If at first you don’t succeed, sue, sue again.
Pasadena stockbroker Rafi Kahn has filed suit against Intermix Media Inc., claiming that he lost $421,000 in share value when the company, then called eUniverse Inc., restated its earnings in May 2003.
Kahn initially was hired by eUniverse in 2001 as a consultant. A year later, the Securities and Exchange Commission began investigating him for allegedly promoting and then selling the stocks of four companies, including eUniverse.
In May 2003, the online entertainment network restated earnings for the second and third quarters of that year. After the restatement, the company suffered several shareholder suits and was de-listed. In the past year, the company reorganized and changed its name to Intermix Media.
Kahn, in a suit filed in Los Angeles Superior Court, alleges he had warrants as part of his consulting agreement that had a share value of more than $600,000 in early 2003, but was forced to sell them later that year for $189,532 because of the restatement.
The suit is the second time Kahn has alleged shareholder fraud against Intermix, which operates Web sites that include Flowgo.com and MySpace.com. He withdrew his first suit last month but re-filed after discovering that the company’s former chief executive, Brad Greenspan, who resigned after the restatement, filed a shareholder suit against the company earlier this year.
In a statement via e-mail, Antone Johnson, assistant general counsel of Intermix, said: “We believe the allegations and claims, which arise out of an agreement that dates back to January 2001 and which was terminated in June 2002 are frivolous and entirely without merit.”
Last year, Intermix announced that the SEC had dropped an investigation into the company’s May 2003 restatement. Anton Handal, a partner at Handal & Associates who represents Kahn, could not be reached for comment.
Earlier this month, Intermix agreed to pay $7.5 million to settle a lawsuit by New York Attorney General Eliot Spitzer, charging the company with bundling hidden “spyware” along with millions of programs it gave away for free.
The company said it would discontinue distribution of its adware, redirect and toolbar programs, all of which Intermix said it had previously stopped distributing.