Wednesday, July 13, 2016

The Verge: Hyperloop One was just hit with an explosive lawsuit from its co-founder



Hyperloop One, the LA-based startup focused on futuristic, super-fast transportation, was supposed to be racing toward the future. But after Brogan BamBrogan, the co-founder and chief technology officer, filed an explosive new lawsuit today, the company appears headed toward implosion.
In the complaint filed in court today, BamBrogan alleges that the company’s top executives engaged in financial misconduct, abuse, and physical threats, marginalizing many of the company’s employees and jeopardizing its future. He accuses CEO Rob Lloyd, co-founder Shervin Pishevar, and Pishevar’s brother Afshin, of using Hyperloop One "to augment their personal brands, enhance their romantic lives, and line their pockets (and those of their family members)." As first reported by BuzzFeed, BamBrogan, who left an engineering job at SpaceX to found Hyperloop One, has also filed a restraining order against against Afshin Pishevar.
But that is just one of the tamer parts of the lawsuit. Here are some of the craziest allegations from BamBrogan and his fellow plaintiffs:

Afshin Pishevar threatened BamBrogan with a "hangman’s noose"

Brogan BamBrogan (left) showing off the "hangman’s noose" he alleges Afshin Pishevar (right, in security footage) placed on his chair.
In the lawsuit, BamBrogan says he passed up a trip to Moscow to meet with potential investors "to continue attempting to solve the critical issues facing the company." After a Russian investor raised concerns about BamBrogan’s absence to Shervin Pishevar, Pishevar became "agitated." The lawsuit continues:
Then, just hours after that dinner, at 11:28 p.m. California time, Shervin’s brother and Chief Legal Officer of Hyperloop One, Defendant Afshin Pishevar, strolled through Hyperloop One’s office and placed a hangman’s noose on BamBrogan’s chair. Hyperloop One’s security cameras captured it all.
"The message was clear," the lawsuit states, noting that after the alleged threat, BamBrogan was told to take a leave of absence, while assistant general counsel David Pendergast and VP of finance William Mulholland would be fired.

Shervin Pishevar gave Hyperloop One’s PR person a huge raise, after he started dating her

BamBrogan accuses the Pishevar brothers, as well as Joe Lonsdale, vice chair of the company’s board of directors (and named defendant), of wasting the company’s precious cash through nepotistic hires. One example is an unnamed public relations operative who was allegedly given a giant raise from $15,000 a month to over $40,000 after she started dating Shervin Pishevar. Only after their wedding engagement fell through did Pishevar heed advice to scrap her contract.

The assistant general counsel was fired in front of his wife and children

After the noose threat against BamBrogan, the plaintiffs said they "feared for their safety." Assistant general counsel David Pendergast brought his wife and children to the office, but the presence of his family didn’t prevent Hyperloop One CEO Rob Lloyd from firing him, the lawsuit states.

Pishevar established a "pay-to-play" culture at Hyperloop One

The lawsuit alleges that Shervin Pishevar "pressured" Hyperloop One investors to funnel their money through his venture capital firm, Sherpa Capital, in order to "gain direct access" to the cash. "Reputable investors" were pushed off in favor of Pishevar’s friends, the plaintiffs says.
"It is reasonable to assume that numerous investors declined to invest in Hyperloop One out of disinterest in paying a quid pro quo to Sherpa Capital."

The second-ranking engineer, who wanted to resign, was instead promoted against his will

Earlier this month, Recode reported that BamBrogan was forced out of the company, and was replaced by former vice president of engineering Josh Giegel. But according to the lawsuit, Giegel was ready to resign along with Pendergast and Mulholland. The day after the noose incident, Lloyd announced to the company that Giegel was joining the board of directors, "a statement belied by the resignation e-mail that Giegel was sending Lloyd literally as he spoke."
The plaintiffs allege that Pishevar and Lloyd began a "propaganda effort" to conceal the truth from employees about the staff departures and to turn the others against each other. Hyperloop One’s website still shows BamBrogan and Mulholland as part of the company. "All of this has been an effort to turn the remaining team against those who stood up for them, and consequently are no longer at the company and unable to shed light on the truth."

There were threats made. Many, many threats

Before the noose incident, BamBrogan and 10 other employees sent a letter to Lloyd, Pishevar, and Lonsdale "about the breaches of fiduciary duty they had witnessed, and changes necessary to set the company on a course for long-term success," the lawsuit says. In response, Lloyd allegedly gathered the 11 employees together a delivered a series of threats.
If anyone who signed the letter was found to have engaged in any misconduct, all eleven would be held accountable; if anyone talked to investors about what was happening in the company, Hyperloop One would "come after" them; if they did not toe the line, this would be the "worst day" of their lives; and they would bleed the employees dry with frivolous lawsuits.
Later, Lonsdale allegedly sent an email to employees claiming BamBrogan was "unstable," had "gone haywire," and was attempting to "sabotage deals."
Before the lawsuit, Hyperloop One was making progress on a high concept transportation idea — first introduced by Elon Musk in 2013 — that many were skeptical could actually come to fruition. The startup raised $130 million from investors, struck partnerships with a number of big-name engineering and transportation firms, was studying the feasibility of hyperloop systems in Russia and the Arctic region, and conducted its first public, open-air test in the desert of Nevada. It plans on conducting a full-system test at the end of the year.
"I wouldn't let a lawsuit determine [the] fate of the company," said one source close to Hyperloop One. "It is usually is a pain for fundraising, but it should not stop the technical work or project development."
This complaint, though, is not the first against some of Hyperloop One’s top executives. Lonsdale, who co-founded the secretive Silicon Valley company Palantir and venture capital firm Formation 8, was accused of rape last year. (He has since countersued his accuser.)
If anything, the lawsuit proves that Hyperloop One, despite its high-minded pronouncements about the future of transportation, is still a Silicon Valley company with big egos who occasionally need to duke it out in the courts.
(Lawyers for the plaintiffs declined comment. The Verge has reached out to Hyperloop One for its response, and will update this story when its received.)
UPDATE July 12th, 3:57PM ET: A lawyer for Hyperloop One sent a statement: "Today's lawsuit brought by former employees of Hyperloop One is unfortunate and delusional. These employees tried to stage a coup and failed. They knew that the company was aware of their actions, and today's lawsuit is their preemptive strike. The claims are pure nonsense and will be met with a swift and potent legal response. Frivolous lawsuits like this one have become all too common against start-ups that achieve breakthrough success. The lawsuit filed today by these disgruntled ex-employees is almost a cliche. It is also a measure of Hyperloop's success. The company continues to recruit top talent, secure significant funding from global investors and accelerate toward its technology milestones. Hyperloop is on track, its board and team are united and today's bogus lawsuit will have no impact on its goal of becoming the first company to bring the Hyperloop to the world."
(Source: http://www.theverge.com/2016/7/12/12162422/hyperloop-one-lawsuit-bambrogan-pishevar-lloyd-noose)

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