Skip to comments.FR EXCLUSIVE: Spiderman Stan Lee and POW! Entertainment Sued in Fed Court re Bankruptcy Illegalities
Posted on 07/09/2007 6:12:39 PM PDT by doug from upland
NOTE: this is an incredible story. Shining the light on this bankruptcy case will shine more light on the Clintons. The case was filed today at 5pm in Federal District Court in Los Angeles.
Spider Man Creator Stan Lee and POW! Entertainment (POWN) Sued by Stan Lee Media for Illegalities In Bankruptcy Transfers
Federal Lawsuit filed Monday by Stan Lee Media in Los Angeles Details Frauds by SpiderMan Creator Lee in Taking Assets from Bankruptcy Estate to Launch New Public Company Owned and Operated by Lee and SLM Insiders
LOS ANGELES July 9, 2007 -- The company that was founded by Spider Man creator Stan Lee in 1999 and saved from attempted legal annihilation by Lee in November 2006 by Wall Street whistleblower James Nesfield has today filed suit against Lee and his new public company POW Entertainment for illegal transfers of assets from the Estate in Bankruptcy along with other allegations of serious wrongdoing.
The following are pertinent quotes from the Complaint:
8.defendants have conspired to commit and have otherwise engaged in acts of fraud upon plaintiff, plaintiffs shareholders, plaintiffs creditors and the United States Bankruptcy Court for the Central District of California.
9.defendant Stan Lee with the help of other insiders (Gil Champion and Arthur Lieberman)founded two new companies named POW! And QED in or about November 2001. Thereafter, Stan Lee proceeded illegally to transfer substantial assets of plaintiff into QED and POW!, all while plaintiff was in bankruptcy and while Stan Lee should have been protecting plaintiffs assets from misappropriation. The acts of Stan Lee and his newly formed companies were perpetrated with the specific intent to (a) mislead the Bankruptcy Court, (B) violate express orders of the Bankruptcy court, and (c) loot and defraud plaintiff and plaintiffs shareholders and creditors for defendants personal financial gain.
18. The October 151998 Employment/Rights Agreement from Stan Lee included an assignment in favor of Stan Lee Entertainment Inc., which stated in pertinent part: I [Stan Lee] assign, convey and grant to [Stan Lee Entertainment Inc.] forever all right, title and interest I may have or control now or in the future in the following: Any and all ideas, names, titles, characters, symbols, logos, designs, likenesses, visual representations, artwork, stories, plots, scripts, episodes, literary property and the conceptual universe related thereto, including my name and likeness (the Property) which will or have been in whole or part disclosed in writing to.published merchandised, advertised and/or licensed by [Stan Lee Entertainment Inc.]its affiliates and successors in interest and licensees (which by agreement inures to [Stan Lee Entertainment Inc.s] benefit) or any of them and any copyrights, trademarks, statutory rights, common law, goodwill, moral rights and any other rights whatsoever in the Property in any and all media and/or fields, including all rights to renewal or extensions of copyright and make applications or institute suits therefore (the Rights). Plaintiff is currently the rightful owner and holder of all rights and assets set forth in the October 15, 1998 Agreement as plaintiff is the ultimate successor in interest to Stan Lee Entertainment Inc.a Delaware corporation.
25.Since October 15, 1998, the October 15, 1998 Agreement has never been terminated and remains in full force and effect.
26. The October 15, 1998 Agreement was recorded by plaintiff on or about November 28, 2006 with the United States Copyright Office. (and has not been challenged)
The claim includes rights to ownership of all creations of Stan Lee since he left SLM: K) including but not limited to everything he has worked on while affiliated with defendants POW! And QED.
76. Contrary to plaintiffs ownership rights to same the defendants have used, marketed, licensed, merchandised, promoted, advertised and otherwise exploited the Assets for their own financial benefit and without the participation, authority and consent of plaintiff. Defendants have used or licensed Stan Lees name and/or likeness in conjunction with their efforts.
Allegations of SEC Fraud in Public Statements and Actions by POW
82. On or about December 13, 2005, the defendant POW! issued a press release containing false and misleading factual information which clearly demonstrates its intent as well as the intent of the other defendants to assert control and ownership over the Assets and Properties as well as the name and likeness of Stan Lee to the exclusion of the plaintiff: Los Angeles, CA , December 13, 2005- POW! Entertainment (PK: POWN)has announced that POW! Entertainment acquired the exclusive rights and ownership in perpetuity to the name Stan Lee ...
This lawsuit is being filed by famed Los Angeles litigator Pierce O'Donnell and managed by Sean Sheppard of the Andersen Firm in Florida.
About Stan Lee Media: Stan Lee Media can be found on the World Wide Web at http://WWW.stanleemedia.net
Stan Lee Media, founded by Stan Lee in October 1998 to build an Internet based Super Hero creation and production studio in Hollywood, emerged from Chapter 11 bankruptcy protection on December 6, 2006 under the control of Wall Street whistleblower James Nesfield. The law suit, filed against Marvel on March 15, 2007 and now against Stan Lee et al, resulted from a rigorous legal review and forensic analysis of all rights, assets and claims that survived Stan Lee Media's six year bankruptcy proceedings as remaining assets of the company.
Mr. Nesfield became identified on 60 Minutes and in his testimony before the U.S. Senate as the whistle blower who exposed the biggest Wall Street fraud in history, the trillion dollar Mutual Fund Market Timing Scandal. Mr. Nesfield followed Stan Lee Media since its inception as a high flying NASDQ dot Com company during its publicized run up to a $350 million market cap in February 2000 and its flame out in December 2000, when its third death spiral convertible financing was announced on November 30, 2000.
After Stan Lee Media filed for Chapter 11 Bankruptcy protection in Los Angeles in February 2001, Mr. Nesfield followed the actions by the Debtor in Possession management directed by Stan Lee, noting that the bulk of the company's assets were hidden and/or transferred indirectly to a new public company, POW Entertainment, created by Stan Lee and other Stan Lee Media insiders Gil Champion and Arthur Lieberman.
Mr. Nesfiled determined that the Primary Asset of the company, all of Stan Lee's Intellectual Property rights, had remained with the company when it was dismissed for cause as warranted by the US Trustee Jennifer Braun. When the company reverted to the control of shareholders, Nesfield became President and Chairman of the revived company.
After rigorous legal review of all the actions taken by or on behalf of the company since its inception, Mr. Nesfield confirmed that, among the Intellectual Property rights that Stan Lee assigned to capitalize his new company in October 1998, were all of his co-creator's rights to his Marvel creations. After Stan Lee's lifetime exclusive employment contract with Marvel was voided during Marvel's Chapter 11 Bankruptcy proceedings in 1998, all of Stan Lee's rights reverted back to him. When Lee gave everything he owned in the "creative universe" as of October 15, 1998 to his new company it included Lee's 50% ownership interest in the largest entertainment franchises in the industry.
While the cases are unrelated, they are based on the same Rights Transfer agreement that Stan Lee made with Stan Lee Entertainment in October, 1998. Under that Agreement (prior in time by 30 days to a similar Agreement Stan signed with Marvel which was also fraudulent on its face because it warranted that the October Agreement was never made) Stan Lee Media became the owner of ALL of Stan Lee's intellectual property rights for what he owned in October, 1998 and what he would create in the future. Because Marvel vioded Stan's original lifetime exclusive contract with Marvel in August 1998, all rights Stan ever owned reverted to him as of September, 1998 and were owned by him in October when he made the assignment to SLM. SLM continues to own those rights which lee hid in his administration of the Bankruptcy.
If not criminal now, what comes about under oath will contribute to a criminal prosecution down the line.
Nice post as usual Doug.
It’s clobberin’ time!
I cannot say that it has happened or will happen, but if the Trustee suspects wrongdoing by a debtor in possession, it is the job of the Trustee to make a criminal referral.
In the bankruptcy, the court approved an agreement that would allow Lee to pull out certain properties from the BK free and clear of creditors and put them into a company called SLC LLC. The purpose was to develop the characters for the benefit of the shareholders and to pay off debts. I have seen the exhibits. That company was never formed by Lee.
Instead, a few months prior to the dismissal of the bankruptcy, there are recorded documents showing a transfer of certain characters and properties to QED, a subsidiary of POW! Entertainment. There is no evidence anywhere to show that the court, the creditors, or the Trustee were aware of that transfer.
Does this mean that the trademarks, characters, and licensing were shifted away from Marvel when Ron Pearlman almost sent the company (and the whole industry) belly up in the 1990s?
What of Jack Kirby, Steve Ditko, and other CO-creators at Marvel? Did they ever get to establish partial ownership? Or did they settle for a lump sum payment?
The position of the newly reformed Stan Lee Media, under the direction of Nesfield, is that SLM owns 1/2 of the rights that are claimed by Marvel. SLM filed a $5 billion lawsuit a few months ago against Marvel. You can see the links previously provided, the two contracts made by Lee.
There are some very, very powerful attorneys representing Stan Lee Media in both cases.
I know of a similar case a friend of mine had that mirrored what you are talking about and the people they sued avoided the criminal stuff by out of court settlements for lots of money with privacy made as part of the settlement.
The stock holders want money more than Lee in jail, and now based on evidence, they will be able to force Lee to pay far more to them than they would have originally paid themselves in the investment.
Lee has totally screwed himself and could lose 85% of so of what he tried to take.
Here is a bit of a link where Lee is connected from the past for you as well.
Stan Lee was dumped by Marvel. Peter Paul was instrumental in setting him free so he could genuinely profit from his creations. At Marvel, he was only an employee. Lee later sued Marvel and got a settlement that was probably in excess of $15 million. Because of the contract signed with SLM that was never disavowed, the position of SLM is that the benefits accrue for SLM and the stockholders.
Depends on if the Judge is related to a friend of someone. Unless Lee gets that kind of break, he’s screwed... as he should be.
I don’t know anything about a resolution with Kirby and Ditko.
Yes, Lee has screwed himself. How would you like to own stock in POW! Entertainment? How would you like to be someone from Disney who recently negotiated a deal with Lee?
The complaint and exhibits are lengthy. I think they may be about 100 pages. When I have some time, I may pull a few of the exhibits for your enjoyment. The recorded documents really tell a story.
I have read some of the BK file, which took many, many hours. It only scratched the surface. Because of the contract Lee had with SLM, one would think that such contract and the rights therefrom would have been an enormous asset to be listed in the BK. Why was it not listed as an asset? It was the most valuable asset. Shareholders settled for pennies on the dollar. And now, by some superhero magic, characters and assets are part of the new POW! Entertainment. That is a big, big problem.
In the one similar case I remember, my friend went after the other folks and in discovery they threw back some 40 thousand pages of documents.
The technique was an attempt to comply with the court, but to make finding evidence against them very tough to do.
Well as I told you before once, they got a fast scanner and paper-port. Scanned all the documents in 4 days and then used the data base feature in paper-port to search for evidence of what they needed. They could bring up evidence in seconds that on other cases they would never find.
Anyway, look for a paper dump in the tens of thousands, it is what lawyers do in multimillion dollar cases.
The side benefit would be that you might find you are getting this a lot more in the public’s attention.
Think about linking your video in this thread please with Stan Lee all full of himself in that other possible piece of criminality.
Claim Against Marvel Alleges Co-Ownership of Superheroes
March 19, 2007
By Eriq Gardner
NEW YORK — The battle for control of superhero characters created by Stan
Lee is heating up, with the company formerly run by the comic book legend
suing Marvel Entertainment for billions of dollars, claiming co-ownership of
characters such as Spider-Man, the Incredible Hulk and X-Men.
The suit, filed last week in New York District Court on behalf of Stan Lee
Media Inc., claims that Lee, who was terminated in 1998 by Marvel, set up a
company and signed an “Employment Agreement/Rights Assignment” contract that
gave the co-creative interests in his characters to his new company.
According to the complaint, filed by Goodwin Proctor partner Ethan Horwitz,
the “assignment has never been terminated and continues to be in full force
Lee is no longer in control of SLMI, and the new suit against Marvel is the
latest development in the acrimonious relationship between Lee and the
company that bears his name.
After Lee formed SLMI in 1998 with the stated purpose of bringing his
superheroes to the digital age, the company suffered a dot-com meltdown. In
2001, it filed for Chapter 11 bankruptcy, and during bankruptcy proceedings,
shareholders installed new executives, including James Nesfield as its new
chairman and president.
Earlier this year, Lee sued SLMI’s new executives, accusing them of having
conspired to fraudulently gain control of the company and having
“misappropriated, infringed and interfered with copyrights, trademarks,
publicity rights and contract rights owned exclusively by Stan Lee and his
The suit filed last week appears to be the company’s counterattack against
Lee. In recent years, Lee and Marvel have made amends, with Lee now serving
as president emeritus of Marvel Comics. Marvel maintains that it has full
ownership over the characters at issue and has issued a statement by Lee
that reads, “I do not support this action and believe the suit to be
The plaintiffs allege causes of action for accounting, declaratory relief,
constructive trust and two counts of interference with the right of
publicity. They are demanding 50% of all income, proceeds and profits
derived from Marvel’s use, marketing, licensing, merchandising, promotion,
advertising and exploitation of the Lee characters, which have been the
basis for films that have grossed billions in total boxoffice.
Nesfield said SLMI might force Lee to testify in court.
“Stan Lee is no longer with the company,” Nesfield said. “But the contract
remains intact. He has signed it, and the contract is still in force.”
As a caveat and for the record, because I was in California, Jim Nesfield asked me to be the VP of the newly reformed SLM Inc. They needed someone to physically go to the storage unit and collect all of the books, records, and any remaining property. He gave me a resolution to give me that authority, and I agreed to do so. The Debtor in Possession would not allow me to take possession of the books and records. I officially resigned as VP, when that purpose could not be accomplished, and such resignation was approved. Nevertheless, the attorney for Lee named me on the lawsuit they had earlier filed.
You will find this interesting. In one of the last motions made in court, the attorney for the debtor in possession made a motion TO DESTROY CORPORATE RECORDS because they claimed they could not afford to store them. We discovered that many months earlier they paid off a large storage bill and took possession of those books and records.
Lee’s counsel has claimed that the newly reformed SLM was formed illegally. Well, there was a public notice for shareholders to come to a meeting. Lee himself was given notice of the meeting sent to his home. He, did not go to the meeting. Nesfield had the shareholders necessary and the proxies necessary to conduct business. His purpose was to save the company.
Stan has done great things in his life with the creation of superheroes who taught good messages to kids. We are going to find out what happened.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.