Former Spotify global head of creator services Troy Carter, his wife and his company Atom Factory have had a suit filed against them by mega-manger Scooter Braun after allegedly failing to pay back a $10 million loan.
The suit – filed in LA Superior Court on Wednesday – alleges that the former Spotify bigwig (who left the global streaming giant earlier this month) has defaulted on a loan which was secured under a June 3, 2016, promissory note in excess of $10 million.
Braun’s name does not appear in the suit; however, according to Billboard, Ithaca is his $120 million investment fund, which he uses as a holding company for his Scooter Braun Projects.
According to the note, Ithaca agreed to help Carter and Atom Factory – his management company, a division of Coalition Media Group which he founded in 2007 – in a legal dispute.
TMZ have reported that the dispute is with former management client, Lady Gaga, who Carter managed from 2007-2013.
They agreed that if AFACT (Carter’s LLC) settled the arbitration, Ithaca would be paid the cash proceeds received by Atom Factory from the arbitration.
Apparently, Carter used Atom Factory’s Culver City, California, property as collateral, and signed over the deed of truth plus the assignment of leases and rents to Ithaca around September 23, 2016.
But according to the suit, Atom Factory settled the matter themselves in March 2018, which violates the terms of the note. The suit also claims that AFACT committed intentional interference when they transferred the proceeds of the settlement to an unknown recipient so they were not accessible by AFACT, breaching the agreement further by not paying back the money owed.
Although Ithaca sent a written notice in August which demanded AFACT uphold the terms of their agreement, they have not been paid.
Carter has since backflipped on his initial statement to TMZ on Wednesday in which he said that he didn’t borrow money from Ithaca. By Thursday he had told them that he did, in fact, owe Ithaca money, and that the amount to be repaid was being negotiated when the lawsuit was filed.
Carter provided Billboard with a written response to the allegations, which is below in full:
“Sadly, Scooter Braun, went back on his word. The fact is that I’ve never borrowed a dime from him, nor have I needed to. Ithaca has already received in excess of $12 million for my repurchase of the company. The equity they originally held became debt with collateral attached. Nothing out of the ordinary. He decided to file a lawsuit after we reached a stalemate on interpretations of the balance of debt.
“Our agreement on the new price was disavowed when the press ran a piece about me purchasing a piece of art at auction. Scooter called to congratulate me and within 24 hours I received an email from his attorney stating there no longer would be a discount on the deal since I could afford to purchase such a painting.
“I’m beyond disappointed that Scooter would file such a claim after I was the first person to support him when he was looking to launch Ithaca. I also advocated on his behalf to other management companies he wanted to acquire. I considered us friends.
“When I lost a client I volunteered to repurchase the company as a show of good faith. Ithaca declined. After a few months, I was surprised to hear that Scooter wanted me to return the money because the settlement with the client would take too long. He threatened to sabotage my reputation with a fraud claim if we didn’t reach a deal. A claim he knew to be incontestably untrue.
“When you lose a client it brings you to a point where you begin to question your status and sincerity of relationships. The only currency you’re left with is your reputation. Threatening fraud when someone is in such a [vunerable] position is the cruelest business tactic I’ve seen in my career. I lived through Death Row Records and some of the hardest guys in Philadelphia. Not one of them ever tried to extort me. It’s ironic how it now feels like I’m being extorted.
“I’ve done what I’ve done against all odds. There are only a handful of African-American executives left in our business and yet he’s okay with attempting to falsely ruin my reputation. It doesn’t just damage me; it’s also damaging to the young black executives coming behind me. I represent and helped build a culture he financially benefits from.
“Initially I took this personal, until I learned he did this to another manager who lost a big client. He bailed on him the same way and threatened him with fraud if the money wasn’t returned.
“Losing money is a byproduct of business. But I’m not in the business of losing friendships over money.
“I built my career on honoring my commitments and will continue to do so.”
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