The board of auto supplier Johnson Controls Inc. has expressed support for CEO Alex Molinaroli following news reports and legal proceedings that detailed extensive financial ties between Molinaroli and a convicted Ponzi schemer.
In a statement, lead director William Lacy said Molinaroli has the board's “full support.”
The Milwaukee Journal Sentinel reported last week that a federal fraud case against Joseph Zada showed Molinaroli provided him with millions of dollars over several years and allowed him to live rent-free in a Grosse Pointe Shores, Mich., mansion the CEO had purchased.
“The board is confident that Alex Molinaroli's involvement in the Zada case is an unfortunate personal matter that has no relevance to Johnson Controls,” Lacy said in the statement. “Alex has the board's full support as chairman and CEO. Under his leadership the company has delivered strong operating results while simultaneously undergoing a strategic transformation designed to drive future growth.”
Separately, a JCI spokesman said Molinaroli still is scheduled to participate in the company's fourth-quarter conference call Thursday. JCI is in the process of spinning off its automotive seating and interiors businesses to concentrate on its building controls operations.
Johnson Controls, based in the Milwaukee suburb of Glendale, Wis., recently spun off its interiors business into a joint venture with Yanfeng Automotive Trim Systems Co. of Shanghai and it is in the midst of a plan to spin off its massive auto seating operations into a separate public company.
Over the weekend, Molinaroli, 56, told the Journal Sentinel that he had given Zada money to invest, although he also said he did not know Zada well and did not know how his money was to be invested.
He said he informed the board of the matter Friday, after the Zada ties were outlined in the first Journal Sentinel story. Molinaroli told the paper the board is “concerned” about him but added he feels his job is secure.
In their case in U.S. District Court in Florida, U.S. prosecutors said Molinaroli paid Zada's legal fees and offered to pay up to $20 million to provide restitution to people who lost money in the scheme. Zada was convicted on 15 counts of fraud.
Molinaroli confirmed to the newspaper he had paid legal fees but said the payments were supposed to be loans. He also said he discussed the matter of paying restitution to Zada's victims but stopped short of offering to do so.
The Zada controversy comes a year after the board lowered Molinaroli's $20 million pay package by $1 million after he admitted to an affair with a consultant who was doing business with JCI. The affair led to a messy, public divorce with his ex-wife, Patsy.
Molinaroli became acquainted with Zada in 2006 through his ex-wife's son, John Shealy, according to the Journal Sentinel. In 2013, Shealy pleaded guilty to charges related to a federal investigation of a large synthetic marijuana production ring.