The early days of a startup that helps connect celebrities directly with their fans through SMS messaging are the subject of a new lawsuit brought about by two founders who say they are the victims of fraud.
Los Angeles-based Community operates a tech platform through which actors and musicians like Jennifer Lopez and Kerry Washington have shared a phone number through which they can text message fans. Community clients can use service to solicit recommendations on the best smoothie shops in Toronto or to let fans know about an upcoming concert.
Two of the company’s original co-founders, Charles Buffin and Max Levine, and an early investor, Steven Levine, are now suing another co-founder, Matthew Peltier, who serves as Community’s CEO, for breach of fiduciary duty and fraud, alleging that he misrepresented the business position, including concealing an investment from Ashton Kutcher and Guy Oseary’s Sound Ventures. They are asking for upwards of $30 million in damages.
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“The claims are meritless,” said Peltier’s lawyer, Neel Chatterjee, in a statement. “The company was in a tough financial situation, and the plaintiffs exited the company amicably knowing that Matt was working to turn the company around. The fact that Matt did turn the company around is not the basis for any claim whatsoever.”
Like many startups, Community began its life as a very different business. It launched in 2013 as a web application called Shimmur where fans could create content that they hoped their favorite celebrities, typically digital creators, would see. Other users could upvote or downvote the posts to help determine what made its way to the top of the feed. Buffin and Max Levine, say they hired Peltier as a product manager a few months after they co-founded Shimmur. Peltier was made a co-founder and, in 2014, named CEO of the business.
Buffin, Max Levine and Steven Levine are suing Peltier and Community over what they say happened after Shimmur pivoted to become Community. By this point, Buffin and Max Levine had left the business but retained stakes in the business. Steven Levine, meanwhile, had a 2.5 percent position in the company following a series of investments totaling $50,000. The trio allege that Peltier misrepresented Community’s financial positioning, suggesting that their shares no longer had value. He then pressured them to sell back their shares but didn’t tell them that he was pursuing an investment from Sound Ventures that would value the business at $180 million. They ultimately sold 10 percent of the business for around $22,000 each.
“Had Peltier told Buffin and Max Levine this information, they would not have agreed to sell back any of their shares,” reads the lawsuit filed by Miller Barondess’ Christopher Beatty.
The lawsuit further alleges that Peltier is not acknowledging Steven Levine’s position in the business and that Peltier has not paid back Max Levine for loans he made to the company.
