Former Penticton mayor ordered to pay $800K for dipping into family business cash

Former Penticton mayor John Vassilaki has been ordered to pay his family business $800,000 after a judge found he’d paid himself and immediate members of his family excessive salaries for years.

According to a March 19 BC Supreme Court decision, Vassilaki used company money to pay three sets of management salaries to his immediate family, which was “demonstrably unnecessary” given the small size of the business. He also took $20,000 to pay his personal income tax bill, and used company money to pay for his personal stamp collection.

Justice Kenneth Ball said Vassilaki had “simply refused” to obey his fiduciary responsibilities to the business and this was coupled with his “intransigent insolence,” which was so egregious that it was impossible for him to continue working there.

The court’s ruling is one of numerous legal battles Vassilaki has been involved in regarding family-owned businesses.

In 2023, Vassilaki was ordered to pay his brother Nick $14,000 in damages after he physically assaulted him in 2020.

Vassilaki sat on Penticton council from 2002 to 2014, and was mayor from 2018 to 2022.

In the current case, Vassilaki initiated the proceedings, suing for unfair dismissal when he was let go as the manager of the family liquor store in 2023.

However, his brother Nick countersued, saying Vassilaki had helped himself to the company’s money, which was why he’d been fired.

The decision says Vassilaki was paying himself $84,000 a year to manage the Last Call Liquor Mart, although he appears not to have done much.

“(Vassilaki) rarely stocked shelves or worked at the till but he spent most of his time at work watching television in his office,” Justice Ball said in the decision.

The liquor store was majority owned by Vassilaki and his brother Nick, with their children owning the rest of the shares. Vassilaki’s son, Fred, along with Nick’s children, Florio and George, managed the liquor store’s day-to-day operations, with Vassilaki in charge.

However, Vassilaki didn’t like answering the phone, and taking orders by phone was given to other employees.

“(Vassilaki) also did not have computer skills and, as a result, he did not process orders or handle any tasks that required the use of a computer,” the Justice said.

He did, however, dip into the company’s cash.

“(Vassilaki) admitted that he was obliged to deal with the monies held by (the company) as a fiduciary, and not rely on the monies… as a personal financial backstop,” the Justice said. “In a business with a total of nine employees, (Vassilaki) placed three of them in managerial positions paying well above the going rate given their duties and responsibilities in the liquor store.”

The decision says Vassilaki refused to hold a shareholder meeting and kept the company’s finances away from Nick and other members of the family.

“Had Nick and Florio known of the amounts being paid to (Vassilaki’s wife, son, and daughter-in-law) they would have put an immediate stop to the payments. As they were unaware of the payments, their ability to stop such conduct was not within their capacity,” the Judge found.

In 2020, Nick warned Vassilaki to seek board approval for pay increases.

“His misconduct persisted despite this warning,” the Justice said.

In 2023, Vassilaki’s brother hired a law firm specializing in internal workplace investigations, which uncovered what had taken place.

“(Vassilaki) displayed serious insolence towards Nick and the other shareholders through various statements made… during the interview and investigation process,” the Judge said.

After the investigation took place, Vassilaki was fired.

The decision says Vassilaki admitted to much of the alleged misconduct and didn’t deny that the company had just cause for firing him. However, he argued the company had condoned his conduct.

Judge Ball said the company hadn’t condoned his actions and that he’d deliberately concealed the removal of the funds. 

“(Vassilaki) has also acted, by hiding his acts, in a conflict of interest which was both substantially and procedurally unfair to (the company) through his undisclosed personal loans, payment of personal expenses and the excessive or unearned wages,” the judge said.

Ultimately, the Justice ordered Vassilaki to pay the family company $814,681.

His brother Nick now has 30 days to argue that the court should order punitive damages as well.