Bend mayoral candidate Brian Douglass is in a legal dispute with his son and daughter-in-law, a Bend-La Pine Schools board member, over fallout from a failed business partnership in a company that organizes the Cascade Lakes Relay, among other races.

The fallout from their failed business partnership led Douglass’s son and daughter-in-law to file an injunction to force the elder Douglass to stop disparaging them in emails and social media posts.

Douglass has accused his son, Scott Douglass and his daughter-in-law, Carrie McPherson Douglass, of committing bank, business and mail fraud. Douglass alleges the couple in 2011 diverted $185,000 from the family’s Smith Rock Race Group, LLC to the couple’s Cascade Lakes Race Group, LLC.

Douglas described their action as a “hostile takeover” that led to the dissolution of Smith Rock Race Group, according to a June 15 filing in Deschutes County Circuit Court.

Scott Douglass and his wife deny the allegations and are surprised Brian Douglass is revisiting their failed business partnership, which ended in May 2011 with a mediated settlement agreement.

“Everything was legally signed in 2011 in mediation,” Scott Douglass said. “We considered it a done deal and moved on. Unfortunately, he has not been able to do the same.”

The settlement agreement included a non-disparagement clause.

Brian Douglass has reportedly broken the clause on multiple occasions, including making negative comments about McPherson Douglass during her 2016 run for the Bend-La Pine Schools board.

On Aug. 2, the couple filed the injunction to stop Brian Douglass from making disparaging comments. In the court filing, they detail various examples of his behavior.

In 2016, Brian Douglass sent a disparaging email to Pamela Hulse Andrews, the founder of Cascade Business Publications, trying to prevent McPherson Douglass from being nominated to the “Business Leaders 40 & Under” list, according to court records.

Brian Douglass also disparaged the couple in a public Facebook post, court records state.

The couple sent Brian Douglass a cease and desist letter in October 2016 and warned him that if he kept making disparaging comments they would seek legal action. But he continued, and sent disparaging emails to a Cascade Lakes Relay vendor and McPherson Douglass’ father, court records show.

“It is my belief that the disparaging comments being written and made by defendant Brian Douglass are designed to inflict emotional harm on my wife and me, as well as interfere with our business and public service opportunities,” Scott Douglass wrote in court records.

A part of the 2011 settlement agreement was an arrangement that let Brian Douglass continue to live rent-free at a house owned by the couple. The couple is now seeking to have Douglass evicted, according to their request for an injunction.

Scott Douglass and McPherson Douglass have not formally responded with a court filing to Brian Douglass’ allegations of fraud. But they included information in their request for an injunction that paints Brian Douglass as the one who controlled the family company’s finances.

Brian Douglass was responsible for managing the fiduciary part of Smith Rock Race Group and controlled the bank accounts. He was not properly performing his duties, including being delinquent by six to eight months in fiduciary reporting, while expensing many meals and goods and services that were not business related, according to court records.

Brian Douglass declined to speak publicly about the complaint he filed about his son and daughter-in-law, but he said he denies the claims that he acted disparagingly toward them.

They have the right to be critical, he said.

“It doesn’t hold water in my opinion,” he said.

Brian Douglass maintains he is the victim of a “hostile takeover.” He has suffered from post-traumatic stress disorder from the alleged crimes and has sought a mental health counseling, he wrote in court documents.

Both parties are scheduled to appear in Deschutes County Circuit Court in September to discuss the request for an injunction. Brian Douglass is expected to argue the injunction should not be issued against him.

— Reporter: 541-617-7820, kspurr@bendbulletin.com

Editor’s note: This article has been corrected. The original version misstated the nature of the dispute between the Douglass family members and the financial arrangement for Brian Douglass to live in a home belonging to Scott Douglass and Carrie McPherson Douglass. The Bulletin regrets the errors.