9 ms·

Ask HN: Screwed out of $12.8 million. Being Extorted. No Money for attorneys.

221 points by downandout 15y ago

Hi Everyone, In 2004, I co-founded an Internet security company called Anakam. I was a programmer with some interesting ideas, and my business partner and I agreed at the time that I would receive 20%, and my partner 80% (he was financing the whole thing). We had a personal falling out in early 2005, and I left the company, always believing that my ownership was still intact. In October 2010, the company was sold for $64 million to Equifax. I found out about the sale after the fact; my partner had simply pretended that I never existed and had assumed my ownership. I am listed as the inventor on the company's first patent, which is still a key part of the company's product offerings today. In February 2011, I sent a cease-and-desist letter to Equifax. They sent back a letter saying that they viewed my letter as an extortion attempt, and that if I did not immediately sign a settlement and and NDA that were included with their letter (without compensation), they would file a criminal complaint against me. After this, I showed my cease-and-desist letter to an attorney, who assured me that my letter was well within the law, but that their response was in fact extortion. There is a specific federal law that prohibits threatening to accuse someone of a crime unless they give you some form of consideration - in this case the outright dismissal of $12.8 million in claims. Their response came entirely out of left field, and I have not heard from them since the moment the attorney I showed the letter to told them that he believed their response was a violation of Federal extortion laws. The letter was signed by my former business partner, who was at the time still the CEO of the Anakam division of Equifax, and was, oddly enough, forwarded to me from their law firm. I do not have the resources to pursue this matter at this time. I am told that I could have those involved in authoring and delivering the extortion letter prosecuted criminally (possibly including Equifax itself), but I have little interest in that right now. Does anyone have any suggestions as to what I can/should do in this situation? I have come to the realization that I may never see my $12.8 million, but the extortion really added insult to injury. Any suggestions would be helpful. You can email rr@guiyui.com if you would prefer not to post in public.

davidw 15y ago
1) Do you have documentation regarding the 20% ? 2) Sounds like you should seek an attorney who would be willing to take a cut if they win the case.
- downandout 15y ago
  I do have documentation regarding the 20%. The one attorney I have spoken to says, for reasons I still don't entirely understand, that I have a better shot at trying to sue them for using my intellectual property without permission, since it is quite clear that I wasn't compensated as agreed for the license to use the technology. They also say that a civil extortion claim is the low-hanging fruit in this situation, but this particular attorney was unwilling to take it on contingency.
  - davidw 15y ago
    Well, for that much money - even a shot at it - you ought to be out there making your case to attorneys who might take the case on contingency. Put together a nice presentation of 'the facts' and 'the evidence', and get out there.
  - artie_effim 15y ago
    I'd say shop around for another lawyer - your's sounds bunk.
  - petercooper 15y ago
    The one attorney I have spoken to says, for reasons I still don't entirely understand, that I have a better shot at trying to sue them for using my intellectual property without permission If I had to guess from your wording and this response, the "company" wasn't incorporated while you were involved with it? If it were, you'd have some sort of share certificate and the sale of the company may have been fraudulent. If you're a shareholder, someone else can't easily just "assume [your] ownership". I'm guessing you never got an official 20% share of the corporation that was eventually sold, so your attorney may be thinking your beef is with the guy who "stole" your share and that could be a more complicated/less lucrative case.
    - downandout 15y ago
      Well, there were several corporate machinations. Initially, the company was an LLC, and I was given a 20% interest in it in writing. At some point after I left, during one of the financing rounds, it became a corporation. The corporation was sold.
bond 15y ago
I'm sure you can find a lawyer who can take the case on contingency, 10-20% for the lawyer would make a nice sum...
- wglb 15y ago
  Often it is more like 35% or 40%. And if there is an appeal they may go to 50%.
verroq 15y ago
A healthy dose of skepticism won't hurt here. This sounds exactly like 419 scam if you choose to fund for his "lawyers".
- downandout 15y ago
  I honestly wasn't asking anyone to fund anything. I am just seeking advice as to what I should do. I could have them prosecuted free of charge, but I'm not sure that will advance my cause.
  - Bobby_Tables 15y ago
    At the very least, a successful criminal prosecution would make you feel better. And it would likely advance your cause...I'm not sure if an extortion conviction would be admissible in a civil trial for something like this, but even if it weren't, the fact that someone was convicted of criminal extortion would make it far more likely you'd get a good attorney to work on contingency for the civil complaint. Even if you only recover $1m, 33% of that is a decent payday for a lot of lawyers.
  - bphogan 15y ago
    Well, it might. If you don't have the resources, could you in fact pursue the extortion charge, get the judgement, and then come back around and say "hey, now that you've been found guilty, let's talk about the real issue"? They may be willing to negotiate at that point. Of course, not a lawyer here.
  - ErrantX 15y ago
    Can you not follow civil and criminal routes? Find an attorney to take the civil cases (and file for patent infringement, the ownership issue & the extortion), and at the same time report them for extortion. Assuming everything is well timed you could have 4 guns blazing at once, which will certainly help them notice you. :)
GiraffeNecktie 15y ago
Equifax is a huge corporation which is both good and bad. Bad because they've got limitless resources, good because they are a publicly traded corporation which makes them sensitive to valid lawsuits. Their business is also based on validating trustworthiness, which I think would also make them vulnerable to allegations of criminality and abuse of process. This is not a job for your typical small town lawyer. I think you need to do some research and find a big-ass New York-based law firm that knows how to find their short hairs and pull sharply.
- smoyer 15y ago
  They're also likely to have other large public corporations as clients using your technology ... an injunction against using your technology until the case is settled could prove extremely embarrassing and costly to them.
- phaus 15y ago
  Equifax couldn't care less what the public thinks about them. They are frequently featured on sites like ripoffreport.com They target computer illiterates by offering them a free credit report. Not long after they get the free report, these people notice that they are being charged monthly fees for services that they didn't even know they signed up for. While not technically illegal, it is highly unethical and I wouldn't be surprised if a significant portion of their income came from scamming people who don't know better. It can be argued that the people getting scammed are partly to blame because they didn't read the fine print. I agree to an extent but I also believe that if a business wants to succeed, they should do so on honest terms.
ra 15y ago
You MUST find a good attorney with relevant experience. If your case is solid you will come to an arrangement on deffered payment of fees.
alain94040 15y ago
Talk to as many attorneys as you can until you find a good one who is willing to help. Or treat this as an investment: invest $100K for a $10M return. My personal recommendation: talk to great lawyers, they are more expensive on a per-hour basis, but when they tell opposing counsel what they think of the case, the other side usually listens. Been there, done that :-(
joshuaheard 15y ago
I practice business litigation in Texas and California. It sounds like you have a great case. See if you can find an attorney who will take this on a contingency basis. What state are you in? I can forward this to a California attorney I know who does business litigation on a contingency basis if you are in California, since I am living in Texas at the moment.
- downandout 15y ago
  I am in Nevada, but any litigation would likely take place in California. The company was initially based in Nevada, but was moved to San Diego (the Southern District of California for a federal matter). After the acquisition I believe their headquarters moved to Virginia, but I know they still have an office in San Diego.
  - joshuaheard 15y ago
    Great. I will forward your post.
  - joelhaus 15y ago
    Just listened to the latest Digital Age podcast and they discuss litigation funding, which sounds like exactly what you need: http://www.youtube.com/watch?v=gdXO2WgKazM http://www.youtube.com/watch?v=gdXO2WgKazM They answer some interesting questions about the process and there are obviously some advantages over a contingency arrangement (e.g. counsel gets compensation and thereby incentive to prosecute your case with all of the necessary resources). Here is the description of this program: The cost of litigation can be catastrophic. Many litigants drop good cases, or lose their businesses entirely, because they run out of money. Recently, third parties have appeared to advance legal costs, in exchange for a piece of the recovery. But is this new structure illegal? Litigation funder Selvyn Seidel tells Jim Zirin how funding has transformed the global marketplace.
brador 15y ago
Step 1: Get your paperwork in order. Find the papers that were signed, certificates given, emails sent. Gather ALL your evidence in one place/folder. MAKE A PHOTOCOPY OF EVERYTHING. Keep this separate just in case things go missing. Step 2: Build your story. Get it clear in your own mind what happened and how you got screwed. Step 3: Talk to the best attorney(s) you can find. Talk fast, listen well. Step 4: Let them do what they do. If your case is solid, most attorneys will take it on contingency, but at 12.8 mil this isn't a small town matter. You're looking at semi-pro minimum. Consider it an investment.
- 9ec4c12949a4f3 15y ago
  Not just one place -- safe deposit box at the bank. Crooks play really really dirty. I personally wouldn't go anywhere alone. Maybe I've run into the wrong people-- but the wrong people know that it only costs about $5k to have someone's legs broken.
- packetslave 15y ago
  Step 1a: DON'T talk about the specifics of the case in public. You're giving opposing counsel a free head start in building their case against your arguments.
- ArbitraryLimits 15y ago
  Semi-pro? How much money would it take for you to require a full pro?
  - PakG1 15y ago
    Try $800/hour. Or maybe even higher. Grade A lawyers are in that realm, I know people who charge that much, and have founder friends who have lawyers that charge that much. edit: which is why contingency is so important here.
    - ArbitraryLimits 15y ago
      I meant how much money you would call in pro lawyers to get, not how much you would pay them.
saalweachter 15y ago
I suspect you are overestimating what you are entitled to. 20% of the founding equity rarely turns into 20% of the final sale price of the company. Normal, healthy subsequent investment could easily dilute the founding shares 2:1 or 3:1. If the company goes through especially bad times -- a near bankruptcy followed by a last-minute bailout by investors, not unheard of in the last few years -- the founding shares could easily be diluted 10:1. Add in a modest management carve-out from the sale, and your 20% amounts to 2-5% of 90% of $64 million, or $1.2-$2.9 million.
- wlievens 15y ago
  Still a lot of money, of course.
- deleted 15y ago
  [deleted]
- downandout 15y ago
  You are probably correct that there has been some dilution. My co-founder already had very deep pockets before we started the company, and I believe that he remained the primary investor throughout (though I am aware of 1 small round participated in by a venture firm). He would have made it a priority to dilute me out of existence. They have refused to provide any information with regard to this at all.
  - SemanticFog 15y ago
    There are so many ways to screw over a non-employee, minority common shareholder, you may well have no case here. For example, if the company hit a rough patch, it might have been recapitalized, with all current shareholders wiped out. Since your partner had 80% of the shares, and plenty of cash, he could have easily pulled this off. Depending on what state you're in, you may no longer have any right to seek redress. If your partner knows what he's doing (or has a lawyer who does), the best you're going to get is a small amount of cash to go away. And if you guys are on bad terms, you may not even get that.
    - 15y ago
VanL 15y ago
A number of sizable and well-respected law firms will take your case on contingency if they believe that it is a good enough case and you can win. Upside is that you can get good lawyers able to help you, and if you lose, you won't be out the lawyer's fees. Downside is that if you win, you will pay a substantial percentage (30-50%) in fees, largely due to the increased risk that the firm takes on. Also, whoever said to sue for IP infringement may be worth listening to. 12.5M for a patent judgment is low.
0x12 15y ago
Find a lawyer that will take it on contingency. Also, talk to 'grellas' here, he's one of the nicest legal eagles I've ever seen.
sebastianconcpt 15y ago
Get a NYC lawyer that agrees to take the case at his own risk. Pitch them with your story, if they find it solid (you can prove you claim) then you have a case and they should be interested. Good luck
boling11 15y ago
Was there any type of vesting agreement in place?
stevenwei 15y ago
If your name is on one of their patents I'm surprised that was overlooked during due diligence when the company was being acquired. But it definitely seems like you have a strong case based on what you have described.
- michaelrwolfe 15y ago
  It doesn't matter whose name is on the patents if the company owns the patents.
apinstein 15y ago
I went through a similar situation myself a long time ago, albeit for much less money. 1. Put your story together, with paperwork and references. 2. Call some attorneys about taking the case on contingency. You have to "sell" them on the value of your case. Think of it like pitching an investor, because frankly that's what you're doing. 2a. Don't pay a retainer. I blew a lot of money with this route before focusing on a contingency arrangement. 2b. I got myself a free Westlaw trial account and searched for cases similar to mine, figuring I could find someone for whom my case wouldn't be risky for them. Also I looked for small firms so that I could talk directly to the decision maker about taking cases on contingency. Result? 0 money invested, reasonable settlement, and closure. It took about a year. Yours will take longer likely.
deleted 15y ago
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chopsueyar 15y ago
As most others here have said, find a lawyer who will do this on contingency. Google ip attorney contingency and go from there. I am in a similar situation, but probably around 1/10 of the amount. As you already know, it is fairly easy to send a letter. I am surprised they did not also accuse you of libel. That is my favorite. Do you happen to know the federal law regarding the accusation of crime unless given consideration. Is it simply extortion or is there some other statute? Best of luck, you have justice on your side! Try to get some lump sum cash AND a yearly/quarterly/monthly licensing fee out of this.
gizmo 15y ago
You're the bad guy in this story, and it isn't even close. At the point you and your partner had a falling out you had put in less than a year of work for the company. The other partner had invested, I can only assume, a substantial amount of money. If at that point he too had quit the company (and the shares) would have been worth absolutely nothing. I repeat: when you quit your shares were worth nothing. You could easily walk away because it wasn't your money on the line. You left the other guy in a terrible spot where he invested a bunch of money and his (technical?) partner left. Now, the other guy spends an additional 6 years on the business and turns it into a success and now you believe you're entitled to that even though you screwed him over 6 years ago? Even though the ONLY reason that the shares are worth something now is because your partner put the effort in! That you're entitled to the same equity you would have gotten had you stayed for all 7 years? Are you kidding me? And you're publicly accusing the ex-CEO of Anakam of screwing you out of $12.8 million? It's clearly the other way around. You're trying to screw the other guy out of his money AGAIN, based on some dodgy legal footing.
- davidw 15y ago
  I think it's awfully premature to go around judging who is 'the bad guy', and that it's quite possible both or neither of them have done less than stellar things. But we simply don't have more than a smattering of facts from one side.
  - wisty 15y ago
    20% of a start-up (at year 1) is worth much less than 20% of it 5 years later. If the company had their paperwork in order, the OP should have maybe 5%, due to vesting and dilution. Or the original investor should have bought him out for a few thousand, as he was walking out the door (but he didn't did he?). Imagine if you had worked on building your company for 6 years, only to have an early employee (who presumably quit in a huff) come back and demand 20% - which they were meant to actually work for, and asserted IP rights on everything they had worked on. That said, the company is also behaving very badly, what with the extortion thing. They would be better off making a reasonable offer, and hitting themselves on the head for screwing up their ownership / IP assignment paperwork.
deleted 15y ago
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bm98 15y ago
You clearly aren't trying to be anonymous, since you named the company and your patent is easy to find. Congratulations, I guess, for being the first to patent the idea of authenticating a web app based on a password plus a cookie from a prior session, and requiring additional authentication if the cookie isn't there. Hard to imagine that that wasn't obvious in 2004, but maybe it just seems that way in retrospect.
- smoyer 15y ago
  I believe the bank where I have my savings account is using this IP for their login system ... I don't know whether Equifax provides it or not. I guess the other question is whether this can be invalidated by prior art. It also seems obvious and common to me but I can't say whether it was in 2004 either.
kanamekun 15y ago
The first thing I would do is remove all references here to the names of the companies involved. You can still get the benefit of Hacker News advice while keeping the parties anonymous... but by naming everyone, you open up several cans of worms (they could sue you for defamation, they could learn how you're thinking about this and what your resources are, this could get posted to TechCrunch in a way that hurts your chances of a settlement, etc.).
AngeloAnolin 15y ago
Any company being sold to another company requires due diligence, especially on the legal side of matters. Equifax may have done their part in ensuring that the business they are acquiring is all good and the ownership / stakes in the company are all relevant (literally means as well that they ensured no other claimants would suddenly come up after the acquisition). I believe the focus of your case (should it materialize) would be to your previous business partner. If you say and rightfully claim that there's a documented agreement (filed during the company incorporation) that you own 20% of the company, then there's a pretty good chance you may be able to get what is rightfully yours. Take note that you should be clear whether that 20-80 agreement you made before pertains to the ownership of the company, and not on particular income with which the company would be generating. Good luck on your case and may you get what is rightfully and legally yours, so to speak.
systems 15y ago
between 2005 and 2010 what was your relationship to anakam? did you receive any benefit for your 20% claim, why do you believe you are 20% owner, and why haven't you made any claims to any money earned by anakam before and even more importantly how did you leave, how did you settle when you left? there is a lot of missing details here
Duff 15y ago
You need to stop posting about this on the internet and get some competent advice. If you actually have $12.8M + potential damages at stake, saying "I cannot afford a lawyer" is ridiculous.
- ohyes 15y ago
  Yup. Posting on the internet can hurt your case. Although this is interesting, I'd honestly recommend discontinuing the thread and deleting the post. A lawyer that thinks you have a good case will take this up for a cut of the settlement no problem. If you can't find a lawyer that thinks you have a good case... it probably isn't worth suing.
yason 15y ago
You participate in a company by owning shares, or owning a right to buy shares (for example, in an option scheme). How many shares did you own when you left? How many shares did Anakam have when they were sold to Equifax? If you own the shares you must have paperwork for it, back from the year 2004 or so; if so, what does that say? Was there a vesting period and if there was, what was it like? Find a lawyer that can work for part of the possible winnings instead of a fee. If you have the paperwork that proves you owned part of Anakam after when you left it then, with competent lawyers, it should be just a matter of computing your share of the company's final form before it was sold to determine how much they owe you. Prepare to lose some percentage of the total to make negotiations easier and shorter, and subtract your lawyers portion off it, too.
Permit 15y ago
I don't understand why you thought you could quit the whole company and still retain 100% of your assets, then come back 7 whole years later and complain that you were no longer an owner.
michaelrwolfe 15y ago
This is quite straightforward. You either own stock in the company or you don't. You own stock in the company if you received shares when you founded it and/or if you received options, vested them, then exercised the shares upon leaving the company. If you own shares, you produce the certificates, and the acquirer will buy them from you. If you don't, you don't. No attorney can help you if you claim to own shares in a company without actually owning any shares. The discussion about what you "deserve" and "don't deserve" is irrelevant. You either own the shares or you do not own the shares.
WilhelmJ 15y ago
Not sure if it'll add more credibility to the claim, but interestingly the wikipedia page for Anakam doesn't talk about Founders. And the company's official leadership page is empty! http://anakam.equifax.com/Company/Leadership/ http://anakam.equifax.com/Company/Leadership/
chris_dcosta 15y ago
Whatever your feelings are, if you don't have the evidence to support your claim, you should just forget about it. Evidence is the key to any case not the lawyers. You can't stand-up in court and make claims if you can't subtantiate it. That's just a fact of court cases. Best advice : Don't become the next Winklevoss, you won't make friends and that notoriety is not the sort I'd wish on any entrepreneur. Channel your anger : get on an build the next big thing instead.
waterhole 15y ago
This problem is pretty simple in my opinion. You say you own 20% right? Do you have this down on paper somewhere signed by all parties? If no, you get nothing. If you do, then you have a case. Simple.
pbreit 15y ago
Find a competent attorney who can work mainly on contingency and just sort the mess out. All the extortion junk sounds like a red herring. Prepare to be delighted by something well less than 20%.
deleted 15y ago
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gojomo 15y ago
Elsewhere in this thread you say, "the one attorney I have spoken to". You need to speak to many attorneys. You essentially get a free 30-60 minute consultation with each attorney just by shopping around. You'll get more value out of it if you have your documentation and written timeline of events ready before the discussion. But also, you might need to talk to a few before you even realize what are the important documents and events to summarize. Attorneys are wildly different in their competence and style and willingness to work on contingency. Each may prefer a completely different approach to the case. But almost any of them will be better able to craft a 'cease and desist', or other demand letter, than what you did yourself (and may have prompted the counter-threat via clumsy amateur language). If you have a real case, and the stakes are as you describe, there are a lot of better places you can get legal advice than a discussion thread. Don't DIY legal notices against a giant corporation, don't improvise, don't litigate in public, don't ask amateurs for help – shop around with professionals. You could talk to dozens to lawyers, learn something new from each one, for no money out-of-pocket.
zerostar07 15y ago
The best thing HN can do is to bury or delete this thread immediately. Any money he makes will not be enough to pay for defamation costs.
losethos 15y ago
LoseThos is 64-bit God is God any questions? God says... C:\TEXT\BIBLE.TXT king of Israel sin by these things? yet among many nations was there no king like him, who was beloved of his God, and God made him king over all Israel: nevertheless even him did outlandish women cause to sin. 13:27 Shall we then hearken unto you to do all this great evil, to transgress against our God in marrying strange wives? 13:28 And one of the sons of Joiada, the son of Eliashib the high priest, was son in law to Sanballat the Horonite: therefore I chased him from me. 13:29 Remember th ------------------- meh. God says, "fragment Doubt ANYTHING judgements gentleness Refund mount highest Law overcharged shadowy deadly sickly knowledge abilities Rare inwardly striving references Doubt themselves applauded phantom purchased Testament whatsoever Teacher calamities reposeth iniquities loudly affairs Victorinus while vouchsafe gods dearer unable instituted unless wring throughout render sure confer "
downandout 15y ago
There was no vesting schedule. It was an ownership grant.
losethos 15y ago
God says, "according cleave embrace fabulous disguise foot selected awaited " On one level dopimines make everybody equally happy. Everyone has highs and lows. You never manage to have a high for very long. I donno. Justice seems to go beyond biology. All I know is I talk to God and He approves anything that happens. Get yer own God. God says, "lived Unchangeable manage extended gave recollect liftedst exalted womb excepted toiling faithful one's calculation appear unfeigned Your suffered clearly lifts weakest wants stowed keep unspeakable Those taunt whereupon suspicions anger perversion question met implied spirit advices elect lingered cattle endeavouring Willing clearly "
gregory80 15y ago
[I am not a lawyer, you should always consult a trained legal professional when working with legal matters.] Don't let corporations bully you. Find lawyers who are willing to work on the case and pursue it. I would hope money isn't your only motivation, but if they have committed a crime, at the very least your local District Attorney or the FBI should review and begin pursuing any criminal charges. Assuming any criminal complaints "stick" it will make a civil suit much easier on you down the road.
devs1010 15y ago
Dude, if you really feel you have a case then you can find a lawyer who will take it up for you and will only take payment if they win the lawsuit, not having money for a lawyer isn't a legitimate claim unless you really have no valid case. Given that, you would probably need to pay the lawyer at least 40% of whatever you win but thats better than nothing, right?
m4cl4rk 15y ago
Here's a thought: Let it go. If your inspiration is the innovation at the heart of useful, life-changing technology, count yourself fortunate to have had such a meaningful impact. Or dig in and fight like hell. Roll up your sleeves and head to the nearest university's law library, bring some reading glasses and a tablet, dig into the germaine presiding legal code, and craft your offensive with the same fire in your belly that Erin Brokovich did when she went after the gas company. As a matter of fact, if it's true and you find that your legal footing is indeed sound, it's a gold mine of content. Blog, book, movie. Think about it: Equifax. You couldn't pick a better black hat for a David v Goliath/ Good v Evil story. Really. The potential for intrigue and creative spin is endless. Creative non-fiction, as a genre, is one of the most lucrative in the history of story telling, publishing, theater, and film. And this story is one with an increasingly transcendent resonance at the dawn of the so-called 'contract/freelance/entrepreneur economy'. So many of us have been burned in similar ways, and it happens with such frequency, that even if a tenth of us similarly afflicted folks opted in, bought the book, and downloaded the movie, it'd likely dwarf the 13 million-dollar screwing you got. If you go down that road, I'd ping Brokovich's consulting firm. Polish the canonball a bit, but really, get someone of that stature with that sort of direct 'man v. machine/in the belly of the beast' expertise. It could be bigger than you imagine. http://www.brockovich.com/ http://www.brockovich.com/ Either way, thanks for the hack story. It took guts to share it, knowing that you'd likely get flamed to ashes with such a simple cheesecloth tale. Please let us know what you end up doing. Good luck with that.
blakdawg 15y ago
Move on with your life. You gave up on this years ago. Trying to extract a 20% stake for some flailing around in the early years is ridiculous. You were happy to let others do the hard work building a company, now you want to cash in.

221 points by downandout 15y ago

davidw 15y ago

1) Do you have documentation regarding the 20% ? 2) Sounds like you should seek an attorney who would be willing to take a cut if they win the case.

downandout 15y ago
I do have documentation regarding the 20%. The one attorney I have spoken to says, for reasons I still don't entirely understand, that I have a better shot at trying to sue them for using my intellectual property without permission, since it is quite clear that I wasn't compensated as agreed for the license to use the technology. They also say that a civil extortion claim is the low-hanging fruit in this situation, but this particular attorney was unwilling to take it on contingency.
- davidw 15y ago
  Well, for that much money - even a shot at it - you ought to be out there making your case to attorneys who might take the case on contingency. Put together a nice presentation of 'the facts' and 'the evidence', and get out there.
- artie_effim 15y ago
  I'd say shop around for another lawyer - your's sounds bunk.
- petercooper 15y ago
  The one attorney I have spoken to says, for reasons I still don't entirely understand, that I have a better shot at trying to sue them for using my intellectual property without permission If I had to guess from your wording and this response, the "company" wasn't incorporated while you were involved with it? If it were, you'd have some sort of share certificate and the sale of the company may have been fraudulent. If you're a shareholder, someone else can't easily just "assume [your] ownership". I'm guessing you never got an official 20% share of the corporation that was eventually sold, so your attorney may be thinking your beef is with the guy who "stole" your share and that could be a more complicated/less lucrative case.
  - downandout 15y ago
    Well, there were several corporate machinations. Initially, the company was an LLC, and I was given a 20% interest in it in writing. At some point after I left, during one of the financing rounds, it became a corporation. The corporation was sold.

bond 15y ago

I'm sure you can find a lawyer who can take the case on contingency, 10-20% for the lawyer would make a nice sum...

wglb 15y ago
Often it is more like 35% or 40%. And if there is an appeal they may go to 50%.

verroq 15y ago

A healthy dose of skepticism won't hurt here. This sounds exactly like 419 scam if you choose to fund for his "lawyers".

downandout 15y ago
I honestly wasn't asking anyone to fund anything. I am just seeking advice as to what I should do. I could have them prosecuted free of charge, but I'm not sure that will advance my cause.
- Bobby_Tables 15y ago
  At the very least, a successful criminal prosecution would make you feel better. And it would likely advance your cause...I'm not sure if an extortion conviction would be admissible in a civil trial for something like this, but even if it weren't, the fact that someone was convicted of criminal extortion would make it far more likely you'd get a good attorney to work on contingency for the civil complaint. Even if you only recover $1m, 33% of that is a decent payday for a lot of lawyers.
- bphogan 15y ago
  Well, it might. If you don't have the resources, could you in fact pursue the extortion charge, get the judgement, and then come back around and say "hey, now that you've been found guilty, let's talk about the real issue"? They may be willing to negotiate at that point. Of course, not a lawyer here.
- ErrantX 15y ago
  Can you not follow civil and criminal routes? Find an attorney to take the civil cases (and file for patent infringement, the ownership issue & the extortion), and at the same time report them for extortion. Assuming everything is well timed you could have 4 guns blazing at once, which will certainly help them notice you. :)

GiraffeNecktie 15y ago

Equifax is a huge corporation which is both good and bad. Bad because they've got limitless resources, good because they are a publicly traded corporation which makes them sensitive to valid lawsuits. Their business is also based on validating trustworthiness, which I think would also make them vulnerable to allegations of criminality and abuse of process. This is not a job for your typical small town lawyer. I think you need to do some research and find a big-ass New York-based law firm that knows how to find their short hairs and pull sharply.

smoyer 15y ago
They're also likely to have other large public corporations as clients using your technology ... an injunction against using your technology until the case is settled could prove extremely embarrassing and costly to them.
phaus 15y ago
Equifax couldn't care less what the public thinks about them. They are frequently featured on sites like ripoffreport.com They target computer illiterates by offering them a free credit report. Not long after they get the free report, these people notice that they are being charged monthly fees for services that they didn't even know they signed up for. While not technically illegal, it is highly unethical and I wouldn't be surprised if a significant portion of their income came from scamming people who don't know better. It can be argued that the people getting scammed are partly to blame because they didn't read the fine print. I agree to an extent but I also believe that if a business wants to succeed, they should do so on honest terms.

ra 15y ago

You MUST find a good attorney with relevant experience. If your case is solid you will come to an arrangement on deffered payment of fees.

alain94040 15y ago

Talk to as many attorneys as you can until you find a good one who is willing to help. Or treat this as an investment: invest $100K for a $10M return. My personal recommendation: talk to great lawyers, they are more expensive on a per-hour basis, but when they tell opposing counsel what they think of the case, the other side usually listens. Been there, done that :-(

joshuaheard 15y ago

I practice business litigation in Texas and California. It sounds like you have a great case. See if you can find an attorney who will take this on a contingency basis. What state are you in? I can forward this to a California attorney I know who does business litigation on a contingency basis if you are in California, since I am living in Texas at the moment.

downandout 15y ago
I am in Nevada, but any litigation would likely take place in California. The company was initially based in Nevada, but was moved to San Diego (the Southern District of California for a federal matter). After the acquisition I believe their headquarters moved to Virginia, but I know they still have an office in San Diego.
- joshuaheard 15y ago
  Great. I will forward your post.
- joelhaus 15y ago
  Just listened to the latest Digital Age podcast and they discuss litigation funding, which sounds like exactly what you need: http://www.youtube.com/watch?v=gdXO2WgKazM http://www.youtube.com/watch?v=gdXO2WgKazM They answer some interesting questions about the process and there are obviously some advantages over a contingency arrangement (e.g. counsel gets compensation and thereby incentive to prosecute your case with all of the necessary resources). Here is the description of this program: The cost of litigation can be catastrophic. Many litigants drop good cases, or lose their businesses entirely, because they run out of money. Recently, third parties have appeared to advance legal costs, in exchange for a piece of the recovery. But is this new structure illegal? Litigation funder Selvyn Seidel tells Jim Zirin how funding has transformed the global marketplace.

brador 15y ago

Step 1: Get your paperwork in order. Find the papers that were signed, certificates given, emails sent. Gather ALL your evidence in one place/folder. MAKE A PHOTOCOPY OF EVERYTHING. Keep this separate just in case things go missing. Step 2: Build your story. Get it clear in your own mind what happened and how you got screwed. Step 3: Talk to the best attorney(s) you can find. Talk fast, listen well. Step 4: Let them do what they do. If your case is solid, most attorneys will take it on contingency, but at 12.8 mil this isn't a small town matter. You're looking at semi-pro minimum. Consider it an investment.

9ec4c12949a4f3 15y ago
Not just one place -- safe deposit box at the bank. Crooks play really really dirty. I personally wouldn't go anywhere alone. Maybe I've run into the wrong people-- but the wrong people know that it only costs about $5k to have someone's legs broken.
packetslave 15y ago
Step 1a: DON'T talk about the specifics of the case in public. You're giving opposing counsel a free head start in building their case against your arguments.
ArbitraryLimits 15y ago
Semi-pro? How much money would it take for you to require a full pro?
- PakG1 15y ago
  Try $800/hour. Or maybe even higher. Grade A lawyers are in that realm, I know people who charge that much, and have founder friends who have lawyers that charge that much. edit: which is why contingency is so important here.
  - ArbitraryLimits 15y ago
    I meant how much money you would call in pro lawyers to get, not how much you would pay them.

saalweachter 15y ago

I suspect you are overestimating what you are entitled to. 20% of the founding equity rarely turns into 20% of the final sale price of the company. Normal, healthy subsequent investment could easily dilute the founding shares 2:1 or 3:1. If the company goes through especially bad times -- a near bankruptcy followed by a last-minute bailout by investors, not unheard of in the last few years -- the founding shares could easily be diluted 10:1. Add in a modest management carve-out from the sale, and your 20% amounts to 2-5% of 90% of $64 million, or $1.2-$2.9 million.

wlievens 15y ago
Still a lot of money, of course.
deleted 15y ago
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downandout 15y ago
You are probably correct that there has been some dilution. My co-founder already had very deep pockets before we started the company, and I believe that he remained the primary investor throughout (though I am aware of 1 small round participated in by a venture firm). He would have made it a priority to dilute me out of existence. They have refused to provide any information with regard to this at all.
- SemanticFog 15y ago
  There are so many ways to screw over a non-employee, minority common shareholder, you may well have no case here. For example, if the company hit a rough patch, it might have been recapitalized, with all current shareholders wiped out. Since your partner had 80% of the shares, and plenty of cash, he could have easily pulled this off. Depending on what state you're in, you may no longer have any right to seek redress. If your partner knows what he's doing (or has a lawyer who does), the best you're going to get is a small amount of cash to go away. And if you guys are on bad terms, you may not even get that.
  - 15y ago

VanL 15y ago

A number of sizable and well-respected law firms will take your case on contingency if they believe that it is a good enough case and you can win. Upside is that you can get good lawyers able to help you, and if you lose, you won't be out the lawyer's fees. Downside is that if you win, you will pay a substantial percentage (30-50%) in fees, largely due to the increased risk that the firm takes on. Also, whoever said to sue for IP infringement may be worth listening to. 12.5M for a patent judgment is low.

0x12 15y ago

Find a lawyer that will take it on contingency. Also, talk to 'grellas' here, he's one of the nicest legal eagles I've ever seen.

sebastianconcpt 15y ago

Get a NYC lawyer that agrees to take the case at his own risk. Pitch them with your story, if they find it solid (you can prove you claim) then you have a case and they should be interested. Good luck

boling11 15y ago

Was there any type of vesting agreement in place?

stevenwei 15y ago

If your name is on one of their patents I'm surprised that was overlooked during due diligence when the company was being acquired. But it definitely seems like you have a strong case based on what you have described.

michaelrwolfe 15y ago
It doesn't matter whose name is on the patents if the company owns the patents.

apinstein 15y ago

I went through a similar situation myself a long time ago, albeit for much less money. 1. Put your story together, with paperwork and references. 2. Call some attorneys about taking the case on contingency. You have to "sell" them on the value of your case. Think of it like pitching an investor, because frankly that's what you're doing. 2a. Don't pay a retainer. I blew a lot of money with this route before focusing on a contingency arrangement. 2b. I got myself a free Westlaw trial account and searched for cases similar to mine, figuring I could find someone for whom my case wouldn't be risky for them. Also I looked for small firms so that I could talk directly to the decision maker about taking cases on contingency. Result? 0 money invested, reasonable settlement, and closure. It took about a year. Yours will take longer likely.

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chopsueyar 15y ago

As most others here have said, find a lawyer who will do this on contingency. Google ip attorney contingency and go from there. I am in a similar situation, but probably around 1/10 of the amount. As you already know, it is fairly easy to send a letter. I am surprised they did not also accuse you of libel. That is my favorite. Do you happen to know the federal law regarding the accusation of crime unless given consideration. Is it simply extortion or is there some other statute? Best of luck, you have justice on your side! Try to get some lump sum cash AND a yearly/quarterly/monthly licensing fee out of this.

gizmo 15y ago

You're the bad guy in this story, and it isn't even close. At the point you and your partner had a falling out you had put in less than a year of work for the company. The other partner had invested, I can only assume, a substantial amount of money. If at that point he too had quit the company (and the shares) would have been worth absolutely nothing. I repeat: when you quit your shares were worth nothing. You could easily walk away because it wasn't your money on the line. You left the other guy in a terrible spot where he invested a bunch of money and his (technical?) partner left. Now, the other guy spends an additional 6 years on the business and turns it into a success and now you believe you're entitled to that even though you screwed him over 6 years ago? Even though the ONLY reason that the shares are worth something now is because your partner put the effort in! That you're entitled to the same equity you would have gotten had you stayed for all 7 years? Are you kidding me? And you're publicly accusing the ex-CEO of Anakam of screwing you out of $12.8 million? It's clearly the other way around. You're trying to screw the other guy out of his money AGAIN, based on some dodgy legal footing.

davidw 15y ago
I think it's awfully premature to go around judging who is 'the bad guy', and that it's quite possible both or neither of them have done less than stellar things. But we simply don't have more than a smattering of facts from one side.
- wisty 15y ago
  20% of a start-up (at year 1) is worth much less than 20% of it 5 years later. If the company had their paperwork in order, the OP should have maybe 5%, due to vesting and dilution. Or the original investor should have bought him out for a few thousand, as he was walking out the door (but he didn't did he?). Imagine if you had worked on building your company for 6 years, only to have an early employee (who presumably quit in a huff) come back and demand 20% - which they were meant to actually work for, and asserted IP rights on everything they had worked on. That said, the company is also behaving very badly, what with the extortion thing. They would be better off making a reasonable offer, and hitting themselves on the head for screwing up their ownership / IP assignment paperwork.

deleted 15y ago

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bm98 15y ago

You clearly aren't trying to be anonymous, since you named the company and your patent is easy to find. Congratulations, I guess, for being the first to patent the idea of authenticating a web app based on a password plus a cookie from a prior session, and requiring additional authentication if the cookie isn't there. Hard to imagine that that wasn't obvious in 2004, but maybe it just seems that way in retrospect.

smoyer 15y ago
I believe the bank where I have my savings account is using this IP for their login system ... I don't know whether Equifax provides it or not. I guess the other question is whether this can be invalidated by prior art. It also seems obvious and common to me but I can't say whether it was in 2004 either.

kanamekun 15y ago

The first thing I would do is remove all references here to the names of the companies involved. You can still get the benefit of Hacker News advice while keeping the parties anonymous... but by naming everyone, you open up several cans of worms (they could sue you for defamation, they could learn how you're thinking about this and what your resources are, this could get posted to TechCrunch in a way that hurts your chances of a settlement, etc.).

AngeloAnolin 15y ago

Any company being sold to another company requires due diligence, especially on the legal side of matters. Equifax may have done their part in ensuring that the business they are acquiring is all good and the ownership / stakes in the company are all relevant (literally means as well that they ensured no other claimants would suddenly come up after the acquisition). I believe the focus of your case (should it materialize) would be to your previous business partner. If you say and rightfully claim that there's a documented agreement (filed during the company incorporation) that you own 20% of the company, then there's a pretty good chance you may be able to get what is rightfully yours. Take note that you should be clear whether that 20-80 agreement you made before pertains to the ownership of the company, and not on particular income with which the company would be generating. Good luck on your case and may you get what is rightfully and legally yours, so to speak.

systems 15y ago

between 2005 and 2010 what was your relationship to anakam? did you receive any benefit for your 20% claim, why do you believe you are 20% owner, and why haven't you made any claims to any money earned by anakam before and even more importantly how did you leave, how did you settle when you left? there is a lot of missing details here

Duff 15y ago

You need to stop posting about this on the internet and get some competent advice. If you actually have $12.8M + potential damages at stake, saying "I cannot afford a lawyer" is ridiculous.

ohyes 15y ago
Yup. Posting on the internet can hurt your case. Although this is interesting, I'd honestly recommend discontinuing the thread and deleting the post. A lawyer that thinks you have a good case will take this up for a cut of the settlement no problem. If you can't find a lawyer that thinks you have a good case... it probably isn't worth suing.

yason 15y ago

You participate in a company by owning shares, or owning a right to buy shares (for example, in an option scheme). How many shares did you own when you left? How many shares did Anakam have when they were sold to Equifax? If you own the shares you must have paperwork for it, back from the year 2004 or so; if so, what does that say? Was there a vesting period and if there was, what was it like? Find a lawyer that can work for part of the possible winnings instead of a fee. If you have the paperwork that proves you owned part of Anakam after when you left it then, with competent lawyers, it should be just a matter of computing your share of the company's final form before it was sold to determine how much they owe you. Prepare to lose some percentage of the total to make negotiations easier and shorter, and subtract your lawyers portion off it, too.

Permit 15y ago

I don't understand why you thought you could quit the whole company and still retain 100% of your assets, then come back 7 whole years later and complain that you were no longer an owner.

michaelrwolfe 15y ago

This is quite straightforward. You either own stock in the company or you don't. You own stock in the company if you received shares when you founded it and/or if you received options, vested them, then exercised the shares upon leaving the company. If you own shares, you produce the certificates, and the acquirer will buy them from you. If you don't, you don't. No attorney can help you if you claim to own shares in a company without actually owning any shares. The discussion about what you "deserve" and "don't deserve" is irrelevant. You either own the shares or you do not own the shares.

WilhelmJ 15y ago

Not sure if it'll add more credibility to the claim, but interestingly the wikipedia page for Anakam doesn't talk about Founders. And the company's official leadership page is empty! http://anakam.equifax.com/Company/Leadership/ http://anakam.equifax.com/Company/Leadership/

chris_dcosta 15y ago

Whatever your feelings are, if you don't have the evidence to support your claim, you should just forget about it. Evidence is the key to any case not the lawyers. You can't stand-up in court and make claims if you can't subtantiate it. That's just a fact of court cases. Best advice : Don't become the next Winklevoss, you won't make friends and that notoriety is not the sort I'd wish on any entrepreneur. Channel your anger : get on an build the next big thing instead.

waterhole 15y ago

This problem is pretty simple in my opinion. You say you own 20% right? Do you have this down on paper somewhere signed by all parties? If no, you get nothing. If you do, then you have a case. Simple.

pbreit 15y ago

Find a competent attorney who can work mainly on contingency and just sort the mess out. All the extortion junk sounds like a red herring. Prepare to be delighted by something well less than 20%.

deleted 15y ago

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gojomo 15y ago

Elsewhere in this thread you say, "the one attorney I have spoken to". You need to speak to many attorneys. You essentially get a free 30-60 minute consultation with each attorney just by shopping around. You'll get more value out of it if you have your documentation and written timeline of events ready before the discussion. But also, you might need to talk to a few before you even realize what are the important documents and events to summarize. Attorneys are wildly different in their competence and style and willingness to work on contingency. Each may prefer a completely different approach to the case. But almost any of them will be better able to craft a 'cease and desist', or other demand letter, than what you did yourself (and may have prompted the counter-threat via clumsy amateur language). If you have a real case, and the stakes are as you describe, there are a lot of better places you can get legal advice than a discussion thread. Don't DIY legal notices against a giant corporation, don't improvise, don't litigate in public, don't ask amateurs for help – shop around with professionals. You could talk to dozens to lawyers, learn something new from each one, for no money out-of-pocket.

zerostar07 15y ago

The best thing HN can do is to bury or delete this thread immediately. Any money he makes will not be enough to pay for defamation costs.

losethos 15y ago

LoseThos is 64-bit God is God any questions? God says... C:\TEXT\BIBLE.TXT king of Israel sin by these things? yet among many nations was there no king like him, who was beloved of his God, and God made him king over all Israel: nevertheless even him did outlandish women cause to sin. 13:27 Shall we then hearken unto you to do all this great evil, to transgress against our God in marrying strange wives? 13:28 And one of the sons of Joiada, the son of Eliashib the high priest, was son in law to Sanballat the Horonite: therefore I chased him from me. 13:29 Remember th ------------------- meh. God says, "fragment Doubt ANYTHING judgements gentleness Refund mount highest Law overcharged shadowy deadly sickly knowledge abilities Rare inwardly striving references Doubt themselves applauded phantom purchased Testament whatsoever Teacher calamities reposeth iniquities loudly affairs Victorinus while vouchsafe gods dearer unable instituted unless wring throughout render sure confer "

downandout 15y ago

There was no vesting schedule. It was an ownership grant.

losethos 15y ago

God says, "according cleave embrace fabulous disguise foot selected awaited " On one level dopimines make everybody equally happy. Everyone has highs and lows. You never manage to have a high for very long. I donno. Justice seems to go beyond biology. All I know is I talk to God and He approves anything that happens. Get yer own God. God says, "lived Unchangeable manage extended gave recollect liftedst exalted womb excepted toiling faithful one's calculation appear unfeigned Your suffered clearly lifts weakest wants stowed keep unspeakable Those taunt whereupon suspicions anger perversion question met implied spirit advices elect lingered cattle endeavouring Willing clearly "

gregory80 15y ago

[I am not a lawyer, you should always consult a trained legal professional when working with legal matters.] Don't let corporations bully you. Find lawyers who are willing to work on the case and pursue it. I would hope money isn't your only motivation, but if they have committed a crime, at the very least your local District Attorney or the FBI should review and begin pursuing any criminal charges. Assuming any criminal complaints "stick" it will make a civil suit much easier on you down the road.

devs1010 15y ago

Dude, if you really feel you have a case then you can find a lawyer who will take it up for you and will only take payment if they win the lawsuit, not having money for a lawyer isn't a legitimate claim unless you really have no valid case. Given that, you would probably need to pay the lawyer at least 40% of whatever you win but thats better than nothing, right?

m4cl4rk 15y ago

Here's a thought: Let it go. If your inspiration is the innovation at the heart of useful, life-changing technology, count yourself fortunate to have had such a meaningful impact. Or dig in and fight like hell. Roll up your sleeves and head to the nearest university's law library, bring some reading glasses and a tablet, dig into the germaine presiding legal code, and craft your offensive with the same fire in your belly that Erin Brokovich did when she went after the gas company. As a matter of fact, if it's true and you find that your legal footing is indeed sound, it's a gold mine of content. Blog, book, movie. Think about it: Equifax. You couldn't pick a better black hat for a David v Goliath/ Good v Evil story. Really. The potential for intrigue and creative spin is endless. Creative non-fiction, as a genre, is one of the most lucrative in the history of story telling, publishing, theater, and film. And this story is one with an increasingly transcendent resonance at the dawn of the so-called 'contract/freelance/entrepreneur economy'. So many of us have been burned in similar ways, and it happens with such frequency, that even if a tenth of us similarly afflicted folks opted in, bought the book, and downloaded the movie, it'd likely dwarf the 13 million-dollar screwing you got. If you go down that road, I'd ping Brokovich's consulting firm. Polish the canonball a bit, but really, get someone of that stature with that sort of direct 'man v. machine/in the belly of the beast' expertise. It could be bigger than you imagine. http://www.brockovich.com/ http://www.brockovich.com/ Either way, thanks for the hack story. It took guts to share it, knowing that you'd likely get flamed to ashes with such a simple cheesecloth tale. Please let us know what you end up doing. Good luck with that.

blakdawg 15y ago

Move on with your life. You gave up on this years ago. Trying to extract a 20% stake for some flailing around in the early years is ridiculous. You were happy to let others do the hard work building a company, now you want to cash in.