Bebo co-founders Michael and Xochi Birch (MXB Holdings) along with SV Angel, Michael Jackson (TV executive), and Richard Hecker have filed a lawsuit against Criterion Capital Partners, who bought Bebo from AOL in June 2010. The group of investors were persuaded to put money into Bebo after Criterion acquired the social network, but the investors are alleging that Criteron was mismanaging the website and withheld information from them.
Their filing against Bebo alleges:
– Criterion “exploited” Bebo and was “fraudulent” by “using its operating capital to pay the salaries of Criterion’s staff” including $14,000 per month to Bebo CEO Adam Levin.
– Bebo operated for 20 months and “failed to hold a single board meeting or shareholder meeting.”
– Bebo had also defaulted their San Francisco lease and moved to Criterion’s L.A. headquarters without board approval.
The investors are suing the new Bebo owners for $5 million.