LOS ANGELES (CN) - Actress Kirsten Bell claims in court that managers of a Hollywood tequila bar never paid back her $20,000 investment and skimmed profits for themselves and their other failing businesses.
Bell, TV executive Gina Balian, and film producers Michael Dobin, Roy Lee and Shintaro Shimosawa, all investors in L Scorpion on Hollywood Blvd., sued Meridian Restaurant Group, Scorpion Management, LIK R&D, Christopher Heyman and Joshua Woodward, in Superior Court.
Bell, who starred in "Forgetting Sarah Marshall" and "Veronica Mars," seeks damages for breach of fiduciary duty, breach of contract, conversion, unjust enrichment, unfair business practices, and access to books and records.
Bell claims the defendants quickly drowned the bar in red ink though it was "generating monthly net profits of approximately $20,000 to $30,000".
"This case arises out of a fraudulent scheme by defendants to raise funds from investors to open a restaurant and bar called L Scorpion on Hollywood Boulevard," the complaint states. "Meridian, Scorpion Management, Heyman, and Woodward are majority owners of Scorpion and own other business ventures, including Table 8 and Rokbar, both of which have failed. Defendants orchestrated a scheme to raise $400,000 from investors, including plaintiffs, to funnel the funds into their failing businesses and rob plaintiffs of their investment."
Bell claims that she and her co-plaintiffs each invested $20,000 in L Scorpion, for a 5 percent aggregate ownership interest in the bar.
She claims that in July 2005, Scorpion Management and its parent company Meridian agreed to repay Bell and the other investors 115 percent of their original investment, and distribute pro rata net profits.
Bell claims that she and other plaintiffs hosted private parties at L Scorpion to raise money for the restaurant, which they claim was thriving after receiving glowing reviews.
But Heyman and Woodward's other businesses were on a downward spiral, and they propped them up by diverting food, money, and beverages away from L Scorpion, Bell says.
"Table 8 and Rokbar consistently borrowed funds from L Scorpion without proper documentation and explanation supporting the lines of credit. For example, as early as 2006, a year after L Scorpion opened, Rokbar owed L Scorpion $20,000 and Table 8 owed $5,000. Defendants never informed plaintiffs regarding these lines of credit to Table 8 and Rokbar. Rather, defendants willfully diverted funds from L Scorpion for their own personal side businesses. Funds allegedly borrowed by Table 8 and Rokbar were never paid back," according to the complaint.
Funds were also siphoned through LIK R&D, the complaint states.
"When investors organized private events at L Scorpion, Woodward directed guests to make payments to LIK R&D instead of L Scorpion. Funds from these private parties were never deposited into L Scorpion's accounts and never seen by the investors," according to the complaint.
In breach of the operating agreement, Meridian was paid an extra 2.5 percent of gross revenue on top of its 5 percent management fee, preventing investors from recouping their investment, Bell says.
And, she claims, Heyman and Woodward installed new management without investors' knowledge, and walked away from the business after that partnership turned sour.
"Currently, plaintiffs and the remaining investors do not know if the L Scorpion is still open for business, who is managing the restaurant, and who owns the licenses," the complaint states.
The plaintiffs seek compensatory damages, punitive damages, interest and costs.
They are represented by Preston Lim, with Bird, Marella, Boxer, Wolpert, Nessim, Drooks & Lincenberg.
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