Matthew T. Cone breached his fiduciary duty of loyalty to his employer in 2016 and was restrained and enjoined by the court for doing so, court filings show. These actions by Mr. Cone constitute another disqualifying set of behaviors for a potential member of the SBISD Board of Trustees.
Earlier this month, Save SBISD uncovered unseemly financial practices by Mr. Cone in 2021, wherein he defrauded a lender by selling heavy equipment to a third party that he had pledged as collateral against over $650,000 in loans. Later, Mr. Cone defaulted under his forbearance agreements with that same lender in order to free up cash buy a house in Bunker Hill.
Adding to these disqualifying factors, in 2016, Matt Cone’s former employer, EE Systems, was awarded a restraining order and permanent injunction against Matt Cone by a Harris County District Court Judge. These court orders prevented Mr. Cone from conducting business in thirty-one Texas counties for two years. The orders were the result of Mr. Cone’s breach of his fiduciary duty to EE Systems, amongst other dishonest practices.
Matt Cone’s behavior was so egregious, we will be shocked if any reasonable person can continue to support his candidacy for SBISD Board of Trustees. Currently, Mr. Cone is endorsed by SBISD Trustee John Perez, and has formal financial backing from Spring Branch Families PAC for which Tom Stokes and Mary Chamberlain serve as Directors.
The story of Matt Cone’s breach of his fiduciary duty unfolds like this.
EE Systems leases and services generators to oil and gas companies for use at their pad sites and production facilities.
Matt Cone joined EE Systems as an employee in 2014. Matt Cone worked as a leasing agent for EE Systems, earning $65,000 for his efforts in 2015.
After just over one year of employment by EE Systems, Mr. Cone decided to compete with them directly in that market. But Mr. Cone did not leave EE Systems after making that decision. In fact, while still employed by them, Mr. Cone used EE Systems’ equipment, resources and intellectual property for months to recruit customers, suppliers and financing to his new venture.
When EE Systems found out on October 15, 2016 they terminated Mr. Cone on the spot. They filed suit two weeks later against Mr. Cone for:
Breech of fiduciary duty
Breech of the duty of loyalty
Misappropriation of trade secrets
Breech of confidentiality
The Judge signed a restraining order against Mr. Cone and his new company hours later.
These court filings show the following timeline of events:
Mr. Cone incorporated his own generator leasing company on Aug 5, 2016, while still employed by EE Systems:
Mr. Cone’s new company, Weston Oil & Gas, now needed inventory, customers, and financing.
Around that time, Mr. Cone contacted a generator supplier to procure six (6) generators for Weston O&G, but did so from his EE Systems email account. The supplier was happy to oblige this potential new customer, but suggested Mr. Cone “Put your PO on your own letterhead” as opposed to EE Systems letterhead, which he had used by mistake:
Also around this time, Matt Cone reached out to Allegiance Bank requesting financing for the $252,000 his new company Weston O&G would need to purchase the generators. Mr. Cone clearly used EE Systems’ equipment and computer systems for this action by his separate business. In fact, he pulled EE’s financing request letter template off an EE Systems server, and changed only the letterhead at the top, but NOT the letterhead at the bottom! What a fool:
In his final and most brazen act against his employer, EE Systems, Matt Cone solicited a customer, Teal Natural Resources, to his new business, from his employers computer and email account, and under the cover of a site visit by his current employer EE Systems:
The Master Services Agreement Matt Cone attached to this email was NOT for his employer, EE Systems, but rather for his new personal venture, Weston O&G. We know this because Bill Knox and Teal Natural Resources returned a signed MSA with Weston in October:
The attached document read, in part “This Master Services Agreement is made effective…by and between TEAL OPERATING LLC…and WESTON OIL & GAS SERVICES LLC”:
Signed by Matt Cone:
For the same Teal Natural Resources pad sites Mr. Cone referenced in his August 2016 email and visited as an employee of EE Systems:
This transaction was finalized on October 13, 2016. Matt Cone was STILL EMPLOYED by EE Systems on that date and should have been working for THEM. Instead, he stole a $250,000 transaction from EE Systems for his own benefit.
This speaks volumes about Mr. Cone’s trustworthiness (or lack thereof) in a position of responsibility. Mr. Cone did not hesitate to ignore his responsibilities to his employer, and acted in overt and brazen fashion to enrich himself. This is a clear breach of his fiduciary duty to EE Systems, specifically the duty of loyalty.
Additionally, the fact that Mr. Cone couldn’t even keep his letterheads straight speaks to his overall competence.
What would you do if you discovered that one of your employees had stolen a $250,000 contract from you for their own personal benefit? Probably the exact same thing EE Systems did.
EE Systems terminated Matt Cone’s employment within 48 hours of Mr. Cone signing this deceptive agreement with Teal Natural Resources:
After digging into his emails and discovering proof of Mr. Cone’s deceptive practices, EE Systems sued Matt Cone on the evening of November 2, 2016:
The suit alleged that:
“Mr Cone operated a competitive business and diverted business opportunities until his scheme was discovered and he was terminated,”
Mr. Cone “owed a fiduciary Duty to EE during his employment and was required to place its interests above his own.”
“By directly competing against EE while employed by it, Cone breached his fiduciary duty owed to EE, resulting in lost profits for EE,” adding, “Cone was unjustly enriched by his actions.”
The Plaintiff sought a temporary restraining order enjoining Mr. Cone from soliciting their customers, another temporary restraining order preventing Mr. Cone from using its confidential information against EE Systems, and a permanent injunction after a trial on the merits:
The Judge signed a restraining order the next morning. This TRO prevented Mr. Cone from “engaging with or working on matters associated with those EE customers about which confidential information was misappropriated”, among many other things:
Within weeks, and with EE Systems seemingly having Mr. Cone dead to rights on his behavior, the judge issued a PERMANENT INJUNCTION on Mr. Cone and Weston O&G. That document enjoined Mr. Cone from conducting business in the entire Eagleford Shale, an oil and gas field covering thirty-one (31) counties in south Texas:
The order went on to prohibit Mr. Cone from continuing to breach his fiduciary duty as it related to customers of EE Systems:
A complete copy of the executed permanent injunction is linked below, along with all the other relevant documents in this case.
As we said above, this prior behavior is completely disqualifying for a candidate for SBISD Board of Trustees. How can the electorate trust Mr. Cone to act in the district’s best interests when he has shown no hesitation to put his own financial gain above those who have entrusted him? It is clear that we cannot.