Records: LI contractor ordered to pay $6.7M for secretly owning competing firm

A Nassau County jury has ruled that the former director of government sales for a Westbury-based government contractor must pay $6.7 million to the business after he was found to be secretly owning and operating a competing Nanuet company with his son-in-law, records show.

The scheme was uncovered after the defendant, Yonah Rothman, of upstate Ramapo, mistakenly emailed a nearly $600,000 FEMA contract that he had secured for Supply King USA, his family’s firm, to his then-employer, Complete Packaging, which also had offices in Freeport.

The July 15 jury verdict is the largest of its kind in New York State for cases involving the enforcement of noncompete and nondisclosure agreements, according to Vess Mitev, a Stony Brook attorney who represented Complete Packaging at trial.

"The jury's verdict reaffirms a principle that has been under siege for years, which is that disloyal employees who sign valid noncompete and nondisclosure agreements can and will be held accountable to the fullest extent of the law," Mitev said. "This award is a complete vindication, at long last, and hopefully serves as a reminder that noncompete and nondisclosure agreements are enforceable and there are consequences to their breach."

Attorneys for Rothman and Supply King USA did not respond to requests for comment.

In court papers, Rothman's attorneys argued that his noncompete clause was overly broad; that there was no evidence he held an ownership stake in Supply King or "improperly utilized or disseminated any confidential information or documentation."

Rothman began working at Complete Packaging as a salesman in 2005, records show. The company, which has since shuttered, sold products such as tarps, toothpaste, emergency kits, water, soap and hygiene items to FEMA, the U.S. Army, U.S. Border Patrol, Defense Logistics Agency and the Treasury Department, records show.

Rothman, who was eventually promoted to director of government sales, signed a contract with Complete Packaging that he would not form any business to compete with the company or use confidential information or trade secrets from his position to prepare bids on behalf of a competitor, Mitev said.

But Rothman breached the agreement when he secretly, and without his employer's knowledge, established Supply King with his son-in-law Eli Teichman, Mitev said.

Rothman, the suit alleged, had a 51% ownership stake in Supply King.

Supply King had a similar business model as Complete Packaging, and Rothman used "confidential information and trade secrets" to win contracts for his family's firm, the lawsuit states.

Rothman's sales on behalf of Complete Packaging dropped dramatically in 2021 and 2022 while government contracts at Supply King skyrocketed, the suit indicates.

Meanwhile, court records show Rothman was operating Complete Packaging's Pomona office just a few doors down, and in the same building where he was simultaneously running Supply King.

The U.S. government, Mitev said, does not appear to have been aware of Rothman's double-dipping arrangement.

The Government Services Agency, the federal government's purchasing arm, did not respond to a request for comment.

The arrangement was discovered in April 2020 after Rothman, meaning to email a Supply King employee about a $599,600 FEMA contract for the company, instead notified Complete Packaging, his then-employer.

At trial, Mitev argued that Rothman’s work at Supply King USA directly took sales away from Complete Packaging while he was still on that company's payroll.

"He's got a confidentiality agreement that's undisputed," Mitev said. "It clearly prohibits direct or indirect competition. So it's even more brazen. He just didn't think he was going to get caught. And if he got caught, he didn't think he was gonna get punished for it."

By Robert Brodsky

robert.brodsky@newsday.com@BrodskyRobert

Robert Brodsky is a breaking news reporter who has worked at Newsday since 2011. He is a Queens College and American University alum.