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Investment bank sues Infinium

Console maker accused of fraud, accuses bank of misrepresentation

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Phantom console maker Infinium Labs has been accused of fraud and breach of contract by investment bank SBI-USA - a claim it is backing with legal action against the videogame company.

Infinium immediately blasted SBI-USA's allegations as "frivolous, without merit and intended to interfere with Infinium's business and operations".

SBI-USA, the US arm of Japan's Softbank, was one of Infinium's original investors. In January this year, the console maker announced a $15m stock purchase from SBI-USA and Trilogy Capital Partners offshoot Infinium Investment Partners. The following April, it signed up HaDavar HaNachon as a third investor. At the same time it said SBI-USA had upped its stock purchase, bringing the total invested by the three companies to $44m.

At the time SBI-USA said it was increasing its funding as a sign of its confidence in the ability of Infinium's management.

Now, however, it claims that in return it was to take a cut from any other finance deals Infinium secured. It says the console maker managed to acquire $30m, but that none of that money has come its way.

Infinium countered by claiming SBI-USA has misrepresented the nature of the two firms' agreement - a deal it says has since been terminated - and inflated the sum of money it had managed to secure as investment capital.

"Infinium's agreement with SBI-USA provided that SBI-USA would be paid, under certain circumstances, for investments made by parties with whom SBI-USA had a pre-existing substantive relationship," Infinium CEO Tim Roberts said in a statement. "SBI-USA was wholly unsuccessful in its efforts and was unable to raise any funding whatsoever from such investors. As a result, Infinium terminated its agreement with SBI-USA.

"The Company will vigorously defend itself from these meritless allegations, and will consider all remedies available to it, including all counterclaims and causes of action arising from the lawsuit and the issuance of this inaccurate and malicious news release," he added.

Infinium is already embroiled in legal action with hardware-oriented website HardOCP. The threat of a further lawsuit and the prospect of a countersuit also comes at a time when the company's own Securities & Exchange Commission (SEC) filings show how much cash it still needs - $22.2m - to raise if it's to meet its current launch date and the marketing programme that will support that launch.

The Phantom console and associated broadband games service are currently due to ship some time in Q2 2005, after being delayed in September from the planned 18 November release date. ®

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Ex-Infinium exec sues company...
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