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JUN
15
2 YEARS

Stan Lee Settles Legal Fight Over Control of His Company (Exclusive)

The Spider-Man co-creator fought claims he had participated in a fraudulent conspiracy.

The Avengers Premiere Stan Lee - H 2012
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Stan Lee has reached a deal in principle to resolve litigation that challenged his control over POW! Entertainment, home to Lee's creations since 2001, which currently has a first-look deal with Disney. The settlement puts an end to a multimillion-dollar dispute with former shareholders that helped POW! become a public company.

Lee formed POW! in 2001 after leaving the company that bears his name, Stan Lee Media (SLMI). Three years later, POW! executed a reverse merger with Arturion Entertainment that allowed POW! to become a publicly traded company without the lengthy registration process.

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During the past year, Lee has been feuding with Valerie Barth, a PR consultant who purportedly helped the comic book genius get a star on the Hollywood Walk of Fame, and Ron Sandman, the director of UltraVision. Barth and Sandman once were big shareholders in Arturion and believed that Lee had robbed them of the company they formerly controlled.

Late last year, POW! sued Barth and Sandman for breach of contract and fraud, alleging they owed $1.15 million, plus interest, in connection with a subscription agreement where they attained 3 million shares of POW! common stock. POW! also had a security interest in Barth's property and was attempting to foreclose on it.

In counterclaims, Barth's company Media Dynamics hit back with allegations that Lee and POW!'s top executives participated in a conspiracy to inflate the worth of POW!'s assets at the time of the Arturion merger and had violated dozens of security laws. They said Lee had misrepresented his hold over intellectual property, that he had downplayed the threat of litigation from SLMI, were induced into making investments just to retain shares in the company, breached a reorganization agreement by not attaining minimum funding, put out misleading public statements about POW! and much more.

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The two sides now have found a way to resolve differences. Terms of the agreement aren't known with the attorney for Media Dynamics citing a confidentiality provision. Papers to formally withdraw the claims from a California county court are expected to be submitted soon.

Meanwhile, Stan Lee is still fighting SLMI.

In March, the 2nd Circuit Court of Appeals denied SLMI's attempt to vacate a judgment in an old settled dispute between Lee and Marvel Enterprises. However, the appellate circuit didn't resolve the question over whether SLMI could relitigate arguments that Lee had illegally diverted valuable intellectual property including rights to several superheroes.

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Since 2007, SLMI has had a lawsuit pending against Lee in a California federal court, which was stayed until the resolution of the 2nd Circuit appeal. Now that the appeal is finished, the parties are awaiting a judge's word on whether the case is going to proceed. A status conference has been scheduled for next month.

E-mail: Eriq.Gardner@thr.com

Twitter: @EriqGardner