, his statement said, given his “key role in orchestrating the acts of oppression against Chris.”
Phil, in his own legal filings, alleges Chris was acting jointly with Mithaq Capital SPC, a Saudi Arabian family office that increased its stake in Aimia from less than 13 per cent in early 2023 to almost 31 per cent today, and British fund manager Milkwood Capital in an illegal plot to overthrow the company’s board. Chris denies those allegations as “false” and “difficult to fathom.”
“How could a family office in Saudi Arabia, a fund manager in the U.K. and a recently fired investment manager in New York share economic and/or voting control of Aimia? At the very least, such an awkward setup would require an extensive shareholder agreement signed by all three parties,” Chris says in his legal filing, further claiming that no such agreement exists.
Chris also opposes Mithaq’s recently announced hostile takeover bid for Aimia, his statement says, “as it would deprive shareholders of fair value today and the longer-term upside potential.”
Phil’s case focuses on events leading up to and immediately after Aimia’s most recent annual general meeting, in April. But the basis of Chris’s allegations date back to 2020, when the Mittleman brothers first gained control of Aimia, shortly after the company sold its flagship loyalty program, Aeroplan, to Air Canada for $516-million and transformed itself into an investment holding company.
“Almost overnight, once in the position of power at Aimia that Chris had provided to him, Phil went from calling and e-mailing and texting Chris multiple times per day every day, over 15 years, and relying on Chris for every strategic and tactical decision made in the two-year battle for control of Aimia, to almost completely ignoring Chris,” his counterclaim says.
Chris tried to get himself appointed as co-CEO twice – first on Dec. 2, 2020, and again on Jan. 20, 2022 – in what he claimed was an attempt to re-establish the power structure that he and Phil originally intended for Aimia. The second attempt “appeared to incense the board,” he says in this counterclaim.
“After a brief sham of a ‘process’ came an impossible to refuse offer,” Chris says. He was required to step down from Aimia in order to preserve his role as chief investment officer of Mittleman Investment Management, which by then had become an Aimia subsidiary. If he had refused, he claims, he and his co-workers at Mittleman would have been fired immediately and the firm would have been shut down.
“As if coming from a narco cartel, the choice was simple and unconscionable: silver, or lead,” Chris’ statement says, referring to an infamous saying attributed to Pablo Escobar, who was known for offering people a choice of either money or bullets.
The analogy “is precisely accurate in this case,” Chris argues in a separate section of his legal filing, as he was “forced out of a leadership role from the investment vehicle he found and rescued and fought for and coaxed into being” and was “humiliated professionally” by not being allowed to explain to his clients what had happened.
“Chris was obligated by Aimia to lie about the situation to outsiders,” he claims.
Phil, in his filing, says Chris signed the deal “willingly and with full knowledge of their contents and the benefit of independent legal advice.”
The trial is scheduled to begin Jan. 8, 2024.
Jameson Berkow