SFX Entertainment Sued, Co-Founders Claim They Were Ripped Off
Three men, Paolo Moreno, Lawrence Vavra, and Gabriel Moreno, say they were co-founders of SFX Entertainment [SFXE] and did not receive the founders' shares they say they were promised. They claim CEO Robert Sillerman had no real knowledge of the EDM space and depended on them for awareness and evaluation. They filed a lawsuit in Los Angeles and yesterday SFX responded with a one line "no comment" press release. Given how nasty such legal battles can become, often hinging around a handful of emails and remembered statements, this could be a difficult, though certainly not crippling concern for SFX.
SFX Entertainment is being sued in the case titled "Moreno v. SFX Entertainment Inc., 14-0880, U.S. District Court, Central District of California (Los Angeles)." According to Bloomberg coverage, the three plaintiffs claimed they were "frozen out" after helping the company figure out who to acquire.
According to Bloomberg:
"The three men suing allege that Sillerman had no experience in the industry when they met with him in early 2012, and that he was to provide financing for the venture. They claim they identified and helped obtain seven of the eight 'principal assets' SFX listed in its Securities and Exchange Commission filings in support of the IPO.
The complaint is said to include the following statement:
"Had they known that Sillerman’s true intentions were to use plaintiffs’ strategy, information, connections and access for his own gain, without granting plaintiffs any significant ownership interest in the venture, plaintiffs would not have entered into any agreement with Sillerman, and would not have undertaken to execute on the strategy for the benefit of SFX."
In response, SFX Entertainment released a press release stating only:
"We will have no comment, other than to say we will vigorously defend this baseless lawsuit."
Well, this should get messy.
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