Thursday, March 17, 2011

FINAL SCOREBOARD: Michael Robertson LOSES $644,000 -- Linspire Employees WIN $217,000

UPDATE:  For an updated Scoreboard, read here.

The Robertson-attack-former-employees "game" is finally over. How did the score end up?

As many of you know, back in 2007, Michael Robertson accused several former Linspire employees of embezzlement and other ridiculous charges. This all came from a dispute between myself and Robertson over how to treat employees who were needing to be laid off, given a shift in the company's direction. Greedy Robertson originally wanted to give these long-term, dedicated employees a pathetic two weeks severance (apparently knowing he would be taking all the remaining cash from Linspire soon and wanting as much there as possible), but I wanted to see them treated more fairly. When as CEO, I awarded the severance I felt was fair, Robertons went on his insane attacks, calling us all thieves, conspirators, etc., and making these same false claims to his bank and insurance company.

All along, Robertson told others that he was anxious for his day in court and for the truth to come out. A year ago he stated, "There will be a trial later this year where their [employees] actions will become public. I'm looking forward to it because I'm proud of my actions..." Every time he'd lose another round in court, he could argue that it wasn't over yet, and to just wait and see. Well, it's now over. All the trials and verdicts are in. I've chronicled the blow-by-blow of this over the past years in my blog, but it may have been complicated to have followed all the outcomes along the way. So, now that it's over, I thought I'd summarize how it all played out and share the final "score."


If everything Robertson accused these employees of had been true, they should all be in jail right now, and they certainly wouldn't have profited from the actions they took. So, how did things turn out?

Looking at it monetarily, here is the final scoreboard*:

Robertson blew over a half million dollars unsuccessfully
attacking Linspire Employees, who ended up ahead $217,000.

The bottom line is if the employees had just walked away and accepted the two-weeks of severance Robertson originally wanted to pay them, they would be $217,000 worse off, even taking into account the legal fees they had to waste in defending themselves against Robertson's mad-man attacks**.

As for Robertson, had he just accepted the severance the CEO had awarded these employees, he would be $644,000 better off financially, roughly how much money he lost unsuccessfully attacking these employees.

So, what did Robertson get for his $644,000?
  • He showed the world what a greedy person and unscrupulous bully he is.
  • He showed how dishonest he is. Had what he said been true, these employees should be in jail, and certainly not $217,000 better off.
  • He inspired and brought attention to the website to make sure the world will forever know what he's really like.
  • He wasted countless hours with his lawyers and in the courtroom, suffering costly and embarrassing losses again and again, time that could have been spent running his seemingly anemic businesses.
  • He helped make his lawyers rich.
  • He was called out for possible fraud by his bank.
  • He is being investigated for possible insurance fraud, a criminal offense for which one can serve jail time if found guilty.
  • He put a spotlight on the fact that after nearly FOUR YEARS, he still has not made an accounting to the 100 or so Linspire shareholders as to the millions of dollars that went missing.
Don't you wish you had $644,000 to waste like that? But, we all know what they say about a fool and his money.

The Jury did find myself and the CFO liable for fraud and conspiracy to commit fraud. (UPDATE:  Judge Taylor even ended up vacating and setting aside this small judgement.  Read details here.) I know that sounds very sinister, and Robertson will want to spin it into sounding that way, but it's not. Keep in mind this was a civil trial, so there was nothing criminal about any of this. That is the normal terminology commonly used for civil cases, and it wasn't the jury who chose to use those terms. So, what did the jury mean by "fraud" and "conspiracy to commit fraud?" In his final ruling (see page 13), Judge Taylor summarized the jury's findings on those points***, highlighting that all of the funds transferred were authorized, all the employment agreements valid, and that not one penny of money was taken from Linspire inappropriately. Judge Taylor stated that the ONLY portion of Linspire's claim that had "any merit" was that I and the CFO had a fiduciary duty to have informed Robertson when I laid off the CFO (this is what got called by the scary terms fraud and conspiracy). Judge Taylor points out that the jury was fine with my authority in letting the CFO go as well as the severance amount the CFO received and how he received it. Taylor states that the jury simply felt I should have informed Robertson immediately after I laid the CFO off, not a week later. Linspire was awarded $81,333 in damages for that one item, but the employees got to keep the $466,000 in severance they had received. Judge Taylor summarized it this way, "…the jury wanted about a third of Olson's severance pay refunded as a consequence of Carmony and Olson's lack of forthrightness with Linspire's Chairman and majority shareholder." That was it! No theft, no embezzlement, no unauthorized wire transfers, no erasing emails, etc. Robertson laid dozens of charges against six employees, but the ONLY thing the jury sided with Robertson on was this one point of the timing of when I informed Robertson of the CFO being laid off. View full ruling here, summary on page 13.  (UPDATE:  Judge Taylor even ended up vacating and setting aside this small judgement.  Read details here.)

Judge Taylor goes on to explain that Robertson's REAL motive in this case was his ego, "The success enjoyed by Linspire is modest at best. It is plain to the court that Linspire [Robertson] was not 'required to act in the protection of its interests' as it did. Rather, Linspire [Robertson] approached this case as a vehicle for a test of wills as between Robertson and Carmony." (Page 15 of final ruling.)

Keep in mind that Robertson originally wanted the CFO to only get two weeks of severance, so the CFO still ended up much better off, even with the $81,333 awarded. Judge Taylor also pointed out that the CFO was actually due TWO years of severance, but in the spirit of cooperation, the CFO had agreed to take less when he was terminated. Evidence came out at trial that the CFO reported directly to me as CEO and that he was under contract from his Employment Agreement to do so. At the time I laid him off, I had given him specific, written instructions to "stay out of the middle of this and allow me to communicate this with Robertson," so any reasonable person could understand why he didn't inform Robertson that he had just been laid off by the CEO.

Robertson said he was "proud" of his actions. That should tell everyone all they need to know about Michael Robertson. Because I took no severance for myself when I resigned from Linspire, I ended up about 80K in the hole defending Robertson's attacks (my share of legal fees and damages), but it was worth it to stick up for the employees who were being attacked. I'm much more "proud" of having spent $80K helping defend these good employees, than Robertson should be with the $644K he spent falsely attacking them.

The next time Michael Robertson tries to spread lies about these former employees, or anyone else for that matter, please refer them to the final scoreboard. No matter how he tries to spin things, the bottom line is the employees won $217K and he lost $644K. So yes, the truth has finally come out and now everyone knows what those of us involved have known all along, that Robertson is a greedy, unethical, ruthless bully...and a loser.


*Employee Calculation: Severance awarded to employees by CEO of $466K, less the amount Robertson originally wanted to see these employees get in severance of $29K, less $220K in legal fees and damages suffered by the employees = +$217K.
Robertson Calculation: From court documents showing $426K in legal fees spent by Robertson in the Linspire, Comerica and Federal actions, plus an estimated $100K for the Freespire action, plus $238K awarded the Controller in legal fees, less $120K damage/legal fees awarded = -$644K.
**Like the Controller who was awarded his attorney fees, the other employees could have also sued Robertson for their legal costs, and most would have probably been awarded a judgement for those fees, but they didn't bother, knowing how unethical Roberson is and that even with a judgement, they may have never been able to recover anything from him.
***From Judge Timothy B. Taylor's final ruling: “The court concludes that the only portion of Linspire’s claim that has any merit is the contention that Linspire was required to pursue Carmony on a tort claim because of Olson’s failure to disclose to Robertson that Olson had been terminated, and was required to pursue Olson on a tort claim because of Carmony’s failure to disclose the same fact to Robertson. The court concludes (again, having seen and heard the same evidence as the jury) this is the only reasonable explanation of the jury’s verdicts as to these two defendants. This explanation is consistent with Linspire’s arguments at trial, and remains consistent with its theory today (see Opening Brief filed 12/14/10, section IID4b at pp.5-6). Carmony and Olson both had a fiduciary duty to disclose to Robertson the fact that Olson had been terminated by Carmony even as he was exchanging emails with Robertson giving no inkling of this fact. The amount awarded, $81,333, is about one third of the $240,000 in gross severance the testimony established Olson agreed to take (even though under paragraphs 2a and 3c of Trial Exhibit 28 he was entitled to twice that). In other words, the jury wanted about a third of Olson’s severance pay refunded as a consequence of Carmony and Olson’s lack of forthrightness with Linspire’s Chairman and majority shareholder. The court cannot say that the measure of damages awarded by the jury ($81,333, jointly and severally as to Carmony and Olson) was erroneous.” (View full ruling here, summary on page 13.)

UPDATE:  Judge Taylor even ended up vacating and setting aside the small judgement against the CEO and CFO.  Read details here.


Scott said...

Nice summary. What a waste of everyone's time and money. Robertson is evil.


Anonymous said...

I love this game :)

Kevin Carmony said...

Yes, Robertson brings a whole new meaning to the term "March Madness." =)

Spinfusor said...

Thanks for giving us updates on the case over the years. It's great to know that he finally lost!

Do you know anything about the EMI lawsuit? I haven't heard anything in a while.

Kevin Carmony said...

The Judge hasn't returned a verdict yet on the summary judgement motions in the EMI case. Should be any day. I'll blog as soon as I hear something.