Glendale-based Johnson Controls Inc.’s board of directors says chief executive officer Alex Molinaroli’s involvement with a Ponzi schemer has no relevance to the company.
Molinaroli was listed in West Palm Beach, Fla., court transcripts as one of a large number of investors who loaned money to Joseph P. Zada of Grosse Pointe Shores, Mich.
Zada was found guilty in September of 15 counts of mail fraud in a $50 million Ponzi scheme that spanned 10 years, according to a press release issued by the Southern District of Florida United States Attorney’s Office.
The court transcripts state Molinaroli gave Zada “millions of dollars” since 2006 and also that Zada lived in a Michigan mansion owned by Molinaroli.
Despite his connection to Zada, the JCI board of directors expressed confidence in the CEO.
“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,” said Bill Lacy, a Johnson Controls board member (and former CEO of MGIC Investment Corp.), in a 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.”
“Like many others, Mr. Molinaroli was a victim of Zada’s scheme, not an accomplice,” added Fraser Engerman, director of global media relations for Johnson Controls. “He has not benefited from it in any way. While Zada may have utilized some funds from Molinaroli’s loans to support his legal defense, it was always Molinaroli’s hope that this would ultimately facilitate repayments to all victims – including himself. As with the other unfortunate victims in this matter, Mr. Molinaroli continues to hope but no longer expects he will recover his losses.”
This is not the first scandal involving Molinaroli since he became CEO of Wisconsin’s largest public company in 2013.
He was found to have failed to comply with the company’s ethics policy in late 2014 when he engaged in a relationship with a consultant for the firm. As a result, his fiscal year 2014 Annual Incentive Performance Program payment was reduced by 20 percent.
At a recent public speech in Milwaukee, Molinaroli declined to address his “personal issues.”
Molinaroli has undertaken a massive overhaul at the company.
Over the past two years, Johnson Controls has sold its $3 billion automotive electronics business to Visteon Corp.; sold its HomeLink business to Gentex Corp. for about $700 million; entered a joint venture with SAIC’s Yanfeng Automotive Trim Systems Co. Ltd. for automotive interiors; acquired Hart & Cooley Inc.; entered an air conditioning joint venture with Hitachi Appliances Inc.; sold its Global WorkPlace Solutions unit to CBRE Group Inc.; and announced plans to spin-off its automotive business from the rest of the company. The yet-to-be-named spin-off company will be based in Milwaukee, he said.
The change in the company has been dramatic, Molinaroli said, and employment has gone from 172,000 when he took the reins to 130,000 today
