War Heats Up Between Mesa, Atlantic Coast

Furthermore, ACA said that Mesa executives, including Ornstein, began selling their shares in September, before the announcement of the takeover attempt. According to SEC filings, a number of Mesa executives and directors sold shares between Sept. 8 and Sept. 24, with Ornstein selling more than $2 million in stock, or 175,000 shares, over that span.

"These sales of Mesa's shares by Mesa's directors just prior to the announcement of Mesa's proposed transaction involving ACA are in contrast to their ebullient view of Mesa's future," said ACA, in its complaint.

However, Ornstein, who held 110,000 Mesa shares as of Sept. 24, has a history of being active in the shares. From Feb. 20 to March 10 of this year, when shares were around $3, Ornstein bought 51,000 shares of the company. With Mesa shares having more than quadrupled in the six months from the time Ornstein bought shares to the time he began selling in September, the stock trades may have been profit-taking.

Not-So-Independent Board

Lastly, ACA maintains that the board of directors Mesa wants to install lacks independence and engages in self-dealings that would impair its fiduciary responsibility to ACA shareholders. And while Mesa has moved to make its board more independent, questions still remain.

According to a story in the Oct. 13 edition of the Washington Post, Ornstein and board members George Murnane and James Swigart are involved in partnerships that do business with and profit from Mesa. The story said other directors, notably Herbert Denton (a Mesa board member and owner of investment bank Providence Capital) and Joseph Manson (a Mesa board member and law partner at Piper Rudnick) have also profited from their closeness to the company.

In reaction to the allegations that his board was less than independent, Ornstein vowed to make changes and on Monday announced that Murnane would be removed from the board and replaced by Robert Beleson, former chief marketing officer of Avolar, a division of United. But Swigart, Denton and Manson remain board members.

"Seven of Mesa's nine directors have had, and upon information and belief, continue to have, outside business relationships with Mesa, including highly lucrative consulting contracts, which compromise their independence and taint their judgment," said ACA in its complaint.

On Tuesday, investors boosted shares of both companies. Mesa was up 40 cents, or 3.9%, at $10.80 in afternoon trading, while ACA was up 30 cents, or 2.8%, at $11.05.