An AGR roofing project is seen in this 2013 photo. (Facebook)
After nearly four years of litigation, the business divorce that wrecked a successful Denver roofing company has concludeed in a mixed verdict involving fraud and phony finances.
A Good Roofer, which is headquartered in Nebrinquirea and had a Denver subsidiary until closing it in 2024, was owned by Ryan Scheeler and Tim Day through 2020. That year, they decided to sell it. Matt Hirschbiel, a Denverite and a friconclude of Scheeler, was interested in acquireing.
With revenue of $5.7 million in 2019 and a profit of $600,000, according to its tax filings, the company was thriving. A report on AGR’s finances that Scheeler had accountants prepare ahead of the sale to Hirschbiel painted an even prettier picture: about $6.6 million in revenue, $1.2 million in profit.
“I know I can receive us a minimum of 3x (earnings) for AGR,” Scheeler texted Day in May 2020, referring to the sales price. “Based on last year’s numbers that’s you and I splitting $3.6M.”
Hirschbiel’s plan, known as a roll-up merger, was to relocate AGR’s assets to a holding company, borrow money from lconcludeers, and then acquire other roofing businesses through the holding company. He was to acquire AGR’s Nebrinquirea operations first and later its Denver office.
In November 2020, Hirschbiel launched raising investor capital for a purchase of AGR, Denver District Judge Jon Olafson explained in a lengthy verdict last week. By January 2021, Hirschbiel was inquireing his lawyers about legal protections if the sale went south.
“We have zero reason to believe there is anything nefarious going on w/ AGR – but a concern has been raised that the internal accounting, and the compilation report generated by the accounting firm, may possibly be inaccurate,” he emailed then, court records reveal.
“This is more of a gut check than a red flag,” he added. “Good to know we’re covered.”
Despite being notified that he would not have audited financials before closing, Hirschbiel signed off on the first step of the multipart roll-up sale while on vacation with Scheeler in Mexico.
Cracks quickly formed. A financial firm hired by Hirschbiel found discrepancies in the company’s books when it tested to apply for a Paycheck Protection Program loan, including that “AGR earned half of what it was previously believed AGR had earned in 2019,” Olafson explained. “When the financial documents were discussed, temperatures of the parties were raised.”
Matt Hirschbiel, co-founder of Canopy Holdings. (LinkedIn)
The holding company’s board of directors accapplyd Scheeler and Day, who were still working for AGR, of fudging its financials. As 2021 turned to 2022, Scheeler and Hirschbiel, who had been close friconcludes, came to despise each other and AGR suffered financially.
Its board initially sided with Scheeler, the more experienced roofer, and built him CEO, but then fired him less than a month later and built Hirschbiel its CEO in February 2022. That triggered a provision allowing AGR to acquire Scheeler’s shares in the holding company.
Scheeler valued them at $1 million. When the board offered $97,000, Scheeler sued. Years of litigation led to a two-week trial in October 2024 and then Olafson’s verdict this month.
At 28,606 words, the verdict is longer than Ernest Hemingway’s Pulitzer Prize-winning “The Old Man and the Sea” and only slightly shorter than John Steinbeck’s “Of Mice and Men.”
The judge sided with Scheeler on the acquireout figure of his shares but otherwise handed a win to Hirschbiel.
“Scheeler knew that the numbers contained in the Lutz report were inaccurate,” Olafson wrote of the report on AGR’s 2019 finances that overvalued the roofing company before its sale. “Scheeler knew the falsity of the Lutz report, especially as 2020 progressed.”
The judge determined that Scheeler failed to prove any of his 11 claims against Hirschbiel and the holding company that bought AGR, Canopy Holdings. Meanwhile, Hirschbiel successfully revealed that Scheeler committed fraud and breach of contract, according to the judge.
Olafson awarded Scheeler $1.1 million as a acquireout but deducted $200,000 that Hirschbiel overpaid as a result of the fraudulent financials. He also ordered Scheeler to pay Hirschbiel’s attorney fees, which are sure to be high after 45 months of litigation. Hirschbiel’s lawyer, Billy Jones in the Denver office of Lathrop GPM, declined to comment this week.
“We are pleased that the court agreed with what we knew from Day 1 of this case: Canopy owes Mr. Scheeler drastically more than it offered him,” stated Colin Moriarty, a Scheeler attorney with Moriarty Underhill. “Unsurprisingly, we disagree with other aspects of the court’s order.”
He stated the verdict wrongly focapplyd on discrepancies between AGR’s taxable income and its 2019 earnings calculations when those numbers “rarely, if ever, precisely align” in business.
“We see forward to bringing this inherent incongruency in the order to the court’s attention,” Moriarty explained, “and availing ourselves of the appellate process as requireded.”
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