City National Bank has filed a lawsuit in Los Angeles Superior Court against Konami and developer Autumn Games for allegedly defrauding the financial institution of money it is owed related to a $15 million line of credit. City National Bank claims that Konami and Autumn Games defrauded it of $15 million in credit for the development of Def Jam Rapstar. They also alleged that both parties "lied" to the bank in order to secure the credit line, promising to pay it back with the sales of the game. Further, City National claims Konami and Autumn Games have not paid back any of the money for $15 million in loans.
"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."
The bank further alleges that, after the loan was approved, Konami and Autumn made "baseless and unrealistic projections," that "Def Jam Rapstar" would ship 2.5 million units in its first year.
"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."
The defendants named in the lawsuit are Autumn Games, Konami Digital Entertainment Inc., Konami Corp. CEA Autumn Management LLC, Autumn Games principals Alex Collmer and Jason Donnell, and Does 1-25. 4mm Games, who developed the game and used funds from Autumn, was not named as a defendant.
City National Bank is asking the court for 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," according to Court house News.
Source: Courthouse News