Founder of Frequency Electronics files $40M suit against the company
Martin Bloch, former chief executive of Frequency Electronics Inc., is seen at the Uniondale office in 2011. Bloch's suit alleges that the company's directors began looking for grounds to terminate him and came up with a "farcical" case. Credit: Barry Sloan
The founder and former chief executive of Frequency Electronics Inc. has filed a $40 million lawsuit that charges board members sought to push him out and strip him of benefits and compensation as part of a scheme to take the company private.
The lawsuit, filed by Martin B. Bloch, 84, in State Supreme Court in Mineola, names the Uniondale company, current CEO Stanton D. Sloane and four other board members as defendants.
The lawsuit calls for Frequency Electronics to pay damages, fees and costs of more than $40 million, a sum greater than the $39.4 million in revenue the company posted in 2018, which made it Long Island's 37th largest public company.
In a government filing, the company and the directors named in the lawsuit denied the allegations.
The maker of precision timing devices used in satellites, missiles, drones, GPS devices and communications networks has about 280 employees worldwide and 140 Long Island jobs as of 2018.
Steven Shore, a Manhattan attorney who is representing Bloch, said company memos will help prove the case of his client, who founded the company in 1961.
"Martin Bloch was this company," he said.
Patrick Robson, a Manhattan attorney for Frequency Electronics, said he was unable to make a public statement without clearance from his client.
Shares of Frequency Electronics, which in March won state and Nassau County tax breaks worth more than $1.15 million to expand its Uniondale facility, closed up 1.6% to $9.40 Thursday.
The lawsuit, filed Jan. 28, cited a memo from board member Richard Schwartz, former CEO of defense contractor ATK, purporting to show consideration of how to avoid paying Bloch as much as $9 million should the company change hands:
"This is a big problem … I believe that the Change of Control does not apply to MB voluntary [sic] leaving FEI. I think his contract is weak on this point."
The lawsuit said that the directors began looking for grounds to terminate Bloch and came up with a "farcical" case, charging that Bloch "defrauded" the company by putting family members on the company insurance plan. The company also charged that he received unearned vacation pay.
The lawsuit said that directors denied Bloch documents or information about the allegations against him.
Bloch resigned in a letter "effective 1:00 p.m. January 27," according to the lawsuit. That same day, the company announced that it had terminated Bloch as chief scientist and removed him from his position as executive chairman, though he remains on the board.
The government filing said that Bloch would not receive "any severance or deferred compensation in connection with his termination."
The company's Securities and Exchange Commission filing was accepted at 5:15 p.m.
Bloch resigned as president and CEO in May 2018, but continued as chief scientist.
That opened the way for Sloane to become president and CEO.
The Voyager II space probe, which has exited the solar system in the 43 years since its launch, continues to transmit signals back to earth using a Frequency Electronics product, the lawsuit said.
Ken Schachter covers corporate news, including technology and aerospace, and other business topics for Newsday. He has also worked at The Miami Herald and The Jerusalem Post.
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