Couple denies fraud allegations

The founders of a decorative tile company are vigorously refuting securities fraud allegations from the Montana Auditor's Office.

Frederick "Fritz" Keck and his wife, Sydnee Keck, responded to the allegations Tuesday, saying that financial problems with the Bigfork-based Style N' Tile business were the result of a rift with partners and a change in management.

Sydnee Keck said she and her husband are fully cooperating with the Auditor's Office.

"We've turned in all the information and we have nothing to hide," she said. "We've done absolutely nothing wrong."

Montana Auditor John Morrison is alleging that the Kecks - along with Flathead Valley residents Louise Tidwell and James Coolidge - "committed securities fraud when they made material omissions and misrepresentations to at least 22 investors of Style N' Tile, LLC."

The Auditor's Office complaint alleges that $1,156,750 has been solicited from investors since 1998, when the Kecks started the business with the idea of manufacturing kiln-fired tiles with murals depicting famous art work by artists such as Van Gogh and Norman Rockwell.

"Most of the investors received promissory notes that were not registered with the Montana State Auditor's Office," a press release from the Auditor's Office states. "As the promissory notes came due, instead of paying the terms of the note, Style N' Tile rolled the investor's funds into new promissory notes or convinced the investor to convert their note into an LLC membership interest."

Sydnee Keck said there were never as many as 22 investors, and the most that has been invested is closer to $900,000. She also challenges other allegations in the state complaint.

Keck said she and her husband have not been involved with management of the business since November 2006 because of a rift that developed with Tidwell, Coolidge and other "membership" investors.

"They decided to get Fred out of the office and have it run by the members and they hired Jim Coolidge to do it," Keck said.

In an e-mail to the Inter Lake, Fred Keck said he and his wife were "basically locked out of the office except for one occasion since then. The plaintiff members wanted a new general manager so they chose Coolidge and the results are obvious. The LLC also has a serious issue with Tidwell as well."

Sydnee Keck said the business office essentially has been closed since last September, and she and her husband have been swamped with calls since then. The company had been doing business with major retailers such as Lowe's.

Coolidge, contacted by the Inter Lake Tuesday, said he is consulting an attorney and eventually expects to respond to the allegations.

"Obviously, I would not agree with the Kecks and I think that will come out," he said.

Tidwell, listed in the state complaint as an "unregistered broker-dealer salesperson" for Style N' Tile, could not be reached for comment.

The 16-page auditor's office complaint cites a series of written correspondence from the Kecks, Coolidge and Tidwell to investors identified only by initials.

The Auditor's Office is seeking restitution from the four respondents in the case, including 10 percent annual interest for each of the investors as well as a $5,000 fine for each alleged violation of the Montana Securities Act.

The auditor's action resulted from a complaint filed last September by Elizabeth O'Halloran, an attorney representing six investors in Style N' Tile.

Reporter Jim Mann may be reached at 758-4407 or by e-mail at jmann@dailyinterlake.com