Owner's affair divides family, costs Twin Cities fan business millions

Charles Barry says it felt as if he were presiding over his own hanging.

About halfway through a special board of directors meeting this spring, the chairman and chief executive of one of Minnesota's largest privately owned companies asked for a motion for his own termination.

"There's no sense of playing games with this," Barry said, according to a transcript of the meeting. "Why don't you go ahead and read it."

Minutes later, he was out of his $3.5 million-a-year job at Twin City Fan Companies, a global supplier of air-moving equipment.

Votes to fire Barry came from his three adult children, including his son, Michael, who had raised allegations that Barry improperly spent millions of dollars. His ex-wife, Melanie, who divorced him after learning some of the spending went to Barry's longtime mistress, abstained.

Now the five members of the Barry family are fighting over who should be in charge of the family business, a manufacturing company that employs 1,500 people in five states, including 300 at the firm's Plymouth headquarters.

"Nobody wanted this to happen," said Michael Barry, 54, longtime president of Twin City Fan. "When that meeting was over, we were crying. It was the saddest day of our life."

Charles Barry, 76, has denied that any of his spending was improper and sued the company and his immediate family members, who have filed counterclaims over his "greed and self-dealing."

At the center of the feud is the relationship between Charles Barry and his new wife, Kathleen Bryan-Barry, who has received at least $11 million in support from Charles Barry since the two secretly began a romantic relationship in 2000, according to court records.

Family members have accused Charles Barry of misusing corporate resources to support Bryan-Barry, a charge Charles has repeatedly denied. Charles Barry has accused his ex-wife and children of using the affair to shove him out of the company.

"It really is Shakespearean," said veteran lawyer Bill Mauzy, who represents Charles Barry. "It's sort of like King Lear, with the conniving sisters getting rid of the king and taking over his kingdom."

Over the past four decades, Twin City Fan grew from a small machine shop in Minneapolis into one of the biggest makers of industrial fans in the United States.

The business was founded in 1973 by Charles Barry's father, Benjamin, a welder who dreamed of someday making his children wealthy. Charles bought into the business in 1975 with $50,000 borrowed from his wife's family.

The company grew rapidly. With annual sales of $275 million, its products range from small exhaust fans for bathrooms to large blowers that move air in automobile and steel factories. Some sell for more than $2 million.

In the past six years, Charles Barry received a total of $23.1 million in salary and bonuses, according to court records.

He and Melanie became big contributors to philanthropic causes, including $5 million to the Jewish Community Center in Minneapolis. In 2012, a street near Beth El Synagogue in St. Louis Park was renamed Barry Street in the family's honor.

"In the Jewish community, [the family situation] is big gossip," said Sandra Barry Lieberman, Charles' sister. "Everybody in Minneapolis is just rolling their eyes."

As they grew older, Charles and Melanie Barry began shifting ownership of the business to their three children. Charles and Melanie, 75, each now own 26.6 percent of the shares.

The three children control 46.8 percent — enough to challenge Charles in a dispute.

Kathleen was trying to organize a cosmetics company in 2000 when a mutual friend introduced her to Charles as a potential investor. The company never got off the ground, but within months, the two were involved in a romantic relationship, Kathleen said in a recent deposition.

"I was very much treated like a loving spouse, the love of his life," Kathleen testified, adding that Charles also treated her three daughters as if they were his own.

Kathleen, 59, testified that she depended on Charles for almost all of her living expenses. He bought her a $2.8 million home on Lake Minnetonka, a 5-carat engagement ring and four Range Rovers. He spent more than $1 million on her failed retail venture, House of 365, in Wayzata. He also covered college expenses for her three daughters and bought them five horses, one of which cost $143,000, court records show.

Over the course of their relationship, Charles testified, he spent at least $11 million to cover Kathleen's expenses, including trips to Africa, China, France and England.

In December 2016, 12 days after Charles and his wife divorced, Charles married Kathleen on a cruise from Singapore to Sydney, Australia.

Michael Barry knew about his father's relationship, but he said he did not share the information with his mother for years. Charles said he believes Michael sat on the information until he could use it.

That moment arrived in 2015.

In June, the family accepted an offer to sell Twin City Fan to a major competitor in Maryland, which agreed to pay about $450 million in cash and stock.

The deal fell apart when the buyer's stock price collapsed, but an internal document produced as part of Twin City Fan's due diligence revealed a previously unknown problem: millions of dollars of questionable expenditures by Charles Barry, including Kathleen's frequent use of a corporate plane, court records show.

Michael authorized a full-scale investigation. In a legal filing, he said his position in the company gave him a responsibility to act.

Charles Barry said he first learned of the probe in January 2016, when he was contacted by Minneapolis attorney Sam Kaplan, a former U.S. ambassador to Morocco and a longtime family friend. Barry said Kaplan suggested his best move would be to step aside and let Michael take over before things turned "nasty."

"I was being extorted," Charles said.

Michael said he hoped that Kaplan would help his father find a "dignified" way to exit.

"We asked [Sam] to help solve this problem quietly and with a high level of respect," Michael said in a recent interview. "But Chuck wasn't really interested. He loves litigation."

Charles said he believes his son's investigation was part of a scheme to force him out. Just a few months before the meeting with Kaplan, he said, Michael told him he was "tired of being the prince" and felt it was "time I become king."

In July 2016, Charles agreed to take a leave of absence while investigators hired by the board looked at the evidence. Ten months later, the investigators submitted their report.

For Charles, the findings were devastating.

Lead investigator James Gilbert, a former Minnesota Supreme Court justice, found that Charles Barry had violated his duties by unilaterally giving himself large bonuses and taking other actions that harmed the company.

Some of Gilbert's harshest criticism involved Kathleen's use of a corporate jet. Since 2011, Kathleen and her guests used the leased plane on more than 120 trips without Charles. Gilbert found that those trips cost the company $2.8 million, and he recommended that Twin City Fan take legal action to collect.

"These flights had no conceivable connection to TCF business," Gilbert said in his report, noting that Charles "took affirmative steps to conceal the fact Ms. Bryan was using the plane."

Altogether, Gilbert found that Charles Barry owes the company $21.1 million, which Charles disputes. That figure includes $3.2 million in compensation that exceeded the terms of Charles' employment contract, as well as millions of dollars in unpaid loans.

Charles maintains that Kathleen's flights were a proper use of his fringe benefits, and he denies doing anything wrong at Twin City Fan. He said his only regret is that he didn't divorce his wife more than 10 years ago. Melanie Barry sued for divorce in April 2016.
"I could never pull the trigger, and the reason was my family," Charles Barry said. "How could I do that to them?"

Two weeks after Gilbert filed his report, the Barry family assembled in a downtown Minneapolis law office for the special board meeting.

As it ended, Charles Barry couldn't restrain his bitterness.

"I started this company 40 years ago with the help of my brother-in-law," Barry said, according to a transcript of the May 18 meeting. "We worked together. We struggled through the hardest of times, nearly went bankrupt a couple of times. … To have my children use my gift to them as a way to take vengeance on their father, shame on you."

The board named Michael Barry chairman and CEO. Family members said Charles has only himself to blame.

"The deceitful actions of my ex-husband of 55 years have been emotionally and financially devastating to me and my family," Melanie Barry said in a written response to the Star Tribune. "I had no knowledge that he was living a double life and betraying me, our family-owned business, our three children and seven grandchildren. Those of us that were closest to Charles Barry have learned the hard way that his word cannot be trusted."

A Hennepin County judge encouraged family members to settle the dispute at a 2016 court hearing, suggesting that a buyout of Charles' shares may be the best solution.

"I gather you folks have had a really rough time, and I'm sorry to hear about this," Judge Bruce Peterson said at the hearing. "The more I hear about this history … the sadder I am that families get into these situations. I know it's not the easiest for anybody."

Jeffrey Meitrodt • 612-673-4132