God Wins! -today’s court ruling
Paley v. Radar Networks
FOR IMMEDIATE RELEASE
Bankruptcy Court issues order permitting California fraud trial to resume against Ross Levinsohn, Steve Hall, and Nova Spivack.
On August 10, 2012, the United States Bankruptcy Court for the Northern District of California issued an order permitting plaintiff Kate Paley, daughter of CBS founder William Paley, to pursue causes of action for fraudulent transfer against defendants Ross Levinsohn, Steve Hall, and Nova Spivack, who have been sued in California state court.
This ruling ends a five-month delay that was orchestrated by defendants to avoid a public trial. On May 3, 2010, Ms. Paley filed a complaint in San Mateo Superior Court, alleging causes of action for fraud, fraudulent conveyance, breach of contract, unfair competition, and related claims.
Named as defendants were Ross Levinsohn (who most recently served as interim CEO of Yahoo!, Inc.), Steve Hall (managing partner of Silicon Valley venture capital firm Vulcan Capital), and Nova Spivack. Plaintiff Paley was the primary investor in Radar Networks, Inc., a Silicon Valley startup managed by defendants. Plaintiff contends that defendants mismanaged the company, resulting in its failure and the eventual fraudulent transfer of the company’s assets to another company controlled by Evri, Inc., another company controlled by defendant Hall.
Discovery in the case revealed that Levinsohn had an actual intent to defraud Ms. Paley. In September 2009, for example, Levinsohn voted in favor of a transaction that converted Ms. Paley, without her consent, from a creditor who was owed over $3 million by Radar to an equity holder . Levinsohn was told numerous times that converting Ms. Paley’s loan to equity was improper, but this conversion was a first and necessary step to making sure that Ms. Paley could not share any of the proceeds from the fraudulent sale of Radar’s assets to Evri. Thereafter, in February 2010, as the sole member of Radar’s “Acquisition Committee,” Levinsohn rejected an offer from Intellectual Ventures for more than twice the amount offered by Evri. Radar’s assets were then sold to Evri, giving defendants control over the assets, proceeds from the assets, and all the while leaving Ms. Paley with nothing from her investment. This carefully orchestrated scheme forms the basis for the California lawsuit.
In an attempt to avoid trial, defendants filed motions for summary judgment in the California suit, which were denied in February 2012. The case was set for trial to begin on February 27, 2012; that very day, defendants filed a notice of stay after orchestrating a bankruptcy filing on behalf of Radar Networks. For months in the bankruptcy suit, defendants attempted to delay the proceedings in order to avoid a public trial.
Following this order by the Bankruptcy Court, Ms. Paley will immediately move the Superior Court to lift its stay and allow trial to resume. The case is Paley et al v. Radar Networks, Inc. et al, Case No. CIV-494701, currently pending in San Mateo Superior Court in Redwood City, California.