Investor Sues Social Media Entertainment Platform JMBT Live for Fraud
JMBT Live, owner of the Tilt entertainment platform, “misrepresented” the status of its contracts and negotiations with prospective content partners to investors, said plaintiff Locust Group, a Wyoming-based limited liability firm, in a fraud complaint (docket 1:23-cv-04203) Friday in U.S. District Court for Southern New York in Manhattan.
Locust Group participated in a JMBT seed financing round in February 2022, entering into a convertible promissory note with CEO Michael Russell for the purpose of funding development of JMBT’s early-stage social media and entertainment platform, Tilt, the complaint said. With Tilt, defendants sought to compete with platforms including Instagram, Facebook and TikTok by securing partnerships with celebrities, artists, entertainers and athletes to create exclusive, branded content through pay-per-view and subscription-based models, it said.
In April 2022, JMBT, Locust and other investors entered into a series seed preferred stock purchase agreement, with Locust agreeing to convert the total amount of outstanding principal and interest under the note, $563,313, to 1.07 million shares of series seed-2 preferred stock in JMBT, it said. Locust has been a JMBT shareholder since then.
In a May 2022 overview, Russell provided information to shareholders and investors, including Michael Kendall, a Locust principal, in an effort to obtain additional financing, said the complaint. In the presentation and by email, Russell said JMBT had secured contracts with French Montana, Ozuna, Bobby Shmurda, Busta Rhymes, Fetty Wap, Malu Trevejo, Nicky Jam, James Rodriguez, El Alfa and Natti Natasha. Russell also said contracts between JMBT and 50 Cent, Ronaldinho Gaucho, Tory Lanez, DJ Khaled, Floyd Mayweather and Anuel AA were “in review” and “deal terms” between JMBT and Cristiano Ronaldo, Tom Brady, Sabrina Carpenter, Snoop Dogg and Alessandra Ambrosio were “in review,” said the complaint.
A July email to shareholders and investors, including Kendall as a representative of plaintiff, provided further status updates on Tilt’s development and JMBT’s finances, saying JMBT had secured contracts with French Montana, Rodriguez, Nicky Jam, El Alfa and Natti Natasha, and “key deals” between JMBT and Brady, Cristiano Ronaldo, Mayweather, Jerry Springer and DJ Khaled were “in review,” it said.
In November and December, Russell sent additional status update emails, confirming secured contracts with Rodriguez, FoodGod, Nicky Jam, Natti Natasha, Scott Wolf, Frech Montana, El Alfa, Kelly “Risk” Graval, HaHa Davis, Shmurda, Busta Rhymes, Zion Clark, Kelly Wolf and Malu Trevejo. It said it secured contracts with talent agency partners Creative Artists Agency (CAA) and A3 Artists Agency, and was in negotiations with content partners Mario Lopez, Nick Cannon, Springer, Mike Tyson, Nigel Sylvester, Ne-Yo, T.I. Harris and Metta World Peace.
On information and belief, JMBT and Russell “misrepresented the status of contracts and negotiations between JMBT and other investors,” said the complaint. JMBT made misrepresentations in May, July, November and December, including the status of its contracts and negotiations with CAA and other talent agencies and the status of contracts and negotiations with other investors, it said. In addition to fraud, Locust Group claims breach of fiduciary duty. Plaintiff seeks general and special damages according to proof, costs, interest and attorney’s fees.