Los Angeles Startup Faces Explosive Lawsuit from Co-founder

In a lawsuit filed on July 12 in Los Angeles Superior Court, Silicon Valley insider Shervin Pishevar was accused of mismanaging his latest startup, Hyperloop One, a company aiming to create a high-speed train.The lawsuit was filed by Brogan BamBrogan, who co-founded the Los Angeles-based startup with Pishevar in 2014, and three other former executives. He is suing Hyperloop One, Pishevar (the company’s executive chairman), and three others associated with the company. BamBrogan alleges that Hyperloop’s executives breached their fiduciary duty by placing their own interests above those of Hyperloop One. The causes of action include wrongful termination, breach of contract, defamation, intentional infliction of emotional distress, and assault.

The complaint alleges several instances of nepotism. First, Shervin hired his brother Afshin–a personal injury and criminal defense lawyer–as the company’s general counsel and gave him more stock options than the company’s top engineers. Similarly, defendant Joe Lonsdale allegedly forced Hyperloop to retain his younger brother’s financial firm as an executive advisor, despite being unqualified.

The complaint further alleges that Shervin dated the company’s outside PR representative and subsequently nearly tripled her pay. (The woman’s former employer has indicated, however, that the complaint incorrectly portrays this relationship.) Moreover, Shervin allegedly coerced Hyperloop investors into putting money into his personal fund, Sherpa Ventures.

While Shervin and defendant Joe Lonsdale control 78 percent of Hyperloop’s voting rights, the men are allegedly uninvolved in the company’s daily matters. Shervin and Lonsdale rarely spend time at the startup other than to give tours to friends and celebrities. On multiple occasions, Shervin allegedly forced Hyperloop’s engineers to stop working and vacate the offices so that he could host parties for his friends.

More shockingly, during a meeting between Pishevar and Russian investors in Moscow, Afshin put a hangman’s noose on BamBrogan’s chair, an act caught on security camera. (Last month, BamBrogan sought a restraining order against Afshin.) The incident allegedly occurred shortly after BamBrogan and his fellow plaintiffs wrote a letter to Shervin, Lonsdale, and the company’s chief executive, Robert Lloyd, complaining that their work was undervalued and that Shervin had “outsized control” over the company. (According to the suit, Shervin granted himself 90 percent of Hyperloop common stock, while BamBrogan only had six percent.)

Lloyd told the letter’s signers that the company planned to demote or fire them. BamBrogan thereafter resigned, allegedly fearing “for his physical safety.” One of the signers was subsequently fired.

Shervin’s attorney called the suit “delusional” and explained that it will be “met with a swift and potent legal response.” Hyperloop One is expected to counter-claim in the next few weeks.

The product liability lawyers at the Neumann Law Group represent victims of accidents throughout the Los Angeles area. Call us at (213) 227-0001 for a free consultation.

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