David Venning
CLEVELAND, Ohio - The founder of a Geauga County-based student-travel company resigned from his leadership positions with the company last year after an internal investigation found he had coerced three low-ranking Asian staff members into sexual contact with him at a company facility in Thailand, according to interviews and a confidential memo obtained by cleveland.com.
The six-month investigation, launched in March 2013, found that Henry "David" Venning, 55, as then-president and CEO of Rustic Pathways, had directed at least 10 Asian staff members to give him private, nighttime massages in his bedroom at a company facility in Thailand that sometimes led to the unwelcome sexual contact, according the memo, which detailed the investigation and was sent to top company officials in August 2013.
The internal memo, written by Carson G. Burnham, an attorney with Ogletree, Deakins, Nash, Smoak and Stewart, a Boston law firm, also laid out possible arguments that Venning's behavior could subject him or the company to criminal prosecution or lawsuits.
Some of these employees also were directed to massage Venning in his Ohio home in Lake County and during trips to various countries, according to the memo.
The employees did not report the behavior because of cultural norms forbidding negative comments against one's boss, and because Venning threatened to fire Asian staff if they talked about his "personal relationships," the investigation found. Many of the employees, who were hired to do menial jobs, came from impoverished communities, the memo states.
[Related: To learn more about how the investigation unfolded and what it uncovered, click here]
Among the findings uncovered by the investigation, according to the memo, a lightly redacted copy of which was obtained by cleveland.com:
- Two low-ranking male staff members reported being coerced by Venning into sex acts while they massaged Venning, even though the employees had told Venning the contact was unwelcome. Both employees said they were not homosexual, and that they complied with Venning due to Southeast Asian culture that strongly discourages refusing orders from "the boss." A third employee said he rebuffed Venning after Venning touched him "in an unwelcome sexual manner" including his "private area." (The third now-former employee in a message to cleveland.com praised Venning, and denied that anything bad happened to him while he worked for Rustic Pathways.)
- The three employees who the memo said had unwelcome sexual contact with Venning said Venning paid them before or afterward. The company memo described the payments as "pocket money" or "tips."
- Venning impeded the investigation by refusing to provide to company officials records from his computer, the memo said. He also admitted to deleting files from the computer, according to the memo.
- He also intimidated and disparaged an American student whose February 2013 complaint, drawn from conversations with Asian staff, launched the investigation, and pressured subordinates to stop the investigation before it was complete, according to the memo.
- Venning arranged for underage students traveling with the company to be taken to the Red Light District in Bangkok, Thailand, where, the memo said, the students witnessed prostitution and possibly witnessed sexual activity. The trip to the red light district, which the company told cleveland.com was impromptu and unsanctioned, took place during a program through which students learned about impoverished and marginalized people in Thailand.
The investigation found no evidence that any students traveling with the company were the victims of any inappropriate sexual contact.
The memo said Venning offered contradictory explanations for the massages.
But the memo said Venning maintained any sexual contact between him and subordinates was consensual, that directing subordinate employees to massage him constituted necessary medical treatment and that he could not remember the massages ever leading to sex. He also described the allegations raised by the student as "false and libelous," and threatened legal action against anyone who repeated or acted upon the facts found through the company's investigation, the memo states.
Through his Willoughby-based attorney, Michael C. Lucas, Venning refused an interview request from cleveland.com. In a written statement, Venning said:
"While I do not agree with all the findings of the investigation as they were relayed to me, I concluded more than two years ago that the best course for Rustic Pathways going forward would be for me to resign as chairman and CEO, to place my equity holdings in the company in a trust, and to step away from any operational, programming or management role at the company. That is exactly what I did. I will not be commenting any further on this matter."
The most serious possibility identified by the law firm in its memo was that Venning potentially could be prosecuted for sex trafficking by force or coercion, a federal charge with a minimum 15-year prison sentence.
The law firm suggested that prosecutors could argue Venning brought or recruited employees into situations where they could not leave the workplace without his permission, coerced them into sex acts and then paid them afterward.
"Our criminal-law experts (including former federal and state prosecutors and white-collar criminal defense attorneys) confirm that were this activity to come to the attention of authorities, it would be zealously investigated and prosecuted, and would likely be a high-profile case attracting media attention to Mr. Venning as well as the Company," the memo states. "Additional aggravating factors include the Company's core mission of philanthropy, and the fact that the parents are asked to entrust their children to this Company's care. Mr. Venning's alleged behavior and its focus on young employees (even if they all happen to be over 18 so far) suggests the risk of criminal investigation is serious, even if it has not yet occurred, which would subject Mr. Venning and the Company to serious legal exposure and scandal."
Rustic Pathways also might face potential criminal exposure related to the dissemination of harmful material to minors during the trip to Bangkok's Red Light District and for wire fraud due to the company's practice of avoiding taxes by paying some employees "under the table," the memo said.
The law firm also said that the company's Asian or American employees could have a basis to sue under various employment-related legal theories, including creating a hostile workplace, retaliation or sexual harassment.
However, the law firm said the company's Asian employees might be reluctant or unable to file a lawsuit.
"Given the deeply hierarchical culture in Thailand, and the employees' low wages, it is unlikely that any one of them will come to the U.S. and pursue a civil claim on his own," the memo states. "However, in the event that the actions taken by Mr. Venning are disclosed to the media, there is a reasonable possibility that a local law firm representing plaintiffs will attempt to entice the affected employees into filing a class-action lawsuit against Mr. Venning and the company."
The company did not report its findings to any outside authorities. The company told cleveland.com its review was not a criminal investigation, made no conclusions about the allegations it uncovered and only "outlined the broadest set of legal theories that a prosecutor might try to argue if the allegations were true."
In its memo, the law firm said wide-ranging changes within the company were necessary to mitigate legal exposure or public fallout in the event of a lawsuit resulting from Venning's conduct.
The law firm's primary recommendation: part ways with Venning "immediately and unequivocally."
About two months after the student complaint that launched the investigation, Venning stepped down as CEO and chairman of Rustic Pathways on an interim basis. Following the investigation's completion in August 2013, company officials and Venning made the separation permanent.
Today, the company said, Venning plays "zero operational role" with Rustic Pathways, in the U.S. or elsewhere. As part of the terms of his resignation, which was made official in July 2014, Venning agreed to place his ownership stake of Rustic Pathways in the U.S. into a trust, and to cede his CEO title to Chris Stakich, a Mentor native who previously had worked as the company's second-in-command.
Venning remains the full owner of the company and its assets in the United States, including the 50-acre Geauga County property that contains its company headquarters. He also holds majority or minority ownership stakes in the company's international affiliates.
Rustic Pathways is based in Huntsburg, near Chardon, and operates in 17 countries. The company arranges adventurous trips for high school and college-age students to Southeast Asia, Central America, Africa and elsewhere. The company also pursues a philanthropic mission of offering "innovative and responsible travel experiences to positively impact lives and communities around the world."
Company officials said that since the investigation began, supporting the affected employees and the alleged victims has been a top priority, which has included offering them job security. (Two of the three alleged victims have since left the company for unrelated personal reasons, company officials said.)
The law firm also recommended that Rustic Pathways meet with the student whose complaint launched the investigation. The company ended up signing a non-disclosure agreement with her. While officials declined to identify the specific financial terms, they included paying for an international trip for the student and a family member.
"We are grateful to the student who came forward to voice concerns and confident in the changes we have made over the past two years to ensure student and staff safety," said Stakich, who flew from his office in San Francisco to Cleveland for an interview for this story.
Company officials said Stakich as CEO has implemented a wide array of changes recommended by the law firm, including creating an independent board of directors, offering expanded sexual harassment training, creating a 24-hour hotline for anonymous complaints and an employee code of conduct that bars supervisors from having relationships with their subordinate employees.
Venning's separation agreement includes a monthly, lifetime retirement payment, the amount of which company officials would not disclose.
While he is not barred from accessing company properties, a written agreement between Venning and Rustic Pathways requires him to request approval 72 hours in advance of any visits, during which senior management accompanies him, according to the company. The company also said that Venning has no official interactions with rank-and-file employees, middle managers or students, but speaks regularly with senior company officials.
In April 2014, eight months after the company's investigation ended, but three months before his resignation was made official, Venning accepted a distinguished-alumni award from Western Reserve Academy in Hudson, Ohio. In an acceptance speech given to academy students, he presented himself as an emissary of the company.
Social media suggests that Venning continues to travel in Southeast Asia. He occasionally has communicated with members of Rustic Pathways' Asian staff through Facebook in recent months, according to publicly visible posts on the website.
Stakich told cleveland.com the company, which employed 500 part-time and full-time employees and provided trips to more than 8,750 students from across the world last summer, remains safe for students.
"Our number-one concern is the safety and well-being of our students," Stakich said. "Although David's alleged sexual misconduct did not involve any students, we made dramatic improvements to our staff training, hiring and onboarding programs. We also have formal policies and protocols that reflect the company's compliance priorities under new leadership."
The company has removed most references to Venning from its website. But it announced Venning's retirement in a catalog distributed to high-school students in November 2014.
The notice, appearing below a column from Stakich in which he introduced himself as the company's new CEO, described Venning's contributions to Rustic Pathways.
"After 31 legendary years, David Venning -- chairman and founder of Rustic Pathways -- is retiring," the notice reads. "David has transformed the lives of countless students, staff and friends through his dedication to helping others and his talent for creating memorable learning experiences through travel and community service. The ethos he instilled in the DNA of Rustic Pathways still inspires each staff member and program around the world. All of us at Rustic Pathways are thankful to David for what he has created and will continue to meet the high standards of excellence and innovation that he has set."
