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SFX Entertainment Sued. Did Robert Sillerman Cheat Alleged Co-Founders?

SFX Entertainment may be in hot water for alleged stock fraud.

SFX Entertainment is a media conglomerate founded by Robert Sillerman back in June 2012, which focuses on the electronic dance music industry. Earlier today, it was reported that three men by the names of Paolo Moreno, Lawrence Vavra, and Gabriel Moreno have filed a suit in federal court in Los Angeles claiming they gave Sillerman the idea to combine several electronic dance music festivals and promotion companies into what is now SFX Entertainment. Thus, defrauding them out of stock worth more than $100 million.

The suit also alleges that Sillerman promised the plaintiffs 2.5 million “founders shares” and joint partnership of SFX, as well as stock options, cash, and operational control of the company. 

According to the complaint, “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”

"After doing all the leg work to create the company, we brought on Sillerman as a strategic partner," the plaintiffs said in a joint statement. "Once on board, he squeezed us out of SFX, using our business strategy for his financial benefit and defrauded us out of millions."

In an email statement, it is said that SFX will fight the suit.

[H/T http://online.wsj.com]

Photo credit: Fabian Holt