Dallas investor Jared Caplan filed a lawsuit on July 17 against University Board chair Lily Sarafan ’03 MS ’03, accusing her of fraudulent inducement, fraud by nondisclosure, negligent misrepresentation and unjust enrichment.
A statement to The Daily from Sarafan’s legal counsel — Kirkland & Ellis partner Jeremy Fielding — called the allegations “meritless” and “a PR stunt designed to pressure a multimillion-dollar settlement by exploiting Ms. Sarafan’s public profile.”
Caplan claims that as a smaller investor within the Home Care Assistance (HCA) franchise network, he was defrauded by Sarafan, who was the CEO of HCA until November 2020. Caplan seeks monetary relief of over $1 million.
Caplan invested in HCA, an in-home healthcare service for seniors, in 2015. Tad Smith, Sarafan’s successor, rebranded the company as TheKey in 2022, with a stated aim of elevating health and quality of life for seniors.
Caplan claims Sarafan secretly built TheKey to replace HCA’s franchise system, defrauding him of investments in time, effort and money that were necessary to build his franchise office.
In a statement sent to The Daily, Kirkland & Ellis partner and counsel to Sarafan, Jeremy Fielding, said that Caplan’s dispute stems from “repeated attempts to coerce a buyout of his business using threats and intimidation.”
According to the 22-page lawsuit, Caplan claims that Sarafan built a corporate network through a “bait-and-switch” scheme to induce Caplan into a business agreement. He asserts that Sarafan had waited for him to incur the costs and risks of investment before forcing a sale of his franchise back to TheKey at a steeply depreciated price, yielding a 20% to 25% profit margin for the corporate network.
“[Sarafan] had HCA approach the franchisees about buying out their franchise at depressed prices before they could become too successful,” Caplan wrote in his petition to the Dallas County Court.
Sarafan partnered with private equity firm Summit Partners in building TheKey, which Caplan characterized as being part of an underhanded strategy to build a competing corporate model.
“Now that Ms. Sarafan has turned the tables in pursuit of the corporate, private equity funded business model of TheKey, the HCA brand and support for those efforts has been aggressively diminished,” Koddie Bennion, one of Caplan’s attorneys, wrote in a statement to The Daily.
Bennion added that Sarafan had perpetrated “fraud and broken promises.”
In Caplan’s original petition, he said that his North Texas franchise had been valued at $20,975,400. HCA valued the franchise below $4,000,000.
According to the statement by Fielding, Caplan’s dispute stems from “repeated attempts to coerce a buyout of his business using threats and intimidation.”
“We are confident the court will find the allegations to be meritless and resolve the matter in our favor,” he added.
This article has been updated to clarify the length of Sarafan’s tenure as HCA CEO and better contextualize Fielding’s statement.