Lube Co. Allegedly Destroyed by Employees

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Silogram Lubricants of New York filed a complaint last month against more than a dozen former employees and several competitors, contending that the group, led by a Silogram vice president Stevan Jospey, entered into a criminal enterprise to destroy the lube manufacturers business through allegations ranging from unfair competition and trademark infringement to theft, fraud and sexual harassment.

With headquarters in Bayonne, N.J., and a principal business location in Staten Island, N.Y., Silogram Lubricants, also known as Royal Lube Co., filed the civil complaint in the Southern District of New York U.S. District Court on Jan. 6 in attempt to remedy systematic criminal activity and civil torts allegedly committed by the defendants. Outlined in court documents obtained by Lube Report, the charges purport that Silogram vice president Jospey, acting alone and with other defendants, aimed at stealing all value from Silogram and ultimately destroying the company.

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As nephew of Silograms president and sole shareholder, Oscar Margolis, Jospey allegedly began taking advantage of his aging uncles health problems to commandeer absolute control of the company in 2005, and then used his assumed power to commit wanton acts of theft, waste and mismanagement. Silogram claims that Jospey worked in accordance with co-defendant Luis Lebron, who is a former Silogram employee and owner of another defendant, Bayonne-based oil company Encore Petroleum LLC, as well as with other current and prior employees and fuel and lube companies, in acts that resulted in several multi-million dollar losses for Silogram.

A LinkedIn profile for Stevan Jospey lists his position as vice president of Encore Petroleum, from 1990 to the present. Jospey did not respond to Lube Reports calls or emails by deadline.

Jospey had previously filed a breach-of-contract lawsuit against Silogram which alleged that the company – owned and operated by Oscar Margolis and his son, Sean Margolis – wrongfully terminated him and violated a 2009 agreement which entitled Jospey to a payment of $1.2 million if he were improperly terminated. This earlier lawsuit claims that Jospey faithfully performed all his responsibilities in a diligent and business-like manner, but was improperly terminated on March 18, 2013. The case, represented by John Marangos, Esq., of Staten Island, was filed in May 2013. Marangos told Lube Report that Silograms recent lawsuit – in which Marangos represents the majority of the defendants – is merely reactionary and baseless.

After wresting control of the company, Silogram alleged, Jospey created a hostile workplace fraught with unlawful firings, nepotism, bullying and sexual harassment, and engaged in numerous acts of theft through myriad means, such as: misappropriating and diverting rebates on waste oil pickups from co-defendant Advantage Environmental; charging several hundred thousand dollars of personal expenses to the companys credit account; purchasing large loads of distillate and fuel oil from suppliers such as Safety-Kleen Systems and diverting product by the truckload to another defendant, Northeastern Fuel, and other competitors; selling Silogram vehicles filled with additives, base oils and viscosity improvers to another defendant, Citilube; deleting invoices from Silograms computer system and diverting proceeds to himself, and more.

The lawsuit charges that Jospey pushed Silogram, which was primarily engaged in manufacturing and distributing lubricants, into the fuel oil business, which helped provide opportunities for his alleged theft to go undiscovered for a longer time. Silogram claims that, unlike the sale of lubricants, fuel oil could be sold on a cash basis to numerous small operators and residents, and that Jospey was able to divert the revenues from it with less risk of detection.

Furthermore, Silogram charged that Jospey arranged for sales of company trucks that were supposed to have been empty, yet were filled with the companys products. Silogram claims that the offenses came to light when massive overweight violations in Florida spurred an investigation. Silogram claims that a witness admitted that some of these acts occurred outside of business hours, late at night, and on weekends, with transactions via paper bags filled with cash, and phony invoices.

Along with the Florida investigation, Silogram was scrutinized in several other probes while under the control of Jospey. In 2012, Jospey allegedly purposefully didnt pay for a $1.4 million delivery of fuel oil from Safety-Kleen, Silogram asserts, but instead sold the oil for his personal benefit, which resulted in Safety-Kleen taking legal action against Silogram.

Jospey also purportedly purchased sub-standard motor oil through transactions with Everclear Oil of Ohio and re-labeled it with API-certified symbols and Silogram logos – a scheme which Silogram says was carried out by Jospey in the intention of having API terminate Silograms license, which it did on Dec. 21, 2012. Furthermore, the Everclear Oil products, which Silogram claims were purchased by Jospey at a rate of 20,000 gallons per week between late 2010 and 2012, caused Silograms customers to have major incidents of engine failure.

Lube Report could not reach Silogram Lubricants for comment by deadline. As of Feb. 18, all phone numbers listed on its website were out of service.