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Why VisionTek is sueing Mitac, Nvidia, VC and five ex-staff

In graphic detail

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Creditors of VisionTek accuse Nvidia, Mitac, BFG Technologies, Advanced Equities Inc and 13 named individuals, many former senior employees of the company, of trying to sabotage the graphics card maker.

In August 2002, VisionTek, the leading US graphics card maker collapsed. A so-called Trustee Assignee, Michael J. Eber of High Ridge Partners, was appointed on behalf of creditors to run the affairs of the firm. A quick call to VisionTek's Illinois headquarters shows that the company is still running a sales operation.

The creditors have, through the Trustee Assignee of the company, filed a lawsuit in the chancery division of Cook County Court, Illinois seeking so-called declatory relief "in excess of $50m” plus court costs and unspecified damages from the defendants for variously breach of employment and confidentiality agreements, breach of fiduciary duties, theft of trade secrets, and tortious interference with VisionTek’s contractual and business relationships.

"Beginning in early August 2002", the lawsuit charges, "the defendants embarked upon a plan pursuant to which the defendants illegally utilized VisionTek, LLC’s proprietary and confidential information and trade secrets and illegally solicited VisionTek LLC's employees, suppliers and customers for the purpose of creating a company to compete with and, ultimately, destroy VisionTek, LLC."

The filing makes for an exhausting read, but the nub of the accusation is that VisionTek was to embark upon a restructure, with the financing and top management, provided by Advanced Equities Inc. Earlier this year Advanced Equities had already secured financing for VisionTek of $4.57m (for which its fee was $407,730).

In a meeting in August 2002, three senior representatives of VisionTek, president Ric Lewis, executive vice president of sales marketing Robert Vance and director of Business development Scott Herkelman, are accused of demanding from Advanced Equities a minimum salary of $200,000 each, seats on the board, and 45 per cent equity in the “surviving company” – or they would walk out.

Advanced Equities rejected the ultimatum, according to the lawsuit, but later conducted secret meetings with the trio in which they – and possibly others – decided to "pursue a plan pursuant to which Advanced Equities would delay and/or terminate negotiations with VisionTek and a new company would be created to include as employees Lewis, Vance and Herkelman", the filing states.

Together representatives of Advanced Equities and Vance, Herkelman and two other VisionTek employees, director of marketing John Malley and tech support John Hall, reviewed the feasibility of setting up a new company, using confidential information illegally obtained from VisionTek, the lawsuit charges.

Lewis, Vance and Herkelman resigned from VisionTek on August 14. Prior to this they are accused of conducting secret negotiations with Nvidia, in which they sought support for their new venture. Also, they solicited Mitac for the same purpose. According to the lawsuit, they cancelled all VisionTek's open orders with Nvidia, destroying the company's ability to conduct business. Around the same time, they deliberately ordered excess inventory from Mitac for the purpose of supplying their new company, incorporated by Herkelman on August 27, 2002 as BFG Technologies.

The former VisionTek staffers named in the suit "became key employees in all phases of selling, marketing and distributing VisionTek’s products. As key employees they had access to, and became intimately familiar with, on a daily basis, VisionTek's confidential information and trade secrets, including operating and financial information relating to VisionTek".

Mitac and Nvidia are described as "key suppliers" of VisionTek, with the Taiwanese manufacturer signatory to a mutual confidentiality agreement with VisionTek.

We have put in calls to Nvidia and to a representative of the Trustee Assignee at Visiontek. Neither have come back to us yet. ®

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