SUIT FILED OVER CELEBRITY BONDS

The Hollywood Reporter
November 17, 1999

The Pullman Group Llc. has filed a lawsuit seeking $2.5 billion in total claims against a group of investment companies, including two run by music industry veteran Charles Koppelman.

The Pullman Group, a pioneer in entertainment and intellectual property securitizations, sued several of the key players in a joint venture allegedly conceived by Pullman Group founder David Pullman to finance a series of celebrity bond issuances similar to the bonds the Pullman Group has created and completed for David Bowie, James Brown, Ashford and Simpson, Edward Holland, Brian Holland and Lamont Dozier (Holland-Dozier-Holland).

Those named in the suit, filed Tuesday in New York Supreme Court, include Prudential Insurance Co., Prudential Securities Inc., Rascoff/Zysblat Organization Inc. (an entertainment accounting firm controlled by principals Joe Rascoff and Bill Zysblat), Entertainment Finance International Llc (the venture formed by Prudential Investments and Rascoff/Zysblat), Willkie, Farr & Gallagher, CAK/Universal Credit Corp. and UCC Lending Corp. (the latter two headed by Koppelman).

The suit, seeking claims of more than $2 billion plus $500 million in punitive damages, allege more than 25 counts and causes of action, including breach of contract, breach of fiduciary duty, misappropriation of trade secrets, conversion, tortious interference and unjust enrichment.

In the complaint, the Pullman Group alleges that Prudential Insurance and its subsidiary Prudential Investments, which were to provide funding for the joint venture, and Rascoff/Zysblat, then an entertainment business management firm and the Pullman Group's partner in the enterprise "improperly and abruptly ceased their affiliation with the Pullman Group by reneging on their agreement and, barely 10 days later, consummated precisely the same deal between themselves as a purportedly new joint venture."

The complaint reads, "In blatant bleach of its fiduciary obligations, however, Rascoff/Zysblat Organization Inc. failed to disclose to the Pullman Group that it was in imminent danger of losing, and in fact later lost, many of its most celebrated clients, including the Rolling Stones, Patti Smith and Paul Simon, because of growing dissatisfaction with the manner in which Rascoff/Zysblat Organization Inc. has been managing their business and related affairs."

Pullman said in the complaint that he later found out that Rascoff/Zysblat had lost prominent clients in past years, having been fired by Duran Duran, the Elvis Presley estate and Leiber & Stoller.  In failing to disclose the precarious status of its client base, the suit said that the Pullman Group would not have offered Rascoff/Zysblat a partnership interest, but rather would either have offered Rascoff/Zysblat a significantly reduced position or have chosen to forego Rascoff/Zysblat's participation entirely.

In addition, the Pullman Group charged that Prudential Securities misappropriated proprietary and confidential information belonging to the Pullman Group to form and finance yet another entity, defendant CAK, to compete directly with the Pullman Group.

The complaint alleges that since CAK's alleged improper creation, it has attempted to disrupt relationships between the Pullman Group and its current and potential clients and to usurp potential business opportunities.  The complaint states, "Prudential Securities representatives, working in concert with CAK, proceeded knowingly, willfully, intentionally and tortiously to interfere with Pullman's relationships with this clients, including Holland-Dozier-Holland, and Nickolas Ashford and Valerie Simpson of Ashford & Simpson, by attempting to entice them to violate their contractual commitments to Pullman."

Pullman conceived of and created the first entertainment and intellectual property securitizations --- the original "Bowie Bonds" --- which resulted in a $55 million private placement secured by the royalty stream from the singer's music catalog.