SAN FRANCISCO -- Ecast Inc. said it has been unfairly targeted by two lawsuits filed by two investor companies, including one backed by actor Danny Glover. According to press reports, the plaintiffs claim they were collectively defrauded of $28 million by Ecast co-founder and former chairman Mouli Cohen.
Reportedly, all of the funds were paid to Cohen personally. The plaintiffs said they made initial payments of about $6 million for Ecast stock that Cohen was supposed to secure for the "investors." However, they charged they never received the promised stock. They also alleged that most of the $22 million they subsequently paid went toward such expenses as transaction fees and European taxes on the investors' supposed "profits" from Ecast's soaring stock value, among other costs, which were spurious.
Both Cohen and Ecast are named in the suits. Ecast attorney Christopher Sundermeier portrayed Ecast as a victim as well, saying it never got any of the alleged investment funds from plaintiffs, or knew about the alleged investment scheme, and that Cohen was promising to sell his personal stock in the company. Sundermeier said Ecast has filed a motion petitioning the court to dismiss the claims against it.
Sundermeier also said Ecast will cross-file a complaint against Cohen, and that the San Francisco-based interactive entertainment company has had previous and "ongoing" legal problems linked to Cohen. According to two northern California news outlets, very similar lawsuits were filed against Cohen in 2003 and 2004, but were settled out of court.
According to the San Jose Mercury-News, Cohen's attorney sent the paper an email containing a strong denial of Cohen's being guilty of any of the charges.
VT was unable to reach Cohen directly for comment. This week he issued a news release promoting a new website, moulicohen.com, and a private equity innovation fund called Voltage Capital, which he now heads. The release and the website included no direct contact information.
One plaintiff is a nonprofit civil rights organization in San Francisco called Vanguard Public Foundation, co-founded by Danny Glover and run by Hari Dillon. According to the San Jose paper, Glover and Dillon in 2002 formed two general partnerships that paid more than $6 million for 2.3 million shares of Ecast stock, based on Cohen's assurances that Microsoft was about to become a major shareholder, driving share values sharply up.
The plaintiffs said they never got the promised stock and that Cohen absconded with their funds. Microsoft never invested in Ecast to VT's knowledge. Cohen resigned from Ecast on Oct. 2, 2002.
Additional plaintiffs invested through Vanguard's partnerships, including In Spirit, a nonprofit that offers aid to quadriplegics. In Spirit said it lost $300,000 that was submitted to Vanguard to invest in Ecast stock which was never delivered. Two other investors, private individuals, said they lost $800,000 the same way.
In his statement on behalf of Ecast, Sundermeier said that after Cohen's resignation in late 2002, he was never employed by Ecast and was never authorized to act on its behalf. He said Ecast reported all relevant details to the authorities after plaintiffs made their allegations. Sundermeier also expressed Ecast's sympathy for any victims of the alleged fraud.