The Wall Street Journal is reporting that three dance music industry veterans are suing Robert F.X. Sillerman, the founder of SFX Entertainment, and Sheldon Finkel, the company's vice chairman. They are alleging that they were defrauded out of stock valued at more than $100 million.
From the WSJ:
In the suit, the plaintiffs allege that they met with Mr. Sillerman in January 2012 to propose a venture that would "identify, acquire, consolidate, and operate assets" in the electronic-dance-music industry. Mr. Sillerman agreed to "partner" with them, according to the suit, offering to provide financial backing while the plaintiffs used their connections to make seven of the company's eight key acquisitions. Those eventually included Mr. Estopinal's promotion company, Disco Donnie Presents; Tomorrowland festival operator ID&T; and Beatport, a digital music store for DJs.
The suit alleges that Mr. Sillerman in emails promised a joint partnership in which the plaintiffs would receive 2.5 million "founders shares" of SFX, along with stock options, cash and operational control of the company.
The article goes on to say that the defendants continued working on SFX's behalf into 2013 believing that they were, but never received their promised shares or compensation for their work.
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In a joint statement, the plaintiffs say "after doing all the leg work to create the company, we brought on Sillerman as a strategic partner... Once on board, he squeezed us out of SFX, using our business strategy for his financial benefit and defrauded us out of millions."
SFX spokesman Ed Tagliaferri has responded by stating the company "will vigorously defend this baseless lawsuit."
SFX is an United States based media conglomerate that focuses on electronic dance music events, including New York's Electric Zoo and Atlanta's TomorrowWorld festivals.
Source: The Wall Street Journal