Plaintiffs in 'Consipio v Private' Allege Obstruction of Receiver

LAS VEGAS—In documents filed with the court in the Las Vegas version of Consipio v Private, the plaintiffs allege that, on the heels of the appointment by Nevada state judge Elizabeth Gonzalez of a receiver, Eric Johnson, to oversee all Private Media Group assets, the company has engaged in obstructionist behavior in violation of the court's order. The allegations, which are being denied by Private, were contained in an Aug. 31 errata (accessible below) to the plaintiffs' opposition to the defendants' motion to stay the order. "Unless Mr. Johnson is permitted to act as the Receiver for PRVT," the errata states, "[Private CEO Berth] Milton will succeed in draining away all of PRVT's assets and valuable intellectual property rights—as he has already tried to do in the days following the Court's August 23, 2011 ruling—thereby bankrupting the corporation." Specific allegations by the plaintiffs include: * On Aug. 25, 2011, two days after the court appointed Sureflix CEO Johnson as receiver, Milton removed $24,701.62 from Private's bank accounts; * On Aug. 26, 2011, in a 8-K filing with the SEC, Private stated, "whether or not the order [appointing receiver] is stayed or set aside, the company intends to conduct its business in the ordinary course"—i.e. Private will not recognize the authority of the receiver: * On Aug. 28, 2011, Private CFO Johan Gillborg sent Johnson an email informing him that Private had received preliminary legal advice from local counsel in Sweden and Spain and additional legal steps must be taken by you, as receiver, to exercise power over non-US operations. We are awaiting legal advice in other jurisdictions." * On Aug. 29, when Johnson arrived in Barcelona and went to Private's European headquarters with certified copies of the order appointing him receiver, he was refused entry into the building on Milton's orders. The claim is supported by a declaration filed with the court by Johnson. * On Aug. 29, Private VP of Online Services accompanied Johnson to Private's Barcelona headquarters. He was initially allowed into Private's offices but was forced to leave by Milton, who called the police and building security to have Sullivan forcibly removed. Sullivan left the building before the police arrived after being given an unsigned letter from Milton stating that "Milcap Media Group, SLU—one of Private's main subsidiaries—or any other Spanish company mentioned in the decision—has no legal duty to follow the receiver's instructions." This claim was supported by a declaration by Sullivan filed with the court. * On Aug. 29. 2011, Milton attempted to transfer the internet domain, Private.com, from the company's name into his own name. Upon learning of this, Johnson contacted the legal department of the registrar and informed them of the order appointing him receiver. The registrar subsequently refused to recognize the attempted transfer and instead placed a legal block on the domain preventing Milton from transferring it into his own name. * Gillborg and Private's U.S. Securities Counsel Samuel Guzik have been organizing calls with NASDAQ without Johnson's knowledge or input. In addition to these allegations, the errata further states that in his declaration filed with the court, Sullivan claimed that in January 2011, "During a meeting between Milton and Mr. Sullivan, Milton stated that 'if they [the plaintiffs in the Nevada case against PRVT] win, there will be nothing left of the company to take.' This suggested to Mr. Sullivan that Milton was preparing to either drain, damage or remove assets from Private-owned companies." All of the above allegations are being made by the plaintiffs in support of their contention contained in the errata's conclusion that, "Unless Mr. Johnson is permitted to act as Receiver, Milton will succeed in fraudulently draining away all of Private's assets and valuable intellectual property rights, thereby bankrupting and destroying the corporation before the writ petition can be decided. Moreover, PRVT is not likely to prevail on its petition for writ relief from the Order appointing the Receiver." Private replied to a request for comment with the following statement: "The company does not comment on ongoing litigation; however, the new allegations referenced from court documents are in fact unfounded and not true. First and foremost, Berth Milton does not have power to sign for bank transfers or trademarks. Also, the money referenced was paid to Berth by accounting to cover his normal salary that was due to him. In regards to the domain name, per a statement from an employee that manages Private’s domain names, no such act or action was ever taken on by Berth Milton in an attempt to 'transfer the valuable Internet domain name, Private.com, from the corporation’s name into his own name.'" In related news, AVN reported yesterday that a justice of the New York Supreme Court had issued an order authorizing the attachment of over $7 million in Private Media Group assets. Consipio Holdings BV is the sole plaintiff in the New York action against Private and a co-plaintiff in the Las Vegas action. The Errata can be accessed here.