PEKIN, Ill. (WMBD) — There’s blood in the water at Reditus Labs in Pekin.

Reditus Laboratories CEO Dr. Aaron Rossi is being sued by his business partner, Dr. James Davie, of Davie and Associates Dermatopathology, P.A.

The medical enterprise is co-owned by Rossi and Davie, of Texas. Last week, Rossi was indicted on federal charges related to tax fraud that are not associated with the business.

However, related to business, Rossi is being sued for the right to access accounting information, in which Davie alleges he was not privy to any of the financial documents associated with the company. The second charge alleges Davie was purposely excluded from the company, despite being an owner and having the right to information regarding the company. Davie is requesting Rossi be expelled and removed from Reditus Laboratories.

The third count is for the dissolution of Reditus, for reasons related to the two charges above.

The lawsuit was filed on Feb. 3, 2021 at the Tazewell County Courthouse. However, court records show the problems had been stirring for quite a while before the lawsuit was filed.

According to court documents, despite the pair being partners at Reditus, Rossi has a bigger share. In February 2019, Rossi and Davie were introduced by a mutual acquaintance for the purpose of opening a laboratory.

The pair then involved a third individual, Greg Cooper, to join the team. An agreement was made that each of them would own 1/3 of the business.

By July, talks had progressed, and it was understood Davie would act as the lab director once his Illinois medical license was approved. He already had a medical license in Texas.

However, things took a turn on July 3 when Davie allegedly discovered Cooper was no longer able to be part of the group due to financial constraints. Instead, Rossi obtained his share and then owned 2/3 of the business, while Davie continued to only have 1/3.

Court documents also allege that during that same month, Davie found out that he would not be acting laboratory director, as Rossi made the decision to hire someone else without Davie’s consent. That person would not start their job until October and would be temporary in the position until Davie received his Illinois medical license.

Because Davie’s practice is in Texas, he was not licensed to practice in Illinois at that time.

Despite the setbacks, Davie continued with the business and even purchased nearly $45,000 in equipment for the laboratory. On July 31 at a meeting in Pekin, Davie and Rossi signed an agreement that Davie would officially serve as lab director and Rossi would be the business manager for Reditus Labs.

The lab started officially on that same day, but Davie alleges in his lawsuit that JIT Labs in California and AIT Labs in Texas prepared and processed patient lab specimens for Reditus Labs for the first several months, because Reditus was not yet ready to perform the processes necessary.

“It was the professional services provided by Davie and Associates Dermatopathology, P.A. during this time, together with the technical component services of JIT Labs and AIT Labs, which generated the income for Reditus Labs.”

As found in the complaint filed by Davie

The lawsuit continues to say it was understood that Davie would not be reimbursed for the other laboratories conducting the tests, but instead, that money would be additional capital for Reditus. That equated to approximately $130,434.

Between the dates of Aug. 8, 2019, and Sept. 3, 2019, Davie continued to make payments, even transferring $50,000 in cash to various accounts related to Reditus. Court documents state Davie is not aware of any contributions made by Rossi or his company, Reditus Healthcare, to the greater good of Reditus Laboratory.

By the fall of 2019, the pair began to argue over how the lab would run, and by October, Rossi made the decision to hire Dr. Adam Quinn of Tazewell Pathology Group to serve as the lab director. In the original agreement, Davie would be the lab director. This was not honored.

Davie received his Illinois medical license on Oct. 24, but Rossi refused to reinstate him as the director.

This began a series of events where Rossi attempted to exclude Davie from operations. The lawsuit alleges Rossi:

  • Failed and refused to provide financial statements
  • Failed to garner Davie’s input and approval when hiring staff
  • Told staff they did not have to listen to Davie or follow his instructions
  • Changed the coding for the billing operations so that Davie could not access them
  • Refused to pay vendors, including JIT and AIT Laboratories, both of which were retained by Davie
  • Established a bank account in Davie’s name in order to trick vendors into depositing the money into that account and not to Davie’s actual account in Texas
  • Refused to refund the money deposited into the account back to Davie
  • Brought on another partner in 2019 which diluted Davie’s ownership percentage
  • Refused to provide financial statements to Davie and instead threatened to sue him in an attempt to get Davie to surrender his ownership to Rossi for, “less than the fair value”

In January 2020, Rossi emailed his attorney, and a copy to Davie, stating, “the partnership was no longer working for him,” and that he wanted to, “seek the dissolution of Reditus Labs,” while threatening unspecified legal action against Davie.

Instead, Rossi’s attorney offered Davie a buy-out price of $50,000. Because Davie had already sunk more than $220,000 into the business, he declined the offer.

Rossi then threatened to sue Davie to get him expelled from Reditus Labs by forfeiting his ownership and seeking to recover alleged damages from Davie on, “bogus and contrived claims of conversion and breach of contract.”

On May 7, 2020, Rossi made good on the threat and filed suit. Davie’s lawyers claim the allegations were made in an effort to intimate Davie into selling or surrendering his 1/3 share of the company to Rossi for less than the actual and/or fair value.

However, on June 30, Rossi’s lawyer offered to pay Davie $100,000 for a buy-out, but Davie refused. In December, Rossi’s lawyer offered $500,000, but Davie refused a third time.

Over the course of the COVID-19 pandemic, Reditus Labs performed more than 1.4 million PCR tests and made approximately $2 million a week. Additionally, it’s expected the income tax liability to Davie and the other owners/members for the years 2020 and 2021 will be significant.

The tax liability for the year 2020 that Davie will have to pay is expected to be more than $500,000 alone.

Despite the profits Reditus Labs boasted, Davie’s lawsuit alleges no distributions were made to him in the years 2020 and 2021. As a result, Davie has not been provided any money to cover his expected federal and state income tax liabilities.

Furthermore, the lawsuit claims Rossi, who is listed as the manager of both Reditus Labs and PAL Health, an orthoses company in Pekin, diverted “significant sums” of cash from Reditus to PAL in order to cover payroll. Those funds were then used to give Rossi both an inflated salary at both locations, allegedly.

Rossi is also the owner of AJR Brands, a print design laboratory, which is located inside PAL Health. At this time, AJR Brands is not affiliated with the lawsuit.

WMBD has reached out to Reditus Laboratories Vice President of Communication Paul Swiech, but has not heard back.

Rossi will appear in court on Wednesday, March 23 at 2 p.m.