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THE WORST BUSINESS CEOS IN AMERICA
Mired in financial and legal trouble, Talos Partners CEO, Robert V. Brazell tops our list
NEWS TO HELP INVESTORS AVOID TAKING A BEATING
New Amended Complaint filed in Utah Securities Fraud Lawsuit against Robert V. Brazell, Robert Kasten, Von H. Whitby and other Defendants.
The Specific Fact Allegations of Fraud begin on Page 11 of the PDF.
Dozens of documents may exist that discuss IBN's insolvency and financial struggles to meet obligations from 2006-2012. Updates coming soon.
NEW AMENDED COMPLAINT FILED IN UTAH SECURITIES FRAUD LAWSUIT SITES MORE SPECIFIC ALLEGATIONS
Robert V. Brazell, Robert Kasten, Von H. Whitby, and other Defendants hit with new amended complaint siting specific allegations of securities and other fraud and allegations—updated lawsuit contains detailed email strings from Brazell and others that clearly outline the allegations.
After Robert V. Brazell's counsel filed a motion to dismiss the Utah Fraud Lawsuit for lack of specificity, the Plaintiff's counsel has filed a new amended complaint that includes increased details, numerous emails, and a clear time line of the allegations.
For those of you following the case and lawsuits against Brazell and others, this new amended complaint is a must read. The Specific Fact Allegations of Fraud begin on page 11 of the PDF and give a time line, inclusive of emails sent from Robert V. Brazell to Plaintiffs during the time of the alleged fraud. The complaint also includes emails from Robert V. Brazell's counsel Jim Kruse, and others.
The complaint outlines how Brazell and other Defendants fraudulently induced investors with alleged grossly exaggerated or false claims to invest in a company called In-Store Broadcasting Holdings, LLC. Yet, the investors were told to cut checks to Robert V. Brazell's personal trust Robann, Ltd. Although the investors were told by Brazell and Kruse multiple times, both verbally and in writing, that the transaction would be an "immediate pass-through" it was not. Brazell kept investors in his holding company Robann Media for almost 4 years, and kept their shares and warrants under his control, making him the largest shareholding in the company by far. This gave Brazell incredible decision making power. Later when his stock loan company, Talos Partners would take over IBN he would write, "Technically no one needs “consent” from Robann Media owners. I am going to ask for it as a courtesy…"
Under Brazell's leadership, company liabilities would skyrocket from just $3.4mm in 2005 to over $18.6mm in 2009. And, despite taking in over $54mm in revenue and $47.3mm in investment, Brazell had managed to bring the company to insolvency and edge of bankruptcy.
Even a private equity firm would tell Brazell he was in over his head. They write, "…You and your team are over your head and have a credibility gap ($3mm of liabilities became $10mm became 22? Sorry, but this is hard stuff and your clean up will not be clean enough…"
Over the course of the alleged fraud, four key Board Members would resign, including Steve Gormley from Great Hill Partners. Great Hill, the largest institutional investor, would ultimately take a $21mm write off and sell all their shares back to the company for only $1,000.
In November of 2008, Brazell would admit in corporate communication, "The Company is insolvent as outlined in the Private Placement Memorandum that you will receive in the next few days. Its liabilities far exceed its assets.”
Ultimately, his stock loan company, Talos Partners would allegedly steal the company in 2009, massively diluting investors. The Plaintiff's investment was diluted from an estimated 16.7% of ownership to just 0.001%.
The Plaintiffs now have reason to believe that Brazell, Whitby, Kasten and Talos had defaulted on their agreement to fund In-Store Broadcasting Holding, LLC in April 2009, via emails from Kruse and Nebel. On December 9, 2010 an email is written to Nebel asking, “Is Talos current on its payments to IBN?” She replied, “No.” When Kruse is asked, “[Do] you believe Talos, has fulfilled its responsibility to IBN for funding? Kruse replies, “Opinions vary. On on cash basis, I believe Talos is about $650,000 short, but RVB believes that Talos is “excused” from funding because of IBN’s failure of performance.” Although both IBN’s CFO and legal counsel believed that Talos was in default of their agreement, due to a conflict of interest and self-dealing, Brazell, Whitby, and Kasten, ignored their duties to the Plaintiffs and did not unwind the transaction or put Talos into default.
In 2012, POP Radio purchased the audio assets from IBN for $12mm. When the dust settled, the Plaintiffs would realize that while they would lose over 98% of their money, Brazell, Whitby and Kasten, and would distribute almost $4mm. Brazell also admits in writing to hiding his fees and Talos' fees in the POP legacy creditor debt, further damaging investors.
Even the buyer's legal counsel Jon S. Liland, would question Brazell and Kruse on making distributions before payment of all liabilities. Although Brazell, Whitby, Kasten, and Kruse were fully aware that multiple liabilities still existed; including the Plaintiff’s claims, they quickly liquidated the funds.
Allegedly, Brazell would even negotiate $500k left in an escrow account down to only $250k then take that money for himself or Talos rather than distribute to investors.
In the end, it would appear that Robert V. Brazell would even throw his own counsel Jim Kruse under the bus when he writes on July 9, 2012, “Sadly. I wonder who’s side Kruse is on…I would like some pressure to have him forgive any bills he has accrued since the POP deal. The Oleksik deal is awful. The way he handled POP is deplorable. Extracting $1 million in fees by hiding my fees and Talos’ fees in the POP legacy creditor debt list is underhanded. He has handled Mark and Robert Riley terribly. He has handled you and George terribly.”
As Patrick Byrne would go on to say about Rob Brazell, "I do not know of anyone who ever invested with Brazell who did anything but lose all his money, sometimes to Brazell himself. I cannot recall a single conversation with Rob Brazell where he did not propose something unseemly, unethical, or illegal..."
It would seem the IBN investors, at least those involved in this lawsuit, would agree with Mr. Byrnes.
Forbes says a CEO should above all protect investor share value
Robert V. Brazell tops our list of small business CEOs that fails time and again to provide returns, while living high off investor's money. Now mired in legal and financial trouble, the truth about Rob Brazell is finally reaching the market where potential investors can make better and more informed decisions before putting their money at risk.
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