Former Sunrise Executive Sues Firm

Ex-Finance Chief Says He Was Fired Out of Retaliation

Sunrise Senior Living's former chief financial officer, Bradley B. Rush, yesterday sued the McLean assisted-living company, claiming that it fired him in May in retaliation for his uncovering improper accounting practices.

In a complaint filed with Fairfax County Circuit Court, Rush claimed breach of contract and defamation. The complaint alleges that Sunrise's senior management "initiated a public and private campaign to defame Mr. Rush directly and through innuendo." It says the company suggested that he destroyed documents to make it appear as if he was responsible for the accounting troubles.

The lawsuit claims that management did so out of concern that Rush's work would thwart efforts to sell the company to private investors, a deal potentially worth millions of dollars personally to company executives and directors.

Sunrise spokeswoman Meghan Lublin called Rush's allegations "nonsense."

"The reasons why Mr. Rush's employment as CFO was terminated for cause, including his actions inconsistent with the company's document preservation directives, as previously disclosed by the company, will be demonstrated in the litigation," Lublin said in an e-mail. She said the company will "vigorously contest this legal action."

Sunrise, which has said accounting errors could cut earnings by $120 million to $125 million from 1999 through 2005, has been the subject of shareholder complaints and a Securities and Exchange Commission investigation. The company said in July that because of its sagging share price, it would seek "strategic alternatives," including a possible sale. Sunrise, which runs 453 communities in North America, Canada and Europe, has not filed financial statements on time since March 2006.

In his lawsuit, Rush said discussions to sell the company began much earlier. He said that company officials grew increasingly impatient with the progress of his work to clean up the accounting issues and that pressure mounted after he participated in a meeting in January or February in which chief executive Paul J. Klaassen and President Thomas B. Newell described discussions they had with investment banks and other potential investors about taking the company private.

Klaassen, the lawsuit alleged, encouraged Rush and others at the meeting to have "convenient" memories if asked about the discussions. When Rush protested to the general counsel, the campaign against him escalated, the lawsuit contends.

Rush said in the lawsuit that he was pressured to complete his investigation and eventually was questioned by a law firm hired to conduct an internal investigation of the accounting irregularities. The firm asked him about what had happened to one of two laptops he had been issued. At first, he said he did not recall where it was, the lawsuit said. Later, he said, he found it at home. When he gave it to the law firm, he had deleted all its files, insisting that the company already had all his work-related files. Everything else was personal, such as his tax returns, personal passwords, music and photos, the lawsuit said. He claimed that the company had told him that he did not have to turn over personal files and materials.

Sunrise said in April that it decided to suspend Rush with pay for taking actions "not consistent with the document retention directives issued by the company." He was fired in May.

Rush's lawsuit seeks compensation for damage to his reputation and prospects for his career and earnings. When Rush was fired, he lost the option to purchase large amounts of Sunrise stock, incentive plan benefits, and a bonus award, according to the lawsuit.

Sunrise this month named Richard J. Nadeau as chief financial officer. Nadeau was previously chief financial officer of the mall developer Mills Corp., where he oversaw a restatement of financial results and the company's subsequent sale to Simon Property Group and Farallon Capital.