A court-appointed receiver has taken control of a Bonita Springs-based producer of direct-mail coupon magazines after it defaulted on nearly $12 million in loans from a business partner.

Michael Shaun Boylan is no longer running Capitol Color Mail Inc. as president and director. He and his company face several lawsuits for monies owed to vendors.

The biggest lawsuit comes from Quad/Graphics Inc., a Wisconsin company that did the printing for Capitol Color.

In its lawsuit, Quad/Graphics alleges it’s owed more than $17 million, mostly tied to two loans it provided to Capitol Color in 2006 and 2008.

Quad-Graphics pushed for an emergency appointment of a receiver in hopes of getting at least some of its money back. A judge agreed to it in late May.

“I don’t know what happened. I don’t know why they didn’t get paid,” said Fort Myers-based accountant Gerard McHale, the receiver.

“Something doesn’t fit right,” he said.

McHale doesn’t see much value left in the company, which at one time boasted it was North America’s largest publisher of direct-mail coupon magazines.

“I don’t see any real assets,” he said. “I think at this point in time, it’s which creditors will get what.”

Capitol Color, 9240 Bonita Beach Road, mailed billions of direct-mail magazines and other advertising inserts and discount offers annually. Quad/Graphics has taken over much of that business, producing seven publications since the receiver took over in May.

Neither Boylan or his attorney could be reached for comment. He left the company a few days before the receiver stepped in.

“I’ve never met the man,” McHale said. “He’s not appeared in court or anything.”

The loan agreements gave Quad/Graphics first priority security interest in everything owned by Capitol Color, from equipment and inventory to deposit accounts and investment property. On top of the loans, Quad/Graphics says it’s owed more than $6 million for goods and services in the lawsuit.

Quad/Graphics sued to foreclose on the collateral.

Also named in the lawsuit as a defendant is Optical Experts Manufacturing Inc., a duplication and printing company that has a $300,000-plus judgment against Capitol Color, McHale said.

Boylan was the sole shareholder of Capitol Color. The company had about 15 employees.

Boylan has not responded to the complaint. He was found in contempt of court in June for sending out an e-mail to his customers advising them that he had moved part of his business to a new company known as “M Clips USA,” which is not associated with Capitol Color. That was in direct violation of the order appointing the receiver and he was ordered to “cease and desist” and to retract the e-mail.

Quad/Graphics alleges that there were fraudulent money transfers made by Capitol Color to Boylan.

In an affidavit, Patricia Rydzik said she became Quad/Graphic’s main financial contact with Capitol Color.

About a month after Capitol Color defaulted on the loans, she said she received the company’s financial statements, which showed nearly $2.7 million in cash distributions were made to Boylan from 2006 through the end of 2008. Distributions, she said, continued after the defaults notices were given.

In her deposition, Rydzik also noted the company’s high expenses. Capitol Color spent more than $711,000 on travel, entertainment, conferences, recruiting and lodging in 2008 — more than double its gross profit for the year. In 2008, it also paid an average of $2,300 a month for cell phone service for eight employees and paid its information systems manager more than $100,000 for 20 hours of work a week, she said.

In 2007, Boylan received a salary of $500,000 and he made $422,310 in 2008, in addition to the cash distributions that he took from the company, Rydzik said.

She said Capitol Color owes more than $515,000 to more than 30 vendors. At least three vendors have taken legal action, including American Express and Scottsdale Resort & Conference Center.

Capitol Color’s revenue declined by more than 30 percent in 2008, she said, after some customers decided to take their business elsewhere, in part due to poor customer service.

“Certainly it appears that something went wrong here somewhere,” McHale said.

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