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Cheyenne Mountain Entertainment Joins Litigation Against Former Chairman, Gary Whiting
rhinok
Member UncommonPosts: 1,798
MESA, Ariz. – February 16, 2010 – Gary Whiting, the Company’s former, Chairman and former CEO of its subsidiary Cheyenne Mountain Games, Inc. has been named in a complaint filed in Maricopa County, Arizona Superior Court by shareholders, derivatively on behalf of Cheyenne Mountain Games, Inc. and Cheyenne Mountain Entertainment, Inc., alleging various wrong doing against the Company.
The Company also became aware a few months ago that Mr. Whiting, was named in a complaint filed in Utah County, Utah, (Case No. Civil 0904022438), and that he has caused the Company to be named in that same lawsuit, and he has allegedly obligated the Company for monies paid to Garvick Properties, LLC, a limited liability company controlled by Mr. Whiting (“Garvick”).
Mr. Whiting and Garvick purchased various securities from the Company and its subsidiaries and has failed to honor the terms of these purchases and has failed to pay the payments when due; therefore, the Company and its subsidiaries have foreclosed on the collateral securing Mr. Whiting’s and Garvick’s obligations including all shares and units owned by Garvick and Garrick Enterprises, LLC.
The shareholders and board of the Company have removed Mr. Whiting as a board member and as an officer and terminated his employment with the Company and any of its subsidiaries. The Company has joined the litigation against Mr. Whiting for alleged wrongdoing. More information about the litigation can be found at http://www.superiorcourt.maricopa.gov/docket/CivilCourtCases/caseInfo.asp?caseNumber=CV2010-003106.
It is uncertain at this time what the affect of Mr. Whiting’s actions and the pending litigation will have on the Company’s operations and financial condition.
About Cheyenne Mountain EntertainmentTM
Cheyenne Mountain EntertainmentTM is an interactive entertainment company located in Mesa, Arizona. Cheyenne Mountain Entertainment's first product is a 3rd person shooter based on the popular science fiction television series, StargateTM SG-1 and StargateTM Atlantis. For more info on the company, visit the company's website at www.cheyenneme.com. For more info on Stargate Resistance, visit the new community site at www.stargateresistance.com
About FireSky
FireSky is a publisher and part of the Cheyenne Mountain Entertainment group of companies. FireSky’s current published product is Stargate Resistance, based on the longest-running U.S. science fiction television series Stargate SG-1® and Stargate Atlantis ™ which are officially licensed by MGM Interactive. For more information, visit the company's websitewww.firesky.com and the Stargate Resistance community site atwww.stargateresistance.com.
Cheyenne Mountain Entertainment, FireSky, the Cheyenne Mountain logo and the FireSky logo are trademarks or registered trademarks of Cheyenne Mountain Entertainment, Inc. in the U.S. and/or other countries. Stargate SG-1TM and © 1997—2006 Metro-Goldwyn-Mayer Studios, Inc. All rights reserved. All other trademarks or tradenames are the property of their respective owners. Statements herein concerning future events and developments and the Company's expectations, beliefs, plans and estimates constitute forward-looking information that involves risks and uncertainties. Cheyenne's actual results could differ materially from those indicated by the forward-looking information.
~Ripper
Comments
Late to the party, but here is a link to the complaint patrickpretty.com/wp-content/uploads/2010/02/DeeringGuenther.pdf
Enjoy!
Interesting read... and a lot of it seems to back up what has been mentioned here about the corporate structure. I quote, starting from page 9:
CME ... effectively has unilateral management control of CMG. Garrick Enterprises... effectively has unilateral management control of CME. EEU effectively has unilateral management control of EEU. Through the above ownership structure, Mr. Whiting effectively has unilateral control of each of the above companies.
So, given that, I'm not sure how CME can remove Whiting from the board, if he controls the majority interest of CME. And while his dealings may have been (were likely?) fraudulent and have violated fiduciary responsibilities, a lot of the complaint keeps mentioning that he did this and that without board or strockholder approval, but their own statement above says he has unilateral control, so by definition, isn't whatever he says and does have implicit shareholder approval?
It also seems to stretch the limits of belief that the officers of CME didn't know exactly what Whiting was doing. Or if they didn't, this was by their own desire to keep themselves ignorant.
Having read the pdf, Whiting and Garvick are the majority share holders, but they havent actually paid for the shares, if I read right, couldnt CME just demand all the shares back and gain control from him and Garvick.
CME can demand all they want, but unless they are voluntarily given back, it would probably take a court case to determine the rightful ownership. This may be partly why CME is going into receivership.
And when the shares come back, they are not "voting" shares, I don't think. And if they are, then they would be under the control of the board, aka Whiting. Now, who might control the board at that time, minus those shares, might be up for question I suppose.
I note that on one hand CME is saying that Whiting and Co never paid for their shares, but somehow, somewhere, they got about $40-50 mil, didn't they? I imagine that all came through Whiting somehow (and probably in some indirect way such that he maintained direct control, rather than having real voting shares go out).
Remember, the company officers/executives do not control the board, or have any say in its composition. It is the other way around--they (CEO, etc.) are but employees of the stockholders (as represented by the board).
Any way you put this, it's a mess. Considering how slow these court cases seem to go, I wouldn't be surprised to see CME in limbo for a year or two.
Well that was a holy s*** read thanks loveclone for that.