My Response to Michael Robertson's Spin-filled Blog Post

Robertson tries to spin the story, but Wikipedia has the facts.

In Jun of 2011, Michael Robertson posted a blog on his site entitled "Jury Finds Kevin Carmony and Chad Olson Liable for Fraud and Conspiracy."  I thought I'd respond here.

Anyone who followed this matter knows this was Robertson's feeble attempt to spin the story and try to clear HIS name in this matter, since it was he who ended up losing and being found liable for hundreds of thousands of dollars.  However, rather than me trying to defend myself, I figured the best defense is the truth, as reported on Robertson's own Wikipedia page with footnotes to the actual rulings:

In 2008, Robertson attempted to sue Linspire's bank, Comerica, in an attempt to get Comerica to refund severance payments which had been made to laid-off Linspire employees. Robertson alleged the severance payments were actually funds which had been embezzled by the laid-off employees. The San Diego Police Department investigated and quickly came to the conclusion that this was a simple dispute between Robertson and Linspire's CEO at the time, Kevin Carmony, and no embezzlement or other crime had been committed.^[10] Robertson lost the lawsuit without it getting past summary judgment.^[11] Robertson then filed a civil suit against the six former employees directly, for which he was counter sued. The jury sided largely with the employees, awarding a $238,000 judgement against Robertson.^[12] A smaller judgement of $80,000 was awarded to Robertson, however, this judgement was vacated and set aside by Judge Taylor.^[13] Judge Taylor stated in his ruling, “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 will as between Robertson and Carmony.”^[14]

In an effort to defend the names of the former employees being sued by Robertson, a website critical of Robertson called Freespire.com was launched in February 2008. The Freespire.com site states that it is "dedicated to shedding light on the REAL Michael Robertson," and discloses information and facts about Robertson. In an attempt to have the Freespire.com site taken down, Robertson had Linspire (renamed as Digital Cornerstone) file a lawsuit, claiming the site violated trademark law. In 2010, Robertson lost the lawsuit with the court saying the site did not infringe on any trademarks and was protected as free speech. Judge Judith F. Hayes stated in her ruling, "...the Court finds the general purpose of the website to be a free speech forum wherein Defendant criticized the management of Plaintiff."^[15][16]

Bottom line, Robertson and his massive ego (which even the Judge commented on in his ruling as being Robertson's motive) unsuccessfully attacked his former employees, lost hundreds of thousands of dollars, was ordered to pay attorney fees, and the only judgement that went his way (which is what his blog post was about), was vacated and set aside by the Judge.  But, of course, Robertson failed to do a follow-up blog about that part.  I, nor Mr. Olson, ever had to pay Robertson one dime in this matter.  Robertson lost at every turn, and I was NEVER found guilty of anything, and the only small civil judgement was set aside.

Kevin

PS:  To read the details of the case and the final outcome in more detail, including exact figures Robertson was ordered to pay, go here.  Also, visit freespire.com to read about the REAL Michael Robertson, as told by dozens of people who have worked closely with him.

Michael Robertson Suffers Final Blow in Attacks on Former Linspire Employees

As documented previously in this blog, Michael Robertson spent several years, and hundreds of thousands of dollars, in attacking former Linspire employees.  Robertson lost at every turn, with only one minor exception, a small judgement against myself and the former CFO for not having informed Robertson in a timely manner when the CFO was laid off.  Now, rightfully so, even that one small judgement has been vacated and set aside by the Judge.  (Read the Judge's ruling is here.)  

With this ruling, and the judgement settled, none of the former employees will ever have to pay Michael Robertson ONE PENNY.  Robertson, however, continues to dodge paying the judgement against him (via his company), still owing hundreds of thousands of dollars to one of the former employees.  

Given this new vacated ruling by Judge Taylor, here is the updated and final scoreboard of how things ended up:

Updated Final Scoreboard after Judge Sets Aside Judgement

As Judge Taylor pointed out in his previous ruling, Robertson's attacks were driven by his ego.  In the end, this was a simple case of Robertson's greed and ego vs me wanting to treat good employees with some respect.  

Kevin

  

Michael Robertson Tries To Spin His Attacks on Former Employees

Robertson blew over a half million dollars unsuccessfully

attacking Linspire Employees, who ended up ahead $217,000.

UPDATE:  For an updated Scoreboard, read here.

As I predicted earlier in this blog, Robertson is taking his massive losses in the courts and trying to spin it as a victory for himself. He lost hundreds of thousands of dollars attacking innocent employees, yet in his most recent Michael's Minute, he tries to justify his greedy behavior by pointing to the few counts that went in his favor, but of course, he leaves out the DOZENS of counts that didn't go his way.

I'm proud of the small amount of damages awarded against me as I fought for the innocent employees. The time, energy and money I spent was DEFENDING good people, and trying to see employees treated with some respect, where as Robertson spent over a half million dollars attacking them. In the end, the court OVERWHELMINGLY sided with the wrongfully accused employees, but you'd never know that reading Robertson's blog.

Some of you have emailed me asking for my response to Robertson's latest Michael Minute, so I'll just refere you to my earlier blog. It gives the FULL story, including what the Judge had to say on the matter. In his final ruling, Judge Taylor summarized the jury's findings, 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. (View full ruling here, summary on page 13.)

Don't just take my word about the REAL Michael Robertson, visit Freespire.com and read the comments from dozens of people who know and have worked with Robertson.

The bottom line is Robertson spent huge amounts of money attacking innocent employees, while I spent my energy defending them, not taking one dime for myself. Oh, and of course, the Linspire shareholders are still waiting to hear from Robertson what happened to their investment.

Kevin

PS: Not surprisingly, given the source =), there were several blatantly false statements in Robertson's blog, which I have pointed out to him.

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."

FINAL SCOREBOARD

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 Freespire.com 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.

Kevin

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Footnotes:

*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.

UPDATE #1: Did Michael Robertson and the Duane Morris Law Firm Commit Insurance Fraud against Chubb?

Did Michael Robertson and Ed Cramp with Duane Morris defraud
Chubb Insurance out of $100,000? Read the documents, and YOU be the judge.

NOTE: As with any personal blog, the opinions expressed here are my own. Each reader should come to their own conclusion, based on the factual documents linked to from this and previous blog posts.

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In my previous blog post, I disclosed documents which called to light the possibility of insurance fraud having been committed by Michael Robertson and Ed Cramp, who represents Robertson via the law firm Duane Morris. I felt there was enough evidence to suggest the possibility of insurance fraud, that the matter should be investigated. I therefore turned over evidence to The San Diego Police Department, The Department of Insurance for the State of California, and to Chubb Insurance.

At the heart of the matter, as I reported in my previous blog, Linspire alleged to Chubb that they were a victim of "theft." In their claim to Chubb, Linspire discussed at great lengths a "police report" they had filed with the San Diego Police department, YET FAILED TO DISCLOSE THE OUTCOME of the police department's investigation. According to the San Diego Police department, Linspire had known for months the outcome, namely, that the San Diego Police Department found NO evidence of ANY theft or criminal wrong doing, and yet Ed Cramp and Linspire failed to disclose this in their claim to Chubb.

I mentioned in my blog that I'd keep you updated on the developments of this matter. This is my first update in a series of updates I will be sharing with you, anytime new information comes to light.

Since my blog, I have had numerous calls and correspondence with several people from the San Diego Police Department, The Department of Insurance for the State of California, and Chubb Insurance.

I received a letter from California's Department of Insurance:

"In reviewing this particular case, there are certain allegations that may warrant a regulatory investigation by this department. We have initiated an investigation into this matter..." ~ Department of Insurance, State of California

I have also spoken with several employees at Chubb, and the case has ended up with one of Chubb's investigators who has has been given the assignment to handle the matter. I have had some very informative phone conversations with this investigator. He said he has read all the information about the case which I had submitted, and mentioned that the letter from Comerica was "particularly interesting." (Comerica said they felt that Linspire could possibly be trying to defraud them.) He said in his opinion there was enough to the case to warrant an investigation, which he is now involved in. I have offered my full assistance in his investigation, as have other former Linspire executives. I also said I'd be willing to provide all the other evidence I have in the matter (emails, depositions, bank statements, checks going to personal accounts, etc.)

During our calls, I updated Chubb on the civil case, disclosing to them the full outcome of that civil matter. I warned Chubb that Michael Robertson and Ed Cramp would likely try to use the outcome from the civil case to justify their CRIMINAL claims of THEFT to Chubb. This didn't seem to matter to the Chubb investigator. Because Linspire's claim was for criminal theft, any civil case would likely have little impact on the case. Even if in a civil trial someone was found liable in some way, that wouldn't justify filing a false and deceptive insurance claim saying you were the victim of criminal theft. In fact, should Robertson use the civil case to justify their claim of theft, I believe that would simply open Chubb up to recover any proceeds to recoup the claim. However, Chubb says they always prosecute insurance fraud vigorously, so I'd assume they would be more interested in a criminal prosecution as well as recovering their money.

I'll continue to keep you posted as this case evolves via Freespire.com. Now that I know the appropriate departments are investigating, and have good contact information for all involved, I will keep the pressure on to see this matter continues to be investigated fully and report the findings along the way, regardless of the outcome.

Kevin

PS: The civil case where Robertson attacked innocent former Linspire employees is pretty much concluded. Look for my blog summing up the conclusion of that matter next week, "Michael Robertson's Million Dollar Ego," where I disclose exactly how much money Robertson wasted on his attempts to persecute former employees.

Did Michael Robertson and the Duane Morris Law Firm Commit Insurance Fraud against Chubb?

Did Duane Morris help Michael Robertson defraud Chubb Insurance

out of $100,000? Read the documents, and YOU be the judge.

NOTE: As with any personal blog, the opinions expressed here are my own. Each reader should come to their own conclusion, based on the factual documents linked to from this blog.

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I think everyone would agree that those who defraud insurance companies should be held accountable and criminally liable. When criminals defraud insurance companies, we all pay for it through higher premiums. Each of us should do our part by reporting insurance fraud, anytime we become aware of it.

It is my opinion that Michael Robertson may have possibly committed insurance fraud against the Chubb insurance company, and that Ed Cramp and the law firm he works for, Duane Morris, aided and assisted Robertson in that possible fraud. Only through a criminal investigation and trial would my belief be validated, but in the meantime, I'll present facts and documents and let you, the reader, decide for yourself how ethical the actions of Robertson, Ed Cramp, and the Duane Morris law firm were. Is it fraud? Unethical? Poor judgement? Or just business as usual?

As came out in depositions with Robertson, his company Linspire was paid $100,000 in damages by Chubb Insurance for, what I believe, was quite possibly a fraudulent claim. Presented here are links to the pertinent documents. Read them, then you can decide for yourself if you feel that actions were taken to intentionally defraud the Chubb Insurance company out of $100,000, and that these actions warrant a criminal investigation.

I Believe Michael Robertson, Ed Cramp and Duane Morris Filed a Deceptive Insurance Claim

As many of you know, Michael Robertson has been trying to use the US court system to attack and bully former Linspire employees. Fortunately, the truth continues to come out, Robertson keeps losing in the courts, and the former employees continue to be vindicated, all be it saddled with huge legal bills (a subject I'll discuss in a future blog).

A few weeks back, when I was going through some of the discovery provided by Michael Robertson in his lawsuit against the former employees, I came across one document that made me fall out of my chair. I couldn't believe what I was reading. It was an insurance claim that Ed Cramp (a lawyer with Duane Morris) had filed on behalf of Michael Robertson with the Chubb insurance company. I believe many of the statements in the claim were false and were soundly shown as such in recent court proceedings. (I've attached a signed declaration from Linspire's former IT Director, giving just one of several examples of the false statements I believe Duane Morris alleged in the claim.)

Most shocking, however, was that pertinent information about the situation had been left out of the claim, information that presumably Robertson and Duane Morris would have known about. I can only believe they intentionally left out this critical information to mislead Chubb to get their claim paid. Ed Cramp used the weight of his nationally-known law firm, Duane Morris, to give the claim credibility, so Chubb would likely have assumed that the claim was accurate, truthful and contained all the pertinent information. I'm sure seeing the Duane Morris letterhead on the claim letter gave Chubb a sense of security in believing what was presented in the application. I can't help but wonder if Chubb would be shocked to learn of what was left out, and may very well not have paid Robertson the $100,000 claim, had they been provided with the full story.

What is Insurance Fraud?

Insurance fraud is defined as, "...when someone intentionally deceives another about an insurance matter to receive money or other benefits not rightfully theirs." In other words, when you file a claim with an insurance company, you can't intentionally misrepresent what happened or leave out relevant information in order to intentionally deceive the insurance company so that they are more likely to pay your claim.

For example...suppose you and a friend were at your house, and you both got into a heated argument, and you threw a book at your friend, but instead it hit and broke your TV. Suppose you can't afford to replace the TV, so you decide to file a claim with your insurance company to have it replaced. However, you're not sure if you policy would cover any damage from you throwing a book through your TV, but you are quite confident you are covered for "theft." So, when you file your claim with the insurance company, instead of telling them about the disagreement you had with your friend and tossing the book, you say that a thief broke into your house in the middle of the night and stole the TV. The insurance company, based on your report of "theft," pays you cash to replace the damaged TV. By misrepresenting the facts to the insurance company, you likely have committed insurance fraud.

I believe you'll see from the documents provided below, that this seems to be exactly what Michael Robertson, Ed Cramp and the Duane Morris law firm did.

Robertson's Claim

I've attached a copy of the actual claim letter given to Chubb, signed on Duane Morris letterhead by Ed Cramp. (I've redacted the former employee's names, as Robertson has dragged their names through the mud enough already with his false allegations.)

As you can see, in the insurance claim letter (viewable here), Duane Morris references this as an "Employee Theft Claim," and makes all sorts of claims as to criminal activities such as "theft" and "embezzlement." Duane Morris also references a "Police Report" which Robertson had filed with the San Diego Police Department. The reason I was so shocked when I found the insurance claim, was that the ultimate findings of the San Diego Police Department's investigation were left out of the claim. You see, Linspire had been told the results of the San Diego Police Department's investigation, approximately THREE MONTHS PRIOR to them having filed this claim. Linspire was told at that time that "no crime had been committed and the issues...were civil in nature."

Viewable here is a declaration, signed under penalty of perjury, by Michael McEwen, a Detective with the San Diego Police Department's Financial Crimes Group. It's only two pages long, and I'd encourage everyone to read it. Here is one portion of Detective McEwen's statement:

"Based on my review of the facts of the case, I determined no crime had been committed and the issues discussed in Mr. Robertson's letter and case submission were civil in nature. My conclusion was that the case involved a disagreement between the Chairman and the CEO of the company, which CEO was an officer and agent of the company. This disagreement did not constitute a crime. I relayed my findings on to Mr. Robertson's representative and to Comerica Bank. I specifically told them 'no crime report was taken and no case number issued.'"

So, according to the detective, Linspire knew that the San Diego Police Department had said that no crime had been committed, and had known this for around three months prior to filing their claim, yet they still filed a claim to Chubb alleging criminal "theft" and "embezzlement." I have to doubt that Linspire's policy with Chubb covered, as Detective McEwen put it, "a disagreement between the Chairman and the CEO, " so I believe they probably decided to tell Chubb it was "theft," something for which they would more likely be covered. In my opinion, such misrepresentations could quite possibly constitute criminal insurance fraud and should be investigated further.

Did Duane Morris Participated in Fraud?

Do you think Chubb would have paid out $100,000 to Robertson had they known of the San Diego Police Department's findings? If Duane Morris had included the findings from the police investigation (as I believe they certainly should have), and let Chubb know that Linspire was told "no crime had been committed," would Chubb have paid the claim? Not having a copy of the insurance policy to review, I can't know for sure, but I do believe it's likely that Robertson and Duane Morris may have felt their chances were better if Chubb considered the claim "theft" and a "crime." I think that is likely why they left out the results of the police investigation, so that the insurance company would not find out what the results were so Linspire's claim of "theft" would more likely be covered. Regardless of what the policy would or would not have covered, leaving out such pertinent information is possible grounds for insurance fraud.

How could the law firm of Duane Morris not have known the results of the police investigation were pertinent? They went to great lengths in their claim to list out all the details of their allegations of "theft" to the police department, even attaching a copy of their "police report," and yet they didn't think to let Chubb know the outcome of that investigation three months after those results had been given to Linspire? Does Duane Morris expect us to believe that Ed Cramp didn't know the outcome? Would Ed Cramp be that incompetent to include the "police report," and yet not take a minute to find out what the results to that report were? In his deposition, Robertson was asked, "Who was the person who liaised with the police department about the police report; in other words, communicated with the police department?" For which Robertson replied, "Michael Umansky." At that time, Michael Umansky was another attorney at Duane Morris who, along with Ed Cramp, worked on the Linspire matter. Robertson also testified that Umansky helped create the "police report" document, and yet Ed Cramp didn't bother to find out how it turned out? It just isn't believable to me. I have to believe Ed Cramp, Michael Umanskey and Duane Morris absolutely knew the outcome of the police investigation, and yet, it appears that THEY FAILED TO DISCLOSE THOSE RESULTS to Chubb. That is by definition insurance fraud, in my opinion, and I have to wonder if Chubb would agree.

A pattern of fraud? Did Robertson and Duane Morris also try to defraud Linspire's bank Comerica in a similar fashion?

Another extremely interesting document that came to light in discovery was a letter from Linspire's bank, Comerica, to Duane Morris. In December of 2008, I blogged about how Robertson lost in summary judgement a case against Comerica. (You can read the details of that outcome here.)

As you can see in this letter from Comerica to Duane Morris in January of 2008, Comerica felt that Robertson and Duane Morris had made "false claims" in trying to have Comerica pay for wire transfers to employees for severance. (Keep in mind this letter came to Duane Morris two weeks BEFORE they filed their claim with Chubb.) Robertson and Duane Morris did the exact same thing to Comerica that they did to Chubb Insurance, using their "police report" to imply they were the victim of "theft," and yet failed to tell Comerica the no-crime-was-committed results of that investigation. Comerica had to track down and interview Detective McEwen themselves, since Linspire did not disclose Detective McEwen's findings to Comerica. As you can tell from the stern tone in Comerica's letter, they felt very much deceived, and called into question not only Linspire's credibility, but that of Duane Morris as well:

"Not only does this undermine Linspire's credibility, it also undermines yours. The motivation underlying Linspire's decision to refrain from signing the Fraud Affidavit under oath is so obvious it strains credulity to suggest it is either accurate or legitimate."

The letter points out that Duane Morris knew of the outcome of the police report BEFORE they gave a copy of it to Comerica:

"Detective McCewen advised Comerica that no case number was assigned to the Draft Police Report because--as he said he informed you prior to your delivery of the Statement and the Draft Police Report to Comerica--the District Attorney determined that no crime was committed and that this was a civil dispute between Linspire and the Employees. He pointed to the employment contracts provided by Linspire to the SDPD, which indicate that the respective amounts of the Employee Wires were less than the amounts legally owed by Linspire to the Employees for contractual severance."

Comerica's letter ends in pointing out that defrauding a financial institution is a crime:

"See, 18 USC 1344 (federal crime to knowingly execute or attempt to execute shceme to obtain money of financial institution by means of false or fraudulent pretenses, representations, or promises)."

These are just a few excerpts from the letter. I would encourage everyone to read the entire letter here. You'll see that the Comerica bank shares many of my beliefs about Robertson and his lawyers. It's hard to imagine that after Duane Morris received this stern letter from Comerica, warning them of possible criminal charges for fraud, that Duane Morris would, just two weeks later, make the same allegations to Chubb. This is evidence that Duane Morris likely knew full well what it was choosing to include, and leave out, when they sent their claim to Chubb.

One might wonder why a nationally-known law firm would put itself at risk by seemingly participating in insurance fraud. Consider what happened in 2002 with one of the Big Five accounting firms, Arthur Andersen. After being found guilty of criminal charges relating to the firm's handling of auditing of the failed Enron corporation, Arthur Anderson voluntarily surrendered their licenses to practice as Certified Public Accountants in the US. Firms can become so addicted to collecting hundreds of thousands of dollars of easy client fees, that they just don't have the courage or willpower to stop and drop a questionable client who pressures them to participate in an activity that finally crosses the line.

I've always had a low opinion of Michael Robertson's ethics (see www.freespire.com), and why I feel he needs a strong, ethical law firm to keep him in check. It's very disappointing that such a large, seemingly respectable firm such as Duane Morris would let Robertson pull them down into what I believe are fraudulent activities. Is this the standard Duane Morris holds itself up to? I have to wonder if filing such a claim was something only Ed Cramp was comfortable doing, or is this the culture at all of Duane Morris?

I find it quite ironic that Robertson falsely accuses former employees of criminal activities, and yet he may be the one who attempted the real crimes of bank and insurance fraud. Robertson tried to have former employees arrested and thrown in jail. They have been vindicated of any criminal wrong-doing. I think the facts now show that it's Robertson and Ed Cramp who need to be investigated and perhaps belong in jail and disbarred. Hopefully Chubb will investigate, along with the appropriate government insurance fraud investigation units.

I have forwarded a copy of this blog to Chubb, who claim they prosecute insurance fraud vigorously, stating "We will not pay a fraudulent claim. In fact, we will spare no expense when fighting fraud." I have also filed a police report on this matter with the San Diego Police Department, as well as filed a report with the Department of Insurance for the State of California.

Kevin

PS: Follow the outcome of any investigation on this matter at Freespire.com.  

Court Orders Michael Robertson to Pay Former Employee $300,000+

Robertson's attacks continue to backfire. Court orders

him to pay over $300,000 to a former Linspire employee.

For those of you following the case of Michael Robertson's insane attacks on former Linspire employees, you will be interested in the latest development from the court today...

One of the former Linspire employees that Robertson attacked was the Controller. This employee (along with several others) was vindicated of all counts in September. Because the Controller had a contract dispute with Robertson, attorney fees are usually awarded, but of course Robertson fought paying. Today, the court awarded the Controller and his lawyer $215,000 in legal fees and $22,958 in prejudgement interest. The Judge also affirmed the jury's damages judgement of $72,500, to be paid by Robertson (Linspire) to the Controller. This means that Robertson will have to pay over $300,000 to just this one employee for his failed attempts in attacking him in the courts. You can read the ruling here. (This is the tentative ruling which was affirmed in court today by Judge Taylor.)

Three of the other employees who were also fully vindicated in the ruling in September, decided not to go after Robertson for their attorney fees, just wanting to move on with their lives. This means Robertson's false allegations and attacks have left them saddled with tens of thousands of dollars in legal bills. All of this makes one wonder why anyone would want to work for Robertson?

I'm glad the Controller decided to go after Robertson for his baseless attacks and that the court system once again worked. As best as I can estimate, between the damages awarded against Robertson and his own legal bills, he will have wasted well over a half million dollars on his vendetta against these employees. (In an upcoming court motion, we may even learn exactly how much money Robertson has wasted on his lawyers.) What a waste of time, money and energy, but then, I've never know Robertson to be sane and rational in his thinking when it comes to his bruised ego. He spends all this money only to shine a spotlight on what kind of person he really is. Brilliant!

Congrats to the Controller and his lawyer, Greg Goonan (who the judge even referred to as "formidable" in his ruling) on seeing that justice continues to be served against the bully Robertson. It's been over three years since the Controller lost his job at Linspire and Robertson denied him his rightful severance. Today, he finally got justice, well, that's assuming Robertson actually PAYS the court-ordered damages. If he doesn't, of course, I'll let you all know.

Kevin

Jury Vindicates Former Linspire Employees of 3-Years of Attacks by Michael Robertson!

Once again, Michael Robertson's bullying has been put to an end
by the greatest legal system in the world. Yesterday, a jury vindicated
four former Linspire employees who were being wrongly abused and
attacked by Michael Robertson. He knew these employees had
done nothing wrong, but used them as innocent pawns in his attacks.

Many of you who follow my blog do so to keep tabs on the litigious antics and bullying of multi-millionaire Michael Robertson. You also know that I started blogging about Robertson only after he started attacking former Linspire employees who I knew to be honest, good people. I've never had any problem with Robertson disagreeing with me or what I did as CEO for Linspire. It was his attacking these blameless employees that bothered me. Those employees deserved being stood up for as Robertson tried to roll over them.

When asked why he was attacking all these good people, Robertson would say, "Just wait until I get my day in court. You'll see the truth." Well, Robertson not only got his "day" in court, but he got three weeks, and we now do have the truth. Yesterday, after being in the court house for three weeks, the jury returned their verdict. Read on....

Quick Summary of the Case

Three years ago, I was the CEO for Linspire. Michael Robertson had stepped down two years earlier, and had virtually no involvement in the running of the company since. However, after the Linspire employees brought in a VERY profitable year, Robertson suddenly decided he wanted to be involved. He first asked me to have Linspire transfer $1,000,000 to himself and $500,000 to his father-in-law, the two preferred shareholders. I explained to Robertson that he couldn't just take money out of the company like that, and that there were around 100 other shareholders to consider. If he wanted a distribution, the company would need to offer it to ALL shareholders, not just Robertson. I then came up with a stock-buy-back plan which would have gotten his father-in-law the $500,000 Robertson wanted him to get, BUT in a legal, fair and equitable way, taking ALL shareholders into account.

Robertson rejected my stock-buy-back proposals. I believe he realized that the only way he could get his hands on the majority of the money (without having to share any with the other shareholders), was to run the company into the ground, liquidate it, and then he and his father-in-law, as preferred shareholders, would be first in line to get paid from any liquidation proceeds. (Which is exactly what he did, and in ten short months, millions of dollars from the company magically disappeared and the company was sold. To this day, shareholders have been given no accounting as to what happened.)

Robertson next wanted me to lay off several long-term, dedicated Linspire employees with only two weeks of severance (even though they had just turned in an VERY profitable year). I refused and told Robertson I wanted no part in such a selfish act. I told Robertson that I wouldn't come into work the coming week so that he would have plenty of time to fire me, take the CEO position back, and then fire the employees as he saw fit. Robertson never did fire me or any of the employees, but rather, called me a week later insisting I come back to the office and do his dirty work, fire the employees, give them two weeks of severance, and transfer $1.5 million to him and his father-in-law. Again, I refused, this time telling him I would return to work and execute the layoffs, but that I would give the employees a fair and reasonable severance, not the two weeks he wanted. That is exactly what I did. I returned to the office and laid off the employees, giving them what I believed was the correct severance. As came out in court, as the CEO, I did intentionally navigate the situation to prevent Michael from stepping in and harming these employees (for which the Jury awarded some small damages against me). I stand by my authority as CEO to have taken the actions I did, and I am glad to have protected these good employees. When I laid the CFO off, he even agreed to take less in severance than he was due based on his employment agreement, which more than offset the additional severance I awarded the other employees, in essence, saving the company money AND treating the employees fairly.

Robertson, upset by my actions, absolutely refused to talk or meet with me (even after repeated attempts by me to meet with him to explain all that had happened), but instead, set about attacking me and the laid off employees at every possible turn. He did many despicable things to these employees, including filing a lawsuit, accusing the former employees of fraud, conspiracy, etc. simply because they were laid off and given severance by me, the CEO. The complaint asked for $318,000 in damages from the employees. The six employees involved were two VPs, one Team Lead, the Controller, the CFO, and myself (the CEO). The only one Robertson should have gone after was ME. I am more than happy to accept any judgment against me IF I did in fact do anything wrong, but I will never forgive Robertson for having gone after employees HE KNEW did nothing wrong. Dragging them into this was disgusting and shows exactly what kind of person he is.

The Jury's Verdict

As hoped, the jury completely vindicated the employees he dragged into this. As you'll see, they did find me responsible in a few areas and awarded a small amount of damages.

Here is what the jury found...

VP #1 - Not liable on all counts and gets to keep all of his severance.

VP #2 - Not liable on all counts and gets to keep all of her severance.

Team Lead - Not liable on all counts and gets to keep all of his severance.

Controller - Not liable on all counts AND Robertson was ordered to pay him $72,500 in damages. (The controller had an employment agreement for six months of severance which Robertson had previously refused to honor.)

The only thing that went Robertson's way was that I (CEO) and the CFO were found responsible in a few areas, and Linspire was awarded a small amount of damages from us (equivalent to about four months worth of the CFO's severance), but the damages were far from what Robertson wanted so the jury definitely didn't agree fully with Robertson's side of things. I still believe everything I did was within my authority as CEO, and the CFO did absolutely nothing wrong, as he was simply following my directions (which his employment agreement told him to do). So...

CFO - As I mentioned, he had an employment agreement for two years of severance, but Robertson wanted him to get only two weeks, later moving that up to 2.5 months (in trial he requested the CFO get NO severance). The CFO, however, agreed to accept only 12 months of severance when laid off, saving the company the other 12 months of his severance. The jury ruled that the CFO could keep all of his severance, but awarded damages to Linspire which equated to about 4 months of the CFO's severance. (Even though the CFO essentially ended up with 8 months of severance, well above the 2.5 months Robertson wanted him to receive, we are considering a post trial motion given that he had an employment agreement for two years of severance and was terminated without cause.)

CEO - Like the CFO, I too had an employment agreement giving me two years of severance. However, after laying off the employees, I freely resigned and walked away from my severance, wanting nothing more to do with Robertson. The jury found me responsible for the same items as the CFO and ordered that I be joined in those same minor damages.

The Bottom Line

Needless to say, I was THRILLED with the jury's verdict. Robertson attacked these good employees, out of spite, greed and ego, and wound up with essentially nothing but a big pile of legal bills. I have never cared what judgments came to me--I have always been prepared to live with any of the consequences of my decisions as CEO--but to see the employees vindicated was great. It's been a long three years of Robertson attacking these good people and blemishing their reputations. It was nice to see their names cleared.

So, the bottom line? As per the complaint, Robertson wanted to 1) take away ALL the severance from ALL the employees and be awarded $318,000 AND 2) not be forced to pay the Controller his severance of $72,500. After the jury's verdict, Robertson will end up netting only $8,833, all while having spent, I'm sure, hundreds of thousands in legal bills (ouch!) and quite likely being liable for more, since all the employees who were found not having done anything wrong are of course asking the judge for statutory indemnification and legal fees. It's certainly not fair that these faultless employees should have to pay their legal bills for just defending themselves against Robertson's baseless attacks.

Far more important than the financial victory, however, is these former employees have their good names back! Justice was served!

There were a lot of interesting things to come out of the trail such as why Robertson has never told the shareholders what happened to their investment in Linspire, how he feels about common shareholders who he called "second class" from the witness stand, the many despicable measures Robertson took in attacking these former employees, and much more. I will do a follow-up blog with some of these details, but for now, I just wanted to share this wonderful news and take some time to enjoy this favorable outcome.

This is the third loss Robertson has suffered in the courts relating to the layoffs. He lost against his bank Comerica and also against the gripe site Freespire.com. At least his lawyers are doing very well. =)

Thank you's

Thanks to my co-defendants. We have all grown closer together having had to go through this. You have all been wonderful, and as I said, I couldn't be happier for you with the outcome. (Pool party? =)

I want to thank the AMAZING lawyers Gil Cabrera and Greg Goonan who did such a wonderful job at representing us. More important than the outcome, as defendants, we were all so very proud of the way these fine men conducted themselves. There were actually points in their closing arguments that brought many of us to tears, as they advocated for us and the truth. If you ever need a great lawyer, these two are the best!

I want to personally thank all the jury members who had to spend THREE WEEKS of their lives in the court house dealing with this. America has the best legal system in the world, and at the center of it is our jury system. Thank you from me and all the defendants in this case!

I don't know if it's appropriate, but I have to do it, a BIG thanks to Judge Timothy Taylor. I was SO impressed with how he conducted every minute of this case. There was one part where Robertson's lawyer was hammering away at me, trying to make me look guilty because I couldn't find something in a document, but the Judge DID find it and pointed it out. I don't thank him for that, I thank him because he would have done the same for the other side. He is truly a wonderful example of what a smart, fair, and just judge should be. He WAS the smartest man in the room, as it should be.

Lastly, I want to give a special thanks to the many friends and former employees who showed up at the court house to support us these past few weeks! Seeing you there in support was greatly appreciated by me and the other defendants. It was so touching to have received so many emails, not only wishing us all the best, but actually saying you were "praying for us" and that the truth would come out. Thank you from all of us for those prayers. They were answered.

Kevin

Michael Robertson's $20,000,000 Mistake (Almost)

As most of you know, Michael Robertson is continuing his legal attack on some very good people who once worked at Linspire. As part of this legal assault, I have had to produce emails, documents, etc. in discovery. In going through the old emails I had kept, I found one that I thought I would share here.

One day Robertson and I were arguing about how to treat employees. I think employees are the most important asset of a company. Robertson yells and swears at them, tries to make them feel small, gives them crappy severance, and even ends up suing them. During one of these "how do you treat employee" arguments, I was trying to explain to him that the employees I was defending had just brought in millions of dollars in revenues and profits. He would always come back with, "Yes, and that's their job. That's what they get paid to do." He then went on to brag about how "he" got $20M from Microsoft years earlier by forcing them into a rough situation where they had to pay us to change our name.

Oh?

See the email I've pasted below which I had sent to Michael Robertson back in 2002. It's an email that I spent a great deal of time and thought on writing before sending it to Robertson. This email, and my subsequent cajoling of Robertson, would end up being worth $20M to Linspire two years after I wrote it.

"Lindows" had just gotten a favorable ruling in one of the very early rounds of the Microsoft v Lindows trademark case (a full two years before we actually settled). I remember that day very well, as we heard of the ruling right in the middle of a developer's conference that we were holding at the Lindows offices. (I'm sure many of the developers who were at that conference will remember it too, as it was a big victory for Lindows against the giant Microsoft.) After the ruling, Robertson told me that his plan was to try and settle with Microsoft and change our name to ChoicePC. He figured he could get between $100,000 to $250,000 from Microsoft on the heels of this loss for them and that they would now agree to settle. As you'll be able to see in my email to him, I thought that was a bad idea. Much of the press Lindows had been getting was coming FROM the lawsuit. Without that, we were just one of a thousand other Linux distors. We needed something to help us build our brand. To me, that was the name Lindows. I also knew we had little downside but HUGE upside to one day settle for a lot more. Knowing that you can't easily change Robertson's mind (you have to stroke his ego and make him think everything is HIS idea so he can later take the credit), I crafted this well-thought-out email. The next day, after MR had read my email, we met and I continued by tactfully cajoling him. Robertson then agreed with me and decided not to change our name. I remember the sense of relief I felt when he changed his mind. Whew! I'm quite confident that without this email and my cajoling, Robertson would have settled with Microsoft at that time. The rest is history. We continued to milk the press from the name and ultimately took $20M from Microsoft to change our name.

Here's the email.

From: Kevin Carmony [mailto:kevin@lindows.com]
Sent: Friday, March 15, 2002 8:13 PM
To: michael@lindows.com
Subject: Lindows.com

Michael,

First off, congratulations! Not sure if I actually congratulated you on the ruling, so I'll do it now. Not everyone here was as close to the legal proceedings as I was, so they probably don't fully understand how significant your direction in this case was. I was fortunate to have been able to sit in on many of the meetings, calls, e-mails, etc., and to me it was very clear. Many will congratulate our company over this victory, but I sincerely congratulate you personally. Sure, Brobeck has a good team and did some great work (especially Daniel), but I honestly give the bulk of the credit to you. Like you said over dinner, winning doesn't teach you much, but losing does. Lindows.com is the beneficiary of the experience you gained at MP3.com.

As I came back to the office and looked around this place (I was the only one here, everyone was over at the dinner still), and had a minute to think, I have come to the strong opinion that we should keep using the "Lindows" name. I suppose the argument can be made to make the change if MS comes back with a quick settlement, but something tells me they won't, and to be honest, I hope they don't and that we decide to stick with the Lindows name. Let me give you a few reasons why I feel this way...

1. Dvorak said it best, "Lindows has a name that in itself is genius." Two names have put this company squarely on the map: "Michael Robertson" and "Lindows." It was a brilliant move then, and I believe still is, for all the same reasons it was "genius" back then and now even more reasons.

2. Yes, ChoicePC is a very good name as well, BUT it doesn't have the history that "Lindows" now has. I believe the name "Lindows" now stands for much more than when we started (Linux + Windows). It now also stands for not being afraid of taking on MS, it now stands for victory, it now stands for the days of MS always getting there way are numbered. Every army needs a banner, an ensign to rally around..."Lindows" I believe has become that ensign...I'd hate to lose it.

3. Today's victory was felt by so many...you, me, Brobeck...but far more important...our employees, our customers, our Insiders, our supporters, investors, the press, fans, etc. I would feel that if we abandon the name now, in a way we're abandoning them and all the trust they've put in you to fight this fight. What will Dvorak think? What will our Insiders think? What will our employees think? So many people have felt a stake in this fight (you heard the cheers during your toast tonight), I don't want to lose their ardent support. "Lindows" has become the icon of our fight, to bring choice to MS's monopoly. I think it would be a mistake to walk away from that now.

4. I agree we need to focus on making a great product and not fighting legal battles. I believe we've proven we can do this. Our engineering team continues to plow forward, regardless of any legal entanglements. I don't see this a dilution of engineering, but rather a HUGE boost to marketing. I believe we have been handed the best pre-branded name we could possibly have, and it will take much to replace that. Sure, we could work to brand ChoicePC so that everyone comes to know the name...but will the name bring up the same emotions? David V Goliath has served us well in these early days, and I believe there is still steam in that model.

5. We can still introduce the concept of a "ChoicePC" without abandoning Lindows.com or LindowsOS. A "ChoicePC" is one running LindowsOS and shopping at the Lindows.com warehouse. We can gradually brand "choice" while keeping our Lindows banner flying proudly.

6. Lindows has been through the battle and come out victorious (yes, I know this could change, but given such a strong opinion on the PI, I'm feeling confident we will remain victorious.) This battle and victory has injected something into the Lindows name that only another lawsuit could put into ChoicePC. I fear any other lawsuits will be longer fought and perhaps not easily won. We should take this first win and wear it as a badge of honor and courage. As you say, we didn't run when the bully picked on us the first day of school...let's not let MS ever forget that!

7. Finally, I'm exceptionally proud to be associated with this company, and I know all the employees here feel the same way. Lindows is now such a huge part of that pride and our legacy...I don't want to walk away from that. I bet if you took a vote of our employees, 100% would agree. Even if it's not the logical thing to do, it IS the emotional one...and emotions are a powerful thing when trying to get employees to love a company.

You instinctively KNEW that "Lindows" was the right name when we started, just like MP3.com was the right name. My instincts are screaming to me it is even a more brilliant name now.

Just wanted to share my insight as you consider this decision.

Congratulations again! I hope you take some time to cherish the moment...not many can say the took on MS and won.

Kevin

Just wanted to make sure Robertson doesn't try re-writing history. Robertson likes taking the good ideas from employees (read this for example), but then treats them poorly, like pawns in his little world. Just ask most of those who have had the misfortune of having worked for him (or been sued by him).

Kevin

Nearly Two Years and Michael Robertson Remains Silent to Linspire Shareholders

Michael Robertson still not talking to shareholders.

It's been nearly two years since Michael Robertson sold Linspire to Xandros without any shareholder input. To this day, Robertson has never held a shareholder meeting or sent any communication to the one hundred or so Linspire shareholders with the details about that transaction.

It took a shareholder lawsuit (which Robertson unsuccessfully tried to thwart) for Robertson to finally come up with any information. After a year and a half, that case was finally settled. Here is what was disclosed from that settlement:

Kevin La Rue 7:36am March 11th, 2010

Dear Fellow Stockholder of Digital Cornerstone (formerly known as Linspire, Inc.),

As you may know, in October 2008, I initiated a lawsuit as a shareholder of Linspire relating to actions taken by Michael Robertson and Larry Kettler in operating Linspire and their mismanagement of the company. I have settled this matter, receiving no money from Linspire personally, but required that a condition of settlement be that I be allowed to disclose to the other shareholders the information I learned during the litigation about what happened to the company’s assets.

Specifically, under the terms of the settlement agreement, I have been authorized to disclose to the shareholders of Linspire how Linspire’s funds were used by category, how much cash Linspire had at the time its assets were sold to Xandros, and a specific accounting of distributions to Linspire’s shareholders or shareholder related entities. It is important to note that the settlement specifically states that this disclosure I am making is not made on behalf of Linspire, Michael Robertson or Larry Kettler.

Based on the information I received during the course of the litigation, below is the disclosure I have been authorized and am able to make to each of you:

As of July 31, 2007, Linspire had $3,802,531.20 of cash on hand. As of June 30, 2008, when Linspire sold substantially all of its non-cash assets to Xandros, Inc., Linspire had $1,077,952.58.

Between June 2007 and June 2008, Linspire expended: $286,329.96 on its data center.

Between July 2007 and July 2008, Linspire expended: $1,629,907.06 in payroll expenses.

Between June 2007 and June 2008, Linspire paid Ajax13, a company related to Michael Robertson, $180,000.00 for a licensing fee for certain software Linspire was allegedly using.

In September 2008, Linspire transferred $600,000.00 to “SKL Trust, Michael Robertson” for “MP3Tunes Pmt.”

Finally, Xandros acquired Linspire for 4,098,360 shares of Xandros (a privately held company). I was unable to verify the valuation of those shares or to obtain who or what entity currently owns these Xandros shares.

I have tried to send this information to all the shareholders of whom I am aware and for which I have a method to contact them (via email addresses or social media services). To the extent you know any other Linspire shareholders, please feel free to forward this to them for their information.

Yours,

Carl Kevin La Rue

It would appear this is the best the Linspire shareholders can hope for. No shareholder meeting. No detailed explanation. In fact, you'll notice one of the terms of the settlement was that the disclosure was NOT made "on behalf of Robertson," who is clearly doing everything possible to avoid any accounting to Shareholders.

I'm sure the Linspire common shareholders would still like to know:

What was the valuation of the Xandros stock? Who holds that stock now? (Presumably Robertson took this as the preferred shareholder.)

What in the world did Linspire need from Ajax13 to warrant a $180K payment to this Robertson-owned company? As the former CEO for Linspire, I can't think of a single thing that Ajax13 had which Linspire needed, but I can certainly see Ajax13 needing Linspire's cash.

It appears that Robertson forced Linspire into liquidation so he could take the $600K (and presumably all the Xandros stock), and yet has kept the company going to attack former employees. The 100 some-odd shareholders still hold stock in Digital Corner Stone, Inc., and that company has lawsuits going on, attacking former employees and trying to shut down Freespire.com. I still own shares of that business. I don't want to see them attacking good people. To this day, Robertson is using Digital Cornerstone to attack Theresa, Cliff, Randy, and others, forcing them to each spend thousands in legal bills defending their good names.

I have no problem with Robertson as a preferred shareholder getting what is rightfully his due. What I DO have a problem with is 1) him doing everything he did without sharing any information to shareholders for years, and 2) him transferring the assets out of the company as some "liquidation," and then keeping the company going so that Robertson can attack good, honest people.

Michael acts as if because he put up millions, he's the only one who deserves to be treated with any fairness or respect in the Linspire failure. He gives no credit to the 100 or so shareholders who wrote checks to buy shares in the company and exercise stock options, or the employees who worked countless, dedicated hours. When I left there, the team of employees left the company profitable with millions in the bank. How are they rewarded? With legal attacks. The $600K Robertson took was only made possible because of the work those employees did. You could take all the salaries from all the employees he is attacking, for the entire time they worked at Linspire, and it would not equal the revenue these employees brought in to Linspire in their last year there alone. Way to "take care of the peeps" Robertson.

Not long ago, I emailed Michael and offered to take down Freespire.com and even purge all my blogs about him if he would back off his legal attacks against these good people. Robertson declined my offer and to this day continues his attacks.

Even if what he did was technically proper, the way he has treated shareholders and employees is unethical and wrong. That's what I have a problem with.

Kevin

Gizmo5 / SIPphone Shareholders--Beware of Michael Robertson's History

.

There have been rumors reported in the press that Gizmo5 (SIPphone) could be sold soon (now confirmed here). In a previous blog, I cautioned any prospective buyers to be sure and do full due diligence. I encouraged them to not just take Robertson at his word (something no one should ever do with someone like Michael Robertson), but be sure and take a full accounting of any code, data centers, and speak personally with each and every employee.

Today, I want to caution any Gizmo5/SIPphone shareholders. They should look at how Michael Robertson dealt with the 100-some-odd Shareholders at Linspire when he sold that company's assets.

Here is what happened at Linspire:

1. Robertson sold Linspire without any input or notice from the majority of individual Shareholders. Even large shareholders, such as myself, were kept completely in the dark.

2. Millions in cash is still missing and unaccounted for to Linspire shareholders.

3. Robertson sold all the Linspire assets in a secret, backroom deal that to this day the terms of which have never been disclosed to the Linspire shareholders. Linspire's assets were sold well over a year ago and Robertson hasn't given ANY report or accounting to the Linspire shareholders. As I predicted, it would require a lawsuit to get Robertson to tell shareholders what happened, and even after that, we still have no answers.

4. The only accounting that was made, was Robertson talking to the press, where he basically said he and his father-in-law, as preferred shareholders, would be the only ones to see anything from the sale.

5. To date, every Linspire common shareholder has lost 100% of their investment, without any notice from Robertson, who remains in hiding from Linspire shareholders. (Actually, ONE common shareholder, Tina Stahlke-Donaldson, was able to sell some of her shares back to the company at a nice profit, after Robertson forced the CFO to accommodate that transaction. Why the special treatment for this one female employee? More on that in a future blog.)

Because VC's are involved at Gizmo5/SIPphone, they may force Robertson to behave more ethically there than he did at Linspire. However, my advice to any Gizmo5 shareholder would be to not sign anything without a full accounting BEFOREHAND. My instincts tell me that you, just like the Linspire common shareholders, could also walk away with nothing, even if Robertson does. Michael will want big numbers to be splashed around in the press so he can pretend to have had a success, but in the end, how much did individual shareholders make? (Thousands of shareholders lost millions at MP3.com, and Linspire shareholders lost all their investment and STILL don't even know what Linspire sold for.) If you are in fact going to get the shaft, you better have Michael explain himself BEFORE the deal is done. If Gizmo5 sells to a big company, that company may never disclose the actual purchase price, and if Robertson treats you the way he did Linspire shareholders, HE will never tell you either.

I'm not sure why anyone would pay more than a few million for Gizmo5, but even if Robertson were to sell it for a big number, I predict the common shareholders still see little to nothing. The VCs will likely have 3x or more liquidation preferences, and knowing Robertson as I do, I wouldn't be at all surprised if he will somehow get the same treatment with his shares. Even if someone was crazy enough to value Gizmo5 for tens of millions, watch how quickly Robertson can "creatively" make sure that as much as possible drops to his pockets, not the common shareholder's.

Why would Robertson suddenly get generous with employees and common shareholders? He is the greediest person I know. Remember, this is the same person who tried to have several former employees arrested for "embezzlement" in a failed attempt to try and take back their severance payments. When those attempts were flatly rejected by the San Diego police department, he then sued these employees to get his greedy little hands on THEIR severance. All that failed energy, work, and harassment over a couple hundred thousand dollars?!? Why would any expect Robertson to suddenly grow a conscience?

Ask questions BEFORE any deal is done, otherwise, you could end up just like the Linspire shareholders, with shares of stock worth less than toilet paper and no answers.

I hope I'm wrong, and the Gizmo5/SIPphone shareholders actually see a return on their investment. I'll be sure and report if they do. At the end of the day, Robertson's real worth will not be determined by how much money he lines his own pockets with (like he did at MP3.com), but how much do ALL the investors make? THAT is the number that REALLY matters.

Kevin

Michael Robertson, the greediest man I know.