Complaint alleges CEO and board members have neglected their duties.
In what is the latest in the continuing saga of Live Current Media, its former CEO and other plaintiffs have filed a lawsuit (pdf) against current CEO Geoffrey Hampson and each of the company’s board members. The lawsuit was filed in the Circuit Court of Cook County, Illinois in the Chancery Division.
The suit goes after Hampson for alleged fraud, breach of contract, breach of fiduciary duties, and unjust enrichment. Its claim against the board is for breach of fiduciary duties through gross mismanagement, waste of corporate assets, and misappropriation of corporate opportunities. The suit alleges that the three board members are all either friends or business associates of Hampson.
Live Current Media owns and operates a number of category-killer domain names, such as Perfume.com, but has sold many of its domains over the past two years to raise money.
At the crux of the complaint is that Hampson did not devote all of his time to running Live Current Media, despite alleged assurances to outgoing CEO David Jeffs that he would do so. Jeffs had grown the company to over $9 million in revenue in 2007 when he brought in Hampson to run the business.
The complaint alleges that just three months after signing his employment contract with Live Current, Hampson formed another company called CoreLink Data Services, LLC. It alleges that Hampson has spent “substantial amounts of his time and Live Current’s resources traveling for and working to build up CoreLink”.
The plaintiffs point out several questionable decisions by Hampson:
-directing the company to pay a bonus of $1 million to Jonathan Ehrlrich to become president of the company in 2007
-hiring his girlfriend (who the plaintiffs say had little or no internet experience) to run Perfume.com, the only division of the company that was earning a profit at the time of her hiring
-causing the company to spend money to move its headquarters to Chicago so that it would be nearer CoreLink’s headquarters.
The complaint also cites a couple “disastrous” decisions by Hampson, including:
The complaint says that Since Hampson joined the company the market cap has dwindled from $46 million to just $1.8 million today.
The plaintiffs want at least $50 million in damages.
On May 21 Live Current Media filed with the SEC to sell more shares in the company. Its filing mentions the lawsuit, but says none of the parties have been served.