Grant & Eisenhofer Files Suit against Cantor Fitzgerald on Behalf of Refco Bankruptcy Estate, Alleging Cantor Affiliates Walked Away with Proprietary Technology Assets Suit alleges Cantor Gaming took mobile gambling technology and other assets without compensating Refco for its original ownership stake; case brought on behalf of bankruptcy estate representative Marc Kirschner
NEW YORK, July 16, 2013 /PRNewswire/ -- The bankruptcy estate of collapsed futures broker Refco Inc. has filed a lawsuit against financial services firm Cantor Fitzgerald, L.P. The suit alleges that Cantor's Nevada gaming businesses acquired proprietary technology and other assets from a subsidiary in which Refco held a 10% stake, without ever compensating the subsidiary (thereby depriving Refco of its interest in that technology).
The lawsuit comes ahead of Cantor's pursuit of a potential initial public offering of its subsidiary in the mobile gaming space, Cantor Entertainment Technology, Inc.
Leading financial litigation law firm Grant & Eisenhofer filed the suit on behalf of Refco bankruptcy estate representative Marc Kirschner to recover compensation owed to the estate under Chapter 11. Refco's ownership portion of the gaming technology is estimated at tens of millions of dollars. The complaint was filed in the U.S. District Court for the Southern District of New York before Judge Ronnie Abrams.
The suit contends that in 2002, Refco invested $8 million in a Cantor Fitzgerald subsidiary, Cantor Index Holdings ("CIH"), in exchange for a 10% partnership interest. Over the next several years, CIH developed successful gaming technology, such as devices for remote gambling and other betting techniques.
The bankruptcy estate alleges that after CIH and its subsidiaries successfully developed and deployed these technologies, Cantor Gaming ultimately shut down CIH and took the rights of CIH's key assets and intellectual property for its own development and profit. The suit alleges that this was done for the benefit of Cantor's Nevada businesses, without properly compensating the subsidiary (and through its ownership interest in the subsidiary, Refco's bankruptcy estate). In one instance, the defendants in 2010 took Cantor Index's profitable betting business in the U.K., by transferring it to a Nevada affiliate, for nominal consideration of £1.00. At another point, Cantor transferred valuable patents for a price to be set later, yet after nearly six years, never set a price or paid any compensation.
The Refco estate's lawsuit contends that having taken assets and business lines from CIH, Cantor used them to create highly valuable businesses in Nevada and elsewhere. The suit asserts claims of breach of contractual and fiduciary duty, conversion, and waste.
The complaint also contends that Cantor has repeatedly admitted to regulators, analysts and the press that the technology developed by CIH and its subsidiaries in the U.K. was critical to the build-out of Cantor's Nevada operations.
Among defendants named in the suit are Cantor G&W (Nevada) L.P., as well as Cantor Fitzgerald CEO Howard Lutnick and Cantor Gaming president Lee Amaitis.
Plaintiffs are seeking millions of dollars in compensatory and punitive damages. An IPO of Cantor Entertainment Technology could potentially value the company in the hundreds of millions of dollars.
"Cantor drained CIH of its assets, and then co-opted the intellectual property for its gambling businesses," said Grant & Eisenhofer co-managing director Jay Eisenhofer. "The brazenness of the Cantor scheme is illustrated in the sham transaction valued at barely a dollar, and the company's public admissions that significant capital was put into developing remote gambling technology key to Cantor's Nevada businesses."
Mr. Eisenhofer continued: "The company still owes its subsidiary, and indirectly Refco's bankruptcy estate, for these technologies and other assets which Refco helped finance a decade ago. Cantor Entertainment Technology's success in the mobile gaming industry and its potential IPO rely heavily on these technologies, and we seek recovery for the bankruptcy estate the fair value of Refco's investment."
In addition to Mr. Eisenhofer, Grant & Eisenhofer directors Geoffrey Jarvis and Matthew Morris and associates Nathan Cook and Ned Weinberger are special litigation counsel to plaintiff bankruptcy estate.
The case is captioned as: Refco Group LTD., LLC v. Cantor Fitzgerald, L.P., et al.
Note: Grant & Eisenhofer P.A. represents plaintiffs in a wide range of complex financial litigation. The firm has played a central role in some of the largest bankruptcies in recent years, including Parmalat, Global Crossing, Delphi, Refco and others.
G&E's clients include institutional investors, whistleblowers and other stakeholders in bankruptcy litigation, securities class actions, derivative lawsuits, consumer class actions, antitrust suits, and cases involving the False Claims Act . G&E has recovered more than $13 billion for investors in the last five years and has consistently been cited by RiskMetrics for securing the highest average investor recovery in securities class actions. Grant & Eisenhofer has been named one of the country's top plaintiffs' law firms by The National Law Journal for the past eight years. For more, visit www.gelaw.com.
SOURCE Grant & Eisenhofer P.A.