Former Factor 5 Employees Sue Company for Fraud
June 17, 2009 at 10:39 PDT – Source: Marin Independent Journal
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Former employees of the recently closed company sue for intellectual property fraud and unpaid wages.
Last month, the German branch of Factor 5 confirmed that San Rafeal, CA branch of Factor 5 closed down. In a recent report in the Marin Independent Journal, it was revealed that when Factor 5 filed to liquidate the company's assets under Chapter 7 bankruptcy on May 13, the company had an estimated $1 to $10 million in debts. The biggest creditor was LucasArts Entertainment Co. Factor 5 owes LucasArts more than $4 million from a loan that was created in 2003.
The bankruptcy filing also had 69 claims for unpaid wages valued at more than $900,000. According to the lawsuit, Factor 5 stopped paying workers on November 1, 2008 and laid off all employees with little or no notice on December 19.
James Smith, a lawyer that represents the former Factor 5 employees, claims that Factor 5's three founders has deceitfully transferred assets, source codes, and intellectual properties to a company called Blue Harvest, which quickly changed their name to White Harvest. The lawyer believes that White Harvest and Factor 5 Inc. are basically the same company run by the same management except under a new name and address.
One game that Factor 5 gave to White Harvest was a new Star Wars: Rogue Squadron for the Wii. Ironically, the game's code name was Blue Harvest. Smith believes that the deceitful asset transfers were made to protect them.
Lukasz Balicki, INACTIVE
