Scooter Braun Involved in $200M Legal Dispute Over Private Equity Fund
Scooter Braun, the music industry megastar who launched
Justin Bieber’s career, is now afflicted with a significant legal dispute over
actions in getting a new private equity fund off the ground. On Thursday night,
two events occurred: Peter Comisar, who
spent two decades at Goldman Sachs and then became vice chairman of investment
banking at Guggenheim Securities, filed suit in Los Angeles. Nearly
simultaneously, Braun filed a petition demanding arbitration.
According to the complaint against Braun and top Hollywood
business manager David Bolno, the two decided in 2016 to expand their empire,
settled on a private equity firm as their vehicle and began recruiting Comisar.
Through his petition, Braun says he poured in excess of $5 million into the
launch of SCOPE Capital Management plus a $3 million salary for Comisar.
Comisar says he only agreed to come on board with a
three-year budget and Braun’s personal investment and alleges he got written agreements
memorializing commitments. Braun is also said to have presented the potential
of raising $500 million to $750 million from famed billionaires in the
entertainment community, including David Geffen, Jimmy Iovine and Haim Saban.
Braun demanded he “burn the bridges” with former employers, adds the complaint.
But in April 2018, according to Comisar, Braun repudiated
financial commitments and stopped funding everything including Comisar’s
salary.
“Bolno, completely unrepentant, explained to Comisar that
Braun never really believed he would have to perform and, brazenly, told him
that ‘people in the entertainment industry do not honor their contractual
agreements,'” states the complaint. “Bolno made clear that he and Braun
believed that Braun was free to renege on his commitments with impunity and
without consequences and would wreak havoc upon Comisar if he chose to pursue
Braun on his commitments.”
Braun presents a different side of the story in his own
arbitration demand. According to him, it’s Comisar who breached a commitment to
raise $250 million for the upstart venture. “Comisar was unable to get a single
investor to invest with SCOPE Capital Management,” states the petition.
Moreover, according to Braun, Comisar diverted resources to
a consultancy and is only now coming forward with “extortionate” demands
because of the impending $1.05 billion sale of Braun’s holding company, Ithaca,
which includes a talent management company, a publishing company, and a record
label.
“Unfortunately, the public disclosure of Braun’s recent high
profile business success has prompted Comisar, an unscrupulous former business
associate to resurface because he sees an opportunity to extract a further
unearned and undeserved payday,” states the petition for arbitration.
Three years after Braun and Comisar had a falling out, the
controversy is now hitting a court.
Braun insists that the notion he had some master plan to
oust Comisar is “absurd” while Comisar implies the script for his dismissal
came early. In particular, Comisar alleges that three years ago, he was
threatened with a smear campaign that included falsely being fired from Goldman
Sachs, dereliction of duties by devoting time to advisory services and racism
as a predicate for his removal.
“Braun warned that this storyline could well destroy
Comisar’s career,” continues the complaint. “The racism claim was entirely
fabricated and without basis. The untoward intimidation strategy of Braun and
Bolno hatched in September 2018 failed. Comisar has remained a value-added
Board member and steward of investors’ capital in this portfolio company during
the two-and-one-half years that have passed since the attempted smear.”
Since 2018, Comisar says he continued forward and
established a merchant bank named STORY3 Capital Partners + Advisors.
Meanwhile, alleges Comisar, Braun hasn’t successfully done
fund raising.
“Not one of Braun’s contacts agreed to invest any amount,
much less the hundreds of millions Braun had promised. Braun had to explain to
Comisar, tail between his legs, how he had asked David Geffen, his supposed
godfather, to invest in SCOPE, only to be told by Geffen that he did not view
Braun as someone with whom Geffen would invest. Braun got the same brush-off
from Jimmy Iovine, Haim Saban, and the Rueben, Soros and Mittal families —
indeed, Braun was rejected by each of his promised close relationship
investors. The truth was that Braun’s relations valued him as someone to
socialize with, but to whom they would never entrust their millions.”
Asserting a causes of action of fraud, breach of fiduciary
duty and breaches of contract while demanding $200 million in damages,
Comisar’s complaint adds, “When it came to fundraising, Braun turned out to be
a sheep in wolf’s clothing, ultimately admitting to Comisar that despite his
bravado, asking people to invest made him ‘uncomfortable’ and he therefore refused
to fully engage in the fundraising efforts. In other words, as Comisar
ultimately found out when Braun pulled out entirely, Braun had never intended
to be fully engaged as he had promised Comisar he would.”
Comisar is represented by Joel Kozberg.
Braun is represented by a Russ August & Kabat team led
by Stanton “Larry” Stein plus James Sanders and Kasey Curtis at Reed Smith.
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