Industry execs “defrauded out of millions,” sue Robert Sillerman
Three industry mainstays are suing Robert F.X. Sillerman – founder and CEO of SFX Entertainment, the company that’s been rapidly acquiring companies in the EDM space – the Wall Street Journal reports today.
According to the Journal, the suit filed in federal court by the three men claims they gave Sillerman the idea of creating SFX Entertainment by rolling together a consortium of dance festivals and promoters, but Sillerman has failed to give them “significant equity” in SFX. The plaintiffs claim Sillerman and his associates are responsible for fraud and breach in contracts.
One of the plaintiffs, Paolo Moreno, has worked for ‘Disco Donnie’ Estopinal, whose Disco Donnie Presents company was acquired by SFX early in its spending spree. Another is Lawrence Vavra, an L.A.-based music manager at the helm of DECKSTAR, whose roster includes Steve Aoki, Holy Ghost!, Datsik and Infected Mushroom.
As the Journal reports: “Over the course of the year, the suit claims, Mr. Sillerman and his representatives avoided the plaintiffs’ repeated requests to formalise the deal, sending them only draft employment agreements with less favourable terms than had been agreed upon-and with no mention of the founders’ shares.”
A section of the plaintiffs’ joint statement reads: “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, used our business strategy for his financial benefit and defrauded us out of millions.” According to an SFX rep, the company “will vigorously defend this baseless lawsuit.”
Events company SFX went on a one-billion dollar spending spree in the dance music industry last year, with acquisitions including Beatport, Totem Onelove (the team behind Stereosonic), ID&T (the team behind Tomorrowland, Sensation, etc.) and many other EDM companies, in a move that saw Sillerman enter Billboard’s Power 100 this year at #52 after being absent from last year’s list.
SFX began trading on the Nasdaq stock exchange in October, memorably bringing Afrojack along to help ring the bell. SFX raised $260 million in the sale, which valued its business at just over $1 billion. Within minutes of its Wall Street debut, however, the company’s initial offering price of $13 was down 10 percent. This week, “shares had fallen 23% to $9.15 as of Wednesday,” the Wall Street Journal reports.