None
A year ago, Acclaim, publisher of Mortal Kombat and Turok: Dinosaur Hunter, declared Chapter 7 bankruptcy and 600 employees lost their jobs. Now, the members of the company are being sued for using the company “as if it were a personal piggy bank”. The lawsuit follows an extensive examination of Acclaim’s book and corporate records by Allen Mendelsohn, an attorney. The lawsuit is requesting $150 million in damages.
Fifteen defendants are named in the suit, although it primarily targets Gregory Fischbach and James Scoroposki, co-founders of the company. “The court appointed trustee alleges that Acclaim was irresponsibly wasteful, most notable during the death throes of the company, a time when cash flow was most badly needed. The suit also notes that in its last few years Acclaim was vexed with financial problems. Its games were not selling well, and it was faced with lawsuits from investors and key licensors, as well as an investigation by the Securities and Exchange Commission,” explained Game Politics.
The claim states:
-Acclaim’s use of Jaymar Marketing and Jansco Inc., a pair of wholesalers owned by Scoroposki. In the five year period leading up to the bankruptcy, Jaymar billed Acclaim for nearly $1.3 million and Jansco charged Acclaim about $1.1 million. The suit alleges these commissions “ultimately were for Scoroposki’s direct benefit…These wasteful commission payments could easily have been avoided by having the company take direct orders for merchandise.”
-Payments to Fischbach, Perlstein & Lieberman (FPL), a California law firm in which Greg Fischbach’s brother is a partner. The trustee report notes that during the same five year period prior to the bankruptcy, Acclaim paid the California law firm $7.3 million in legal fees, while at the same time paying $4.8 million to its corporate general counsel, Katten Muchin Rosenman LLP. According to the trustee, “The services performed by FPL either were unnecessary for Acclaim’s business and/or the bills rendered by the law firm were far in excess of the value of the services provided.”
-Gross overpayments to CIDC LLC, a company owned by Scoroposki, for use of a private plane. In the five years preceding the bankruptcy, Acclaim paid CIDC at least $102,000, including a $48,000 for a trip to Austin $4,105 for a round-trip in 2003 from Long Island to Atlantic City “for reasons that appear to be unrelated to Acclaim’s business.”