commercial real estate<\/a> contractors, according to the complaint. IAP then acquired Auzmet in 2021, its first major acquisition and\u00a0the largest company in IAP\u2019s portfolio by far, seeking outside investment to do so. The lawsuit then alleges that though the revenue of\u00a0IAP\u2019s portfolio companies couldn\u2019t support additional acquisitions, the pair continued to seek outside investment and debt financing to acquire more companies while representing to IAP\u2019s board and lenders that its portfolio companies\u2019 financials were strong.\u00a0<\/p>\nWinton and Gifford then approached the board multiple time for cash\u00a0infusions, citing cash shortfall emergencies, unexpected due to IAP\u2019s purportedly strong financials,\u00a0the lawsuit says. They also allegedly took out two loans totaling more than $1 million to fix cash problems and make payroll that they never disclosed to the board.<\/p>\n
The board sought additional financial oversight, but this prompted Winton and Gifford to present manipulated financial information more often, the complaint alleges. Manipulation occurred primarily by recognizing revenue well before it actually materialized and associated costs were incurred by not entering negative revenue calculations into financial documents, per the complaint. For example, in 2024, they presented 2024 earnings before interest, taxes, depreciation and amortization as $5.5 million, when accounting for the manipulation and undisclosed liabilities, it was actually a multimillion-dollar loss.\u00a0<\/p>\n
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Further, the suit alleges, Winton and Gifford used these inflated revenue metrics to increase their salaries and bonuses, in addition to other methods of improper enrichment.\u00a0<\/p>\n
Auzmet whistleblowers reveal misconduct<\/p>\n
These transgressions were discovered when, as part of the increased oversight, IAP\u2019s board directed Gifford to reduce costs and eliminate redundant positions at Auzmet. It also sought recommendations from now CEO of IAP Bob McNally on how to improve cash flow issues. Instead of following these directives, in May 2025,\u00a0Gifford unilaterally, and without cause,\u00a0demoted Auzmet CEO and founder Jesse Ross to a sales-only position, elevating a man Gifford knew was recently accused of workplace sexual harassment in Ross\u2019 place, the complaint alleges. The board was not informed of this move or of the harassment claim against the new CEO.<\/p>\n
In June upon discovery of Gifford\u2019s actions related to Auzmet, the board terminated him as CEO for insubordination and Winton was stripped of his co-president title, the complaint says. McNally was appointed CEO of IAP, and whistleblowers within Auzmet informed him of their financial misconduct. After an internal investigation, Winton and Gifford were fired for cause in August. The board also bought back their equity in the company worth $0 due to profit-related contract stipulations.<\/p>\n
\u201cThe Court should declare that Winton and Gifford\u2019s conduct, as\u00a0described herein, constituted bad faith, were not in the best interest of the Company,\u00a0and constituted fraud, gross negligence, and\/or willful misconduct,\u201d the complaint asks. Ryan Winton is also named in the lawsuit for allegedly aiding and abetting Gifford and Michael Winton\u2019s acts.\u00a0<\/p>\n
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Meanwhile, the defendants have sought a motion to dismiss the lawsuit and countersued in February for indemnification. Court documents claim Winton and Gifford were initially demoted without cause, and then terminated on \u201ctrumped up charges,\u201d per court documents, with the company \u201crefusing to pay Gifford and Winton what they were rightfully owed.\u201d\u00a0<\/p>\n
Fallout<\/p>\n
IAP\u2019s complaint alleges that once the improper accounting practices were accounted for in an analysis last fall, it was discovered that IAP was on an unsustainable path, with costs outpacing revenue. In its bankruptcy filing, IAP estimated that it had less than $50,000 in assets and between $10 million and $50 million in liabilities.<\/p>\n
Meanwhile, Ross resigned from Auzmet in April, which he announced in a social media post<\/a>. While he declined to comment on the closure of the company as it related to IAP, he addressed the layoffs.<\/p>\nArticle continues below this ad<\/p>\n
\u201cMy focus has been on the almost 200 people who have been left without a career with no warning and assisting\/supporting finding new homes for them. I must commend the broader professional Texas community and businesses across the nation which those business leaders who have reached out to me personally and taken a large portion of the team already,\u201d he wrote. \u201cI\u2019ll continue to support and advocate for the incredible people that made up that team (not the private equity group) and 11 years of my life.\u201d<\/p>\n
A lawyer for IAP declined to comment, while lawyers for Winton and Gifford did not respond.\u00a0<\/p>\n