Will Insane Lawsuit Threaten Hyperloop’s Future?

Hyperloop One’s management team has fallen apart leading to a lawsuit that threatens the company’s future. The suit exposes a corporate culture that looks more like an all-out war than the big happy family Hyperloop One was projecting to the world.

The suit threatens Hyperloop One because it was brought by one of the company’s founders; Brogan BamBrogan, and three top managers. BamBrogan was the company’s first CEO and chief technology officer, who resigned last month. He was also the brains behind much of the organization’s technology.

The lawsuit is sure to generate a lot of bad publicity because it makes the bizarre allegation that Hyperloop One’s chief counsel Ashfin Pishevar, left a hangman’s noose on his desk. Pictures of Brogan with what he claims is the noose; and security footage of Pishevar putting it on the desk, appear at The Wall Street Journal’s website.

To make matters worse BamBrogan tried to get a restraining order against Afshin Pishevar last month, The New York Times reported.

Suit Alleges Hyperloop One Management committed Assault

BamBrogan and three other former employees; Vice President of Business Development Knut Sauer, Assistant General Counsel David Pendergast and Vice President of Finance William Mulholland, are suing Hyperloop Technologies; doing business as Hyperloop One, for wrongful termination, breach of contract, defamation, intentional infliction of emotional distress, assault and breach of fiduciary duty. Hyperloop Technologies Inc., its Chairman Shervin Pishevar, Chairman Rob Loyd, Afshin Pishevar and board member Joseph Lonsdale are named as defendants.

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The suit was filed in the Superior Court of California for the County of Los Angeles on July 12, 2016. It contains some pretty damaging allegations about the corporate culture at Hyperloop One including:

  • “Over the course of Plaintiffs’ employment, it became apparent that those in control of the company continually used the work of the team to augment their personal brands, enhance their romantic lives, and line their pockets (and those of their family members),” the lawsuit complaint states.

 

  • “Those with the expertise to bring the Hyperloop concept to fruition—the team that has done an incredible job building out hardware with their heads down and hands in the dirt—have been systematically marginalized, while the “money men” who do not understand the technology spent little time seeking to understand its potential, focusing instead on puffery—turning the company into a marketing-driven exercise, instead of the engineering-driven enterprise it should be.”

 

  • Shervin Pishevar increased Hyperloop One’s PR vendor’s payment from $15,000 a month to $40,000 a month after he began dating her. Making the unidentified woman the company’s highest paying employee. The two become engaged, but Pishevar fired the woman after the engagement fell through.

 

  • Lonsdale insisted that Hyperloop One hire his brother’s firm as the company’s exclusive investment bank even though it had experience in that roll.

 

  • Shervin Pishevar insisted that Hyperloop one hire his brother Afshin Pishevar as General Counsel. Afshin Pishevar was a criminal defense and personal injury attorney with no experience with corporate law.

 

  • Shervin Pishevar pressured potential investors to put money in his fund; Sherpa Capital, instead of Hyperloop One.

 

  • “He (Shervin Pishevar) also commanded that personal buddies be allowed to invest while strategic and other reputable investors were pushed off.”

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  • When 11 top employees; including the heads of engineering, finance, business development and operations, signed a letter complaining about alleged abuses they were threatened with termination. The letter was sent on May 26, 2016, shortly after Hyperloop One’s successful test in North Las Vegas, Nevada.

 

  • On June 14, 2016, BamBrogan called a group of investors in Russia and told them about the letter and its allegations. One of them raised the concerns with Shervin Pishevar at dinner in Moscow that day.

 

  • “Then, just hours after that dinner, at 11:28 p.m. California time, Shervin’s brother and Chief Legal Officer of Hyperloop One, Defendant Afshin Pishevar, strolled through Hyperloop One’s office and placed a hangman’s noose on BamBrogan’s chair.”

 

  • Mulholland and Pendergast were fired on June 15, 2016. BamBrogan was demoted and threatened with termination if he did not behave.

 

  • Rob Lloyd fired Pendergast in front of his wife and children.

 

  • BamBrogan resigned because he feared for his physical safety.

 

  • Sauer; and the second highest ranking engineer Josh Giegel, resigned on June 16, 2016 along with BamBrogan and Mulholland.

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  • “Defendants also began a blatant smear campaign” against the plaintiffs.

 

No amount of damages is mentioned but the suit claims the plaintiffs left higher paying jobs to work at Hyperloop One. It also asks for their reinstatement at the company.

“Today’s lawsuit brought by former employees of Hyperloop One is unfortunate and delusional,”  the company’s outside counsel Orin Snyder told The New York Times.

“These employees tried to stage a coup and failed,” Snyder told The Wall Street Journal and The Times. “They knew that the company was aware of their actions, and today’s lawsuit is their pre-emptive strike. The claims are pure nonsense and will be met with a swift and potent legal response.”

A Bad Time for Hyperloop

The suit certainly comes at a bad time for Hyperloop One; formerly Hyperloop Tech, the organization has gotten high level support from Russia’s President Vladimir Putin. Putin wants to build a 44-mile Hyperloop connecting the port of Zarubino with China’s Jilin province.

Tech startup Hyperloop One is trying to build a new mode of transportation that would involve pods moving at very high speeds through a tube.
Tech startup Hyperloop One is trying to build a new mode of transportation that would involve pods moving at very high speeds through a tube.

Russian billionaire and freight tycoon Ziyavudin Magomedov has invested around $100 million in Hyperloop One, Bloomberg reported. Madomedov’s company Summa Group owns the port of Zarubinio. Other investors in Hyperloop One include the Kremlin’s Direct Investment Fund and France’s National Railroad SNCF, Bloomberg reported. Whether that deal is still on or not is unknown.

Hyperloop One has raised around $130 million and it plans the first test of its system during the first quarter of 2017, The Wall Street Journal reported. It is unclear how the lawsuit and the exit of BamBrogan and company will affect that test.

A strong possibility is that they will go elsewhere and create their own Hyperloop company, another is that they will go to work for others trying to developing. BamBrogran might return to his former employer Elon Musk’s SpaceX which has engaged in its own Hyperloop tests.

The future of Hyperloop is now more uncertain than ever. Hopefully Hyperloop One will be able to get its act together and get the technology up and running. Yet that does not appear to be happening. Strangely enough BamBrogan’s picture still appears at the Hyperloop One website; hopefully somebody will have the good taste to take it down.