Bank Accuses Gaming Giants of Fraud
LOS ANGELES (CN) - City National Bank says in Superior Court that it was defrauded of $14 million by Konami Corp. and Autumn Games, publishers of the "Def Jam Rapstar" video game.
City National claims Konami and Autumn Games lied to secure Autumn the credit line, assuring the bank that revenue from sales of the rap-themed karaoke game would cover the loans.
But the bank claims it has yet to see a dime of $14 million in loans it extended to Autumn.
"CNB has recently learned that defendants' representations concerning financial conditions and repayment of the loan - both before and after the loan was approved - were false at the time they were made and that defendants never had any intention of repaying the loan as promised," the complaint states. "Rather than paying game-related proceeds directly to CNB as agreed, defendant have kept all game-related proceeds for themselves and have refused to remit any such proceeds to CNB."
Named as defendants are Autumn Games RS I LLC, Konami Digital Entertainment Inc., Konami Corp. CEA Autumn Management LLC, Autumn Games principals Alex Collmer and Jason Donnell, and Does 1-25.
After the loan was approved, the bank says, Konami and Autumn made "baseless and unrealistic projections," that "Def Jam Rapstar" would ship 2.5 million units in its first year.
The bank claims that Autumn Games also promised that it would use a $1 million advance from Konami to pay down the loan - then spent the money on other things.
"By the time CNB learned the true state of affairs, Autumn had drawn down $13,987,003.15 of the $15 million line of credit," the complaint states. "To date, defendants still have not paid CNB a single penny of the principal amount that is due, and they continue to insist that none of the proceeds from sales of the game are owed to CNB and/or available for repayment."
4mm Games (not a party) produced Def Jam Rapstar and used capital from Autumn Games "to develop a music gaming franchise," according to information on the Autumn Games website.
City National Bank, represented by Patricia Glaser, seeks more than $8.9 million in damages for fraud, negligent misrepresentation, breach of contract, breach of covenant of good faith and fair dealing, money had and received, unjust enrichment, recovery of personal property, and punitive damages.
Neither Konami nor Autumn Games immediately responded to requests for comment.