April 26, 2008 in Business

BlueRay files counterclaim over records suit

Staff writer
 

BlueRay Technologies Inc. claims a shareholder suing the company to make it disclose financial records is a former chief financial officer fired for allegedly not maintaining corporate records and for concealing she was convicted of a federal crime.

In court papers filed this week, the Spokane company accuses Yelena Simonyan of seeking the corporate records and suing to influence BlueRay’s buyout of her stock.

BlueRay asked the Spokane County Superior Court to dismiss Simonyan’s lawsuit and restrict disclosure of accounting records and its stock register. The company also is seeking damages for the alleged wrongful disclosure of confidential documents and for not being told of Simonyan’s 2001 probation and fine for conspiracy to defraud the Internal Revenue Service before hiring her.

BlueRay also asks for sanctions against Simonyan and her attorney, Daniel Gibbons, for entering company secrets into the public record, and for attorney’s fees and costs.

In court papers, Gibbons argued there is “no evidence” Simonyan’s request was improper, and she was not responsible for BlueRay’s alleged failure to keep or provide records.

“The counterclaims will be dealt with at the proper time and through the proper procedure,” he said Friday.

Earlier this month, Simonyan sued BlueRay claiming she had invested $100,000 but that the company did not maintain or offer up certain records as required by state law. The lawsuit contained information from corporate records.

A court commissioner later agreed to BlueRay’s request to seal parts of the court record to keep them from competitors and news reporters.

BlueRay contends it has complied with all records requests, except for turning over a stock register and certain accounting records.

A series of setbacks has delayed by months BlueRay’s plan to make and distribute Blu-ray discs. But BlueRay was “on track to begin full operation as early as June, 2008,” prior to a recent article in The Spokesman-Review on the lawsuit, CEO and President Erick Hansen asserts in court documents.

“I have been working diligently to ready the building and manufacturing line for operation,” Hansen states. “Investors and lenders are understandably wary over the information disclosed. … The disclosure of the confidential material is therefore, making it more difficult to obtain necessary operating and financing and investment capital.”

Workers moved more equipment into BlueRay’s office, downtown in the Commercial Building, on Thursday afternoon. Employees are working after temporary layoffs earlier this year, said Steven Schneider, BlueRay’s attorney.

A Beverly Hills, Calif., resident as of late last year, Simonyan was the chief financial officer of BlueRay until Oct. 6, when she was fired for not disclosing her felony and for “failure to properly maintain corporate records and accounts,” Hansen alleges. She was sentenced to three years of probation and fined $3,000 after pleading guilty to the conspiracy charge in 2001. A potential investor group backed out after discovering the conviction during background checks, Hansen claims.

“Even though Ms. Simonyan knew that BlueRay was seeking investors and would eventually be the subject of a public offering, she failed to disclose this important fact that would have affected BlueRay’s ability to attract investors,” he alleges.

BlueRay also claims Simonyan wants the records “for an improper purpose of leveraging a buyout of her interest.” Hansen alleges he negotiated with Simonyan about a buyout, and her records request in late 2007 was “understood to be on hold while these negotiations continued.”

BlueRay says it’s performing an independent audit and is “still trying to complete the work needed to update all corporate records, work that was Ms. Simonyan’s responsibility.”

“Ms. Simonyan’s motive has been revealed as a ploy to extort the corporation in buy-out negotiations,” Schneider writes.

Simonyan was not responsible for all records, and she still wants copies of documents, such as BlueRay’s general ledger and tax returns, Gibbons contends in court papers.

Simonyan’s suit claimed BlueRay provided a financial register dated Oct. 31 that was “out of balance” by more than $4 million. That was due to a “simple clerical error,” Hansen claims.


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