Missouri court rules Pelopidas, Travis Brown must pay former partner $7.5 million

The breakup of a political consulting firm tied to Missouri’s most prolific Republican donor is playing out in the courts with accusations that the firm’s founder used “bogus loans” to steal hundreds of thousands of dollars from the company.

The consulting firm, called Pelopidas, closed its doors in September 2020. The Eastern District Missouri Court of Appeals ruled Tuesday that Pelopidas and its founder, Travis Brown, owe $7.5 million to Rachel Keller, Brown’s former wife and business partner. 

In the unanimous decision, the court reversed a St. Louis County Circuit Court ruling that Keller had violated the terms of a 2019 settlement in an earlier lawsuit and owed Brown and Pelopidas $408,326 in attorney fees. 

The decision is a complete victory for Keller in the court battle that turned on fine points of contract law, said John Kingston, attorney for Keller.

“The only thing going back to the circuit court is the issue of attorneys fees” for Keller as the prevailing party, Kingston said.

Neither Brian McGovern, attorney for Pelopidas, nor Ted Frappoli, attorney for Brown, responded to requests for comment Tuesday. 

Founded in 2007, Pelopidas was the main strategy arm of Rex Sinquefield, the wealthy conservative activist who gives millions annually to candidates and campaigns, generally to Republicans. From 2016 to 2020, Sinquefield made $16.1 million in political contributions reported to the Missouri Ethics Commission.

Through Pelopidas, Sinquefield pursued a personal agenda that included eliminating the personal income tax at the state level and earnings taxes in St. Louis and Kansas City.

After they divorced in 2014, Keller retained her ownership stake, with Brown as the manager and Keller on payroll drawing a salary and other benefits.

Keller filed a lawsuit against Brown and Pelopidas in 2016, the Eastern District opinion signed by Judge Kelly C. Broniec notes. She alleged “a variety of financial misconduct and breaches of fiduciary duty, including allegations that Brown used certain ‘phony loans’ to steal large amounts (of) money from Pelopidas and that he had wrongfully caused Pelopidas to terminate her employment with the company when she reported his unlawful activity.”

Kingston declined to comment when asked if Keller had spoken to law enforcement agencies about her allegations, citing non-disclosure and non-disparagement clauses in the settlement agreement.

While the original lawsuit was active, the St. Louis Post-Dispatch reported that Keller accused Brown of taking $650,000 in unauthorized distributions and diverting $600,000 of Pelopidas’ funds to businesses owned by Brown in Florida.

Sinquefield cut ties to Pelopidas in September 2020, shortly after ending a push to privatize Lambert-St. Louis International Airport. Pelopidas closed up shop shortly thereafter, with Brown taking a position with another high-profile lobbyist, former Missouri House Speaker Steve Tilley, immediately after closing Pelopidas.

Under the settlement agreement from September 2019, Brown and Pelopidas agreed to pay Keller $8.6 million in annual installments. The original lawsuit was dismissed in January 2020.

Brown and Pelopidas filed suit against Keller in February 2020, accusing her of failing to fulfill her part of the settlement by refusing to sign documents necessary to complete it. One document was an acknowledgment that she had turned over her ownership interest in Pelopidas as of the date of the settlement.

Keller filed a counterclaim, alleging the agreement was breached when she did not receive the first $1.1 million installment by April 1, 2020. Brown and Pelopidas placed the money in escrow and refused to release it until the documents were signed as they demanded.

In a footnote to the opinion, Broniec noted that the date when ownership transferred seemed to be the main sticking point between the parties.

For Keller, the issue appears to be whether the IRS would accept that the transfer occurred on the date the settlement agreement was reached instead of the date on finalizing documents, Broniec wrote.

“On the other hand, Brown appears to be mired in his belief that the parties simply agreed to an effective date of September 30, 2019, and he is sticking to it at all costs,” Broniec wrote.

Keller, on the other hand, “appears convinced that he has some nefarious objective for insisting on an effective date of September 30, 2019, which she claims is a practice he has used in the past to steal hundreds of thousands of dollars from Pelopidas via bogus ‘loans’ from the company using backdated documents.”