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TSR says former CEO took trade secrets, proprietary material

Christopher Hughes, former CEO of TSR Inc., sued

Christopher Hughes, former CEO of TSR Inc., sued the company in March, claiming it was trying to avoid paying him severance; the company has filed a counterclaim. Credit: Danielle Silverman

The former chief executive of TSR Inc. put more than a quarter million dollars on a corporate credit card and emailed trade secrets and other proprietary material to his personal account, the computer staffing company said in a legal filing.

The counterclaims come after the former CEO, Christopher Hughes, filed a lawsuit in state Supreme Court in Manhattan for more than $1 million in March, charging that the Hauppauge company terminated him to avoid payments under his severance agreement.

Shelly L. Friedland, a member of Hughes' legal team, said the allegations in TSR's counterclaim are "baseless and illustrate further that TSR is looking for grounds to avoid paying the severance to which Mr. Hughes is entitled."

She said the allegations would be answered more specifically in a future filing.

Hughes' lawsuit said that he submitted a resignation letter on March 2 and was entitled to payments equal to two times his $400,000 base salary and two times his bonus for the fiscal year.

In a Securities and Exchange Commission filing, TSR said it gave Hughes written and oral notice that he was terminated for cause at the end of February.

The counterclaims, filed in May, said that between December 2019 and January 2020, Hughes, without "proper authorization," sent more than 100 documents from his company email account to his personal email account, violating TSR policy.

Hughes is "actively pursuing the acquisition" of another company, described as "Company A," and plans to use the documents to compete with TSR, according to the counterclaims.

"Company A was an acquisition target of TSR while Mr. Hughes was employed with TSR," the filing said.

TSR is seeking a court injunction barring Hughes from using any confidential information in efforts to acquire that company.

The filing also said that from 2017 to 2019, Hughes charged more than $250,000 in expenses to his company credit card, including some that "appeared to be personal expenses" and many that were not "verified with proper documentation."

Emails seeking additional comment from the attorneys for TSR did not elicit an immediate response.

Hughes attempted unsuccessfully to fend off a group of dissident shareholders who held about half of TSR shares and sought management changes.

Hughes and four other TSR directors resigned from the board when the company failed to meet a Dec. 30 deadline to buy out the dissidents' stock holdings for $6.25 per share.

Hughes served as CEO beginning in July 2017, when his father and company founder Joseph Hughes retired.

Christopher Hughes was succeeded as permanent CEO by Thomas Salerno effective March 23. Salerno had been managing director of TSR Consulting Services, the company's IT consulting subsidiary.

Shares of TSR closed up 4.25% Monday at $3.50, but remained far below their 52-week high of $8.88 reached in February. 

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