Warren Buffett has been whitewashing his spotty role in the Benjamin Moore fiasco.
That’s the charge against the folksy billionaire from a number of the paint brand’s independent dealers — including a Big Apple-based operator that has smacked the company with an explosive lawsuit.
Gus and Andrea Giannopoulos, whose Brooklyn-based Capital Paint Supply began selling Benjamin Moore products in 1995, say Buffett turned a blind eye as the upscale label used ruthless, underhanded tactics to milk them for cash during the Great Recession.
“Everybody is talking like Warren Buffett is the good guy here, swooping in to fix this problem,” Gus Giannopoulos told The Post. “But all of this started happening on his watch.”
In addition to breaking contracts for inventory-financing programs, the suit filed in New Jersey Superior Court charges that Benjamin Moore execs demanded payments for advertising that never materialized.
Company reps even bad-mouthed Giannopoulos to clients behind his back as they opened competing stores nearby and tried to steal away wholesale accounts, the suit alleges.
Officials at Benjamin Moore and Berkshire Hathaway, Buffett’s Omaha, Neb.-based investment vehicle, didn’t respond to requests for comment about the suit, filed in January.
In a February response, Benjamin Moore’s lawyers denied the charges and countered by alleging that Capital Paint Supply had violated financing and advertising agreements.
Forced to shutter four of its nine locations in New York and New Jersey as it scrambled for cash, Capital Paint Supply isn’t alone, said Harold Goldmeier, a Harvard-trained professor of finance at American Jewish University. He said his family faced a similar clampdown in 2008 as Benjamin Moore dealers in Chicago, forcing them to exit.
“That’s the flip side to being a hands-off manager,” Goldmeier said, referring to Buffett. “I know people who went to Omaha and tried to see him. Their response was, ‘We don’t mix with the daily operations.’”
Since the recession, Goldmeier estimates that more than 60 family-owned stores closed throughout the Midwest, formerly a stronghold for the brand.
After acquiring the 130-year-old, Montvale, NJ-based company in 2000 for $1 billion, Berkshire Hathaway began extracting a yearly dividend of about $150 million, insiders said.
Pressure to deliver the cash mounted after the credit crisis in 2008, and ex-CEO Denis Abrams opted for hardball tactics, severing old dealer relationships as he squeezed the century-old distribution network, dealers say.
“They did everything on a handshake, and eventually they took advantage of it,” said Mike Fleck, whose New Jersey-based Flexpaint stores saw Benjamin Moore pulled abruptly from their shelves four years ago.
The strategy backfired as dealers switched to other brands and an initiative to expand company-owned stores flopped. Last year, excluding acquisitions, annual revenue was about half the 2005 peak of $1.1 billion, sources said.
“I used to call them the ‘Paint Nazis,’” said Frank Harrelson, a Charlotte, NC-based dealer who ended a 32-year relationship with Benjamin Moore this spring after reps demanded that he throw competing brands out of his store. “You hate to see them coming in the front door.”