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Flemming fights back in lawsuit

Kathleen Flemming was fired in August as CEO of Waterford Village Bank, a business she started, with no explanation given.

Late on Wednesday, she fired back, filing a lawsuit against her former employer, its new CEO, its chairman and its chief financial officer, accusing them of unlawful termination, defamation of character, slander, libel, and breach of contract.

The lawsuit, filed in State Supreme Court, denounces the alleged actions of new CEO Orrin Tobbe, Chairwoman Lisa Wardynski and Chief Financial Officer Kim S. Destro. Tobbe was hired in August to replace Flemming.

The suit charges that Wardynski worked to have Flemming fired from her $200,000-a-year job after Flemming complained about Wardynski's husband displaying inappropriate behavior with bank employees. The suit also claims bank officials then disparaged her in comments to customers, in media interviews and in published reports.

It also accuses the bank of violating two contracts with Flemming, including her employment agreement. And it claims their actions led to the loss of her employment and income, and caused injury to her reputation.

The suit includes claims of inappropriate "sexually-related" behavior by Wardynski's husband, and inappropriate relationships by Destro and another unidentified individual. The suit claims Flemming was fired after she brought these allegations to Lisa Wardynski and then placed Destro and the other individual on probation.

The suit seeks more than $460,000 in damages, plus other compensatory and punitive damages.

Tobbe declined to comment, saying "I haven't been served and haven't talked to counsel."

But he said he stood by the claims he has previously made regarding Flemming. He also stressed that none of the allegations "have anything to do with funds in the bank or stealing or fraud or anything else."

Wardynski, a primary target of the suit, refused to comment, while Destro did not respond to a request for comment.

Flemming's attorney said the suit outlines reasons behind Flemming's firing.

"This is what happened, and this is why we believe she was terminated," said Joseph J. Manna, partner at Lipsitz Green Scime & Cambria LLP. "The proof will be at trial and -- we believe we can prove everything we said in that complaint."

The lawsuit provides illumination into the events surrounding Flemming's sudden dismissal from the Clarence-based startup bank that she founded less than two years earlier.

According to the lawsuit, the situation deteriorated rapidly after Flemming received complaints from employees and customers about the chairwoman's husband, Raymond "Skip" Wardynski, regarding inappropriate behavior with employees.

Flemming also claims in the lawsuit that she received "repeated" complaints from employees and customers about a "hostile work environment."

The suit says Flemming met with Lisa Wardynski on Aug. 5 to alert her of the complaints and demand her husband cease any inappropriate activity with bank employees. Eight days later, Flemming was fired, which she claims Lisa Wardynski sought and directed.

Asked for his reaction to the allegations, Skip Wardynski said late late Thursday that "You'll never hear Skip Wardynski sling mud . . . [but] I found in my lifetime that desperate people do desperate things. . . . I treated all male and female employees of Waterford Village Bank with respect, dignity and courtesy. . . . I never, ever acted in an inappropriate manner at Waterford Village Bank, and I pride myself in that."

The suit claims that the bank unlawfully terminated Flemming and violated the terms of her three-year contract by asserting she had broken federal banking regulations.

According to the lawsuit, Lisa Wardynski told Flemming that she had violated Regulation O of the Federal Reserve Board by obtaining credit beyond what was permitted by the rule. The rule governs loans to executive officers and insiders, which can't exceed $25,000 or 5 percent of the bank's capital and surplus without board approval.

But Flemming denied any such violation and also insisted in the court filing even if there was a violation, it was not "willful" or done with her knowledge, as required for termination under her employment agreement. Her attorney said in an interview that the bank gave her 24 hours to answer some questions in writing about certain transactions and allegations, but they fired her before she could respond. As a result, she is seeking at least $400,000 in base salary owed to her.

"They used the Reg O excuse as a pre-text to fire her," Manna said. "To my knowledge, I don't know if anybody's pursuing this or if there's anything to pursue. I don't know what federal regulators are doing."

The lawsuit also claims the bank violated a subsequent October agreement in which Flemming agreed to turn over her rights to the Waterford trademark in exchange for cash, forgiveness of a loan and $60,000 if the bank raised $3.5 million in a private offering she had launched. But the bank later abandoned the offering. The agreement also contained "non-disparagement" agreements.

Manna said Flemming has been unable to find work because "they've defamed her so much in the business," and said some of her banking contacts advised her to take legal action "to clear her name."

e-mail: jepstein@buffnews.com

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