Multi-Million Dollar Dispute

Former ePrize execs sue; defendants claim no merit.

Allan R Adler

Special to the Jewish News

W

hat is expected to be a
multi-million dollar lawsuit
naming as defendants ePrize
LLC and its prominent top executives
— founder and former chairman Josh
Linkner as well as former company
investor Brian Hermelin — could be
expanded to include even more well-
known Detroit area businessmen as
defendants.
Mark Rossman, a partner with Troy-
based Mantese, Honigman Rossman and
Williamson PC, which is representing
the plaintiffs, says an amended suit may
follow soon.
"Linkner and
Hermelin are the
primary targets, but
there will be other
prominent individuals
named in an amended
lawsuit" Rossman says.
The original suit,
John Linkner
filed April 19 in
Oakland County
Circuit Court against
the former online
marketing company,
also includes ePrize
successor company
Crackerjack LLC.
In the lawsuit, sev-
Brian
eral former executives
Hermelin
of ePrize LLC, which
was based in Pleasant
Ridge, are seeking damages, claiming
they were not paid their fair share when
the company was sold. Connecticut
private equity Catterton Partners Corp.
reportedly acquired a majority of ePrize
LCC for about $100 million. According
to reports, Catterton's $2.5 billion of
equity capital includes Bloomin' Brands,
the Tampa, Fla.-based parent company
of the Outback Steakhouse, Carrabba's
Italian Grill and Bonefish Grill chains.

'Zero Merit' Says Linkner
Linkner founded ePrize in 1999 and
turned it into one of the world's largest
interactive promotion agencies. He also
is credited with being the founder and
CEO of three other technology compa-
nies. He has been on the board of more
than 40 companies and raised more
than $100 million of venture capital. He
is a best-selling author and has earned
the Ernst & Young "Entrepreneur of the
Year" award and was named a President
Barack Obama "Champion of Change"
award recipient. He currently is a part-
ner at Detroit Venture Partners.
Hermelin is also a partner with
Detroit Venture Partners and a director
with the RockBridge Equity Partners. He
was with ePrize for five years, from 2005
to 2010, and was CEO of the Active Aero
Group for 13 years, from 1994-2007.
Linkner, in an email response, says
he was blindsided by the lawsuit.
"It's disturbing that we first learned
about this baseless lawsuit from a news-
paper article" Linkner says. "There is
zero merit to the claims made by these
former ePrize employees, most of whom
are disgruntled about being terminated
years ago"
R. Christopher Cataldo of Jaffe, Raitt,
Heuer & Weiss PC, Southfield, who are
representing ePrize and the defendants,
also says in an email response that the
allegations are "completely without
merit"
"The sale of ePrize and resulting
distributions to the members were com-
pleted according to the letter of the law
and the governing documents of ePrize,"
Cataldo says. "We know that plaintiffs
filed the suit without having reviewed
the relevant documents. My clients
intend to fight this frivolous suit with all
available resources:'

Plaintiffs' Claims
Rossman allegorically describes the case
as the victims of schoolyard bullies fight-

ing back.
He claims the case is a classic "minor-
ity oppression scheme" where a major-
ity of stockholders in a company take
advantage of the minority.
"I've seen it before, and it happened
again here" says Rossman. "The major-
ity interest is the schoolyard bullies and
they're kicking around the minority; but
through this lawsuit, we're kicking them
back"
Gerard Mantese, another partner
at Mantese Honigman Rossman and
Williamson PC, who also represents the
former employees, said his clients could
own a sizable stake, but the company
hasn't furnished the corporate docu-
ments necessary to compute their exact
share. However, the case could involve
millions of dollars, he says.
Mantese alleges, basically, "my clients
were shareholders in a company that
was sold for vast sums of money. Many
other shareholders reaped the benefits
of that sale, but all but one of my clients
received zero"
Among other allegations in the law-
suit, the plaintiffs are claiming "breach
of fiduciary duties and various other
obligations ... ; misappropriating and
converting the Member Plaintiffs' distri-
butions ... ; issuing false tax documents
to the member plaintiffs ... ; manipulat-
ing the financial books and records of
the company...; and wrongfully with-
holding company information in viola-
tion of the Limited Liability Company
Act ... "
The plaintiffs in the suit include
former ePrize executive vice president
of business development Ivan Frank,
former senior vice president of produc-
tion Jeffrey Dwoskin, former senior vice
president of product development Phil
Jacokes, Roy Krauthammer, former con-
troller Blake Atler, former sales associate
Matt Kovaleski, former associate creative
director James Brunk and Frank's invest-
ment company, IJF Holdings LLC.

Imagine a
World Without
Hate,.

What was the
earliest message
you received about
people who are or
perceived to be gay?

Where did you get this
message?

When we talk about bias,
it is important to reflect
on our own biases and
understand where they
come from.

❑

4

>> memos

Ron Applebaum and Erik Stone have

Applebaum

formed the new law firm Applebaum
& Stone PLC, in the 3000 Town Center
building in Southfield. The firm's
primary focus is auto law. Applebaum
has been practicing law in Michigan
since 1991 and was formerly of
Thurswell, Chayet & Weiner and then
Weiner & Associates. He currently serves
as the board president of JARC.

The Michigan Association of CPAs recently
awarded Alan Reinstein of Wayne State
University its 2012-13 Distinguished
Achievement in Accounting Education
Award, making him the state' s nominee
for the American Institute of Certified
Public Accountants 2013 Distinguished
Achievement in Accounting Education
Award.

❑

•

The Anti-Defamation League
100 Years of Fightin
D onate Toda
Our mission remains as important
today as ever!

48.353.7553

www.regions.adl.org/Michigan

1813670

May 9 • 2013 45