Scooter Braun, the music industry megastar who launched Justin Bieber’s career, is now afflicted with a significant legal dispute over actions in getting a new private equity fund off the ground. On Thursday night, two events occurred: Peter Comisar, who spent two decades at Goldman Sachs and then became vice chairman of investment banking at Guggenheim Securities, filed suit in Los Angeles. Nearly simultaneously, Braun filed a petition demanding arbitration.
According to the complaint against Braun and top Hollywood business manager David Bolno, the two decided in 2016 to expand their empire, settled on a private equity firm as their vehicle and began recruiting Comisar. Through his petition, Braun says he poured in excess of $5 million into the launch of SCOPE Capital Management plus a $3 million salary for Comisar.
Comisar says he only agreed to come on board with a three-year budget and Braun’s personal investment and alleges he got written agreements memorializing commitments. Braun is also said to have presented the potential of raising $500 million to $750 million from famed billionaires in the entertainment community, including David Geffen, Jimmy Iovine and Haim Saban. Braun demanded he “burn the bridges” with former employers, adds the complaint.
But in April 2018, according to Comisar, Braun repudiated financial commitments and stopped funding everything including Comisar’s salary.
“Bolno, completely unrepentant, explained to Comisar that Braun never really believed he would have to perform and, brazenly, told him that ‘people in the entertainment industry do not honor their contractual agreements,'” states the complaint. “Bolno made clear that he and Braun believed that Braun was free to renege on his commitments with impunity and without consequences and would wreak havoc upon Comisar if he chose to pursue Braun on his commitments.”
Braun presents a different side of the story in his own arbitration demand. According to him, it’s Comisar who breached a commitment to raise $250 million for the upstart venture. “Comisar was unable to get a single investor to invest with SCOPE Capital Management,” states the petition.
Moreover, according to Braun, Comisar diverted resources to a consultancy and is only now coming forward with “extortionate” demands because of the impending $1.05 billion sale of Braun’s holding company, Ithaca, which includes a talent management company, a publishing company, and a record label.
“Unfortunately, the public disclosure of Braun’s recent high profile business success has prompted Comisar, an unscrupulous former business associate to resurface because he sees an opportunity to extract a further unearned and undeserved payday,” states the petition for arbitration.
Three years after Braun and Comisar had a falling out, the controversy is now hitting a court.
Braun insists that the notion he had some master plan to oust Comisar is “absurd” while Comisar implies the script for his dismissal came early. In particular, Comisar alleges that three years ago, he was threatened with a smear campaign that included falsely being fired from Goldman Sachs, dereliction of duties by devoting time to advisory services and racism as a predicate for his removal.
“Braun warned that this storyline could well destroy Comisar’s career,” continues the complaint. “The racism claim was entirely fabricated and without basis. The untoward intimidation strategy of Braun and Bolno hatched in September 2018 failed. Comisar has remained a value-added Board member and steward of investors’ capital in this portfolio company during the two-and-one-half years that have passed since the attempted smear.”
Since 2018, Comisar says he continued forward and established a merchant bank named STORY3 Capital Partners + Advisors.
Meanwhile, alleges Comisar, Braun hasn’t successfully done fund raising.
“Not one of Braun’s contacts agreed to invest any amount, much less the hundreds of millions Braun had promised. Braun had to explain to Comisar, tail between his legs, how he had asked David Geffen, his supposed godfather, to invest in SCOPE, only to be told by Geffen that he did not view Braun as someone with whom Geffen would invest. Braun got the same brush-off from Jimmy Iovine, Haim Saban, and the Rueben, Soros and Mittal families — indeed, Braun was rejected by each of his promised close relationship investors. The truth was that Braun’s relations valued him as someone to socialize with, but to whom they would never entrust their millions.”
Asserting a causes of action of fraud, breach of fiduciary duty and breaches of contract while demanding $200 million in damages, Comisar’s complaint adds, “When it came to fundraising, Braun turned out to be a sheep in wolf’s clothing, ultimately admitting to Comisar that despite his bravado, asking people to invest made him ‘uncomfortable’ and he therefore refused to fully engage in the fundraising efforts. In other words, as Comisar ultimately found out when Braun pulled out entirely, Braun had never intended to be fully engaged as he had promised Comisar he would.”
Comisar is represented by Joel Kozberg.
Braun is represented by a Russ August & Kabat team led by Stanton “Larry” Stein plus James Sanders and Kasey Curtis at Reed Smith.
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