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Epinions founders sue Benchmark, August et al.

Three of Epinions' five founders filed suit Jan 19 in San Francisco Superior Court against Silicon Valley venture capital firms Benchmark Capital and August Capital, alleging the firms conspired with fellow founder Nirav Tolia to deprive them and other employees of nearly $40 million. Here's a copy of the complaint, filled with intrigue.

The NYT broke the first part of the story late last year, and we were alerted to the filing by an upcoming NYT story planned for tomorrow.

Shopping.com, the San Francisco company that formed after the merger of Epinions and DealTime is also a defendant. More coming tomorrow. Benchmark's Bill Gurley and August's John Johnston, both named in the suit, have so far not responded to a request for comment....

In its SEC filing on Jan. 19, Shopping.com said: "The Company believes that the allegations of this lawsuit are without merit and intends to defend vigorously against this matter."

UPDATE: In a tweak yesterday, we mistakenly removed the complaint -- so we've replaced it above. Also, here's the story we published in Wednesday's Mercury News. Something we weren't able to mention in today's Merc -- because of limited space -- was the following about Tolia, which doesn't seem directly related to the case, but eye-opening nevertheless:

Despite steering Epinions through the trying post-bubble era, Tolia ran into his own troubles during and after the merger with DealTime. During negotiations at the same time with Google, the complaint said, the search engine company had initially planned to buy Epinions, but canceled its plans after finding that Tolia had falsely claimed he'd been employed as a consultant with McKinsey & Co. Tolia also wrongly stated he'd graduated from Stanford University, another reason Tolia was forced to resign from the Shopping.com last July. Here's Shopping.com's statement at the time: Download file.


See also the seminal Alantec lawsuit re: fraudulent voting of common shares, which was settled by VCs in '97.

Anon on January 26, 2005 9:31 AM
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