SANTA ANA — An Orange County chocolatier, who has named some of her recipes after her late father, television talk show host Morton Downey Jr., was cheated out of her share of a chocolate-making company, an attorney told jurors Tuesday, Sept. 19.
The defendants in the lawsuit claimed Xan Confections never earned a profit.
The dispute is whether chocolatier Tracey Downey-Racen is owed a share of profits from the company she owns with Susan D. Johnson and her daughter, Kerry Johnson Anthony.
Johnson and Johnson Anthony, owners of Susan’s Healthy Gourmet in Irvine, teamed up with Downey-Racen in 2009. Susan’s Healthy Gourmet is a nutritious meal-delivery service.
Downey-Racen’s attorney, Rose Amezcua-Moll, told jurors in her opening statement that her client’s partners were guilty of “roundtripping,” meaning they offloaded debts from Susan’s Healthy Gourmet into Xan Confections to keep it from yielding a profit and to get a tax write-off.
The two had to put substantial loans into Xan Confections to keep it afloat, but Amezcua-Moll said, “Was it truly a loan? Where did some of the money come from? The defendants have actively tried to withhold this information.”
If Johnson and Johnson Anthony “did nothing wrong then the quickest out is to show the financials,” Amezcua-Moll said. She claimed “no invoices were ever created to show a proper paper trail on how these businesses were run.”
Downey-Racen is alleging a breach of fiduciary trust, meaning her partners did not attempt to help Xan Confections, but Susan’s Healthy Gourmet instead. When Downey-Racen originally filed suit she alleged her recipes were stolen, but a judge has since ruled those belong to Xan Confections.
Downey-Racen also originally claimed she was cheated out of her one-third share in Xan Confections, but a judge ruled she is an equal partner.
Jurors will consider allegations that Johnson and Johnson Anthony attempted to cheat Downey-Racen out of her ownership share.
Attorney Vasko Mitzev, who represents Susan’s Healthy Gourmet, said Downey-Racen was the deceitful one in the partnership. He said the plaintiff was…