Theres nothing like a lawsuit for airing dirty laundry. Here are some of our favorites from 2006:
Rapt executives sued Accel and Levensohn over the loss of equity. Founders claimed they were smashed down out of their equity stake by the VCs that backed their company. After we covered the story, the VC firms settled the suit.
American International Group Inc. (NYSE: AIG) sued five former members of its private equity investment team, alleging breach of contract, breach of fiduciary duty and computer fraud. The complaint came nearly nine months after AIG fired two of the defendants in a move that resulted in staff resignations and limited partner withdrawals from an already closed fund. AIG wasnt too pleased that its former employees were launching a competing fund.
Limited partner Casita LP filed a lawsuit against MapleWood Equity Partners, seeking to stop from being stripped of its investor rights after it missed a capital call.
Syncom Capital, an early stage venture firm, claimed that Sierra Ventures Managing Director Jeffrey Drazen, along with radio executive Steven Hicks and the hedge fund manager Lawrence Goldfarb, wrested control of an Internet radio startup called ClickRadio from them. Syncom alleged that the three intentionally sank the company, then scooped up its assets for next to nothing. The lawsuit didnt keep Goldfarb from launching a $1 billion venture lending fund for post-IPO companies though.
Peter Thiel and his hedge fund Clarium Capital Management were accused of fraud by the investment firm Amisil Holdings, according to a suit filed in U.S. District Court this fall.
ABRY Partners and Providence Equity Partners agreed to settle a suit over the August 2005 sale of F&W Publications just weeks before trial was set to begin in Delaware’s Chancery Court. Terms of the settlement are confidential, but PE Week obtained a letter sent to limited partners that says Providence will invest in F&W and have the right to designate a board member.
Eugenia VI Venture Holdings sued MapleWood Partners founder and Managing Principal Robert Glaser over the buyout firm’s ill-fated investment in AMC Computer Corp. Eugenia claimed it was the victim of fraud, while Glaser says the suit is a tactical maneuver meant to strengthen other lawsuits.
Former VSP Managing Director Matthew Crisp filed an explosive counter complaint against VSP General Partners John Hamm and Joanna Rees-Gallanter, who are presently co-managing VSP’s second fund for a combined salary of $1 million per year. After raising three funds over 10 years, VSP came apart in 2005, the apparent victim of infighting among its partners. After the firm’s limited partner advisory board pulled the plug on VSP’s third fund, Rees-Gallanter and Hamm sued two of the firm’s former managing directors, Crisp and Vince Vannelli, in September 2005. That suit accused Crisp and Vannelli of breach of fiduciary duty, constructive fraud, and misrepresentation.
In the story, Crisp complains: “Last week, they had a process server come to my home to serve my wife with a deposition subpoena. Deb is eight months pregnant and the last thing she needs is to be hassled by Joanna, John and their lawyer. What possible benefit do they derive from upsetting my pregnant wife?”
Draper Fisher Jurvetson and two other VC firms settled a lawsuit leveled at them by the former CEO of portfolio company Agentis International, who alleged he wasnt getting the severance package the VCs had promised him. DFJ Partner Raj Atluru and Vincent Worms of Partech International offered Jean-Yves Dexmier the CEO job at startup Agentis during the summer in 2001. The contract guaranteed Dexmier a base salary of $264,000 and benefits for 12 months after his termination and 20 days of annual vacation and payments, according to the complaint.
Thirteen private equity firms were accused of violating federal anti-trust laws, in a class-action lawsuit brought by shareholders in various public companies that have been, or soon will be, bought out. The suit alleges that the LBO firms no longer compete with one another for deals. Instead, they club up to pre-emptively shrink the buyer pool, and then drain it all together by making quid pro quo agreements, such as “We wont bid against you on this deal, if you dont bid against us on that deal.”
The founders of Web 2.0 startup RockYou (aka NetPickle)settled a lawsuit filed against them by their former employer, Iconix, which accused them of using its intellectual property as the basis for their company. The settlement came less than a week after PE Week broke the news about the lawsuit.