Today, the 70-year-old Mr. Perelman, who is said to be worth more than $12 billion, controls a sprawling business empire through his conglomerate MacAndrews & Forbes. His conflict with Mr. Milken centers on a major holding, Harland Clarke, the country's largest check-printing company.
In January 2011, as part of Harland Clarke's push into the education field as it sought to diversify away from the dying business of check printing, Harland Clarke acquired GlobalScholar. It paid $135 million for the company, which provides software for teachers to better assess students' performance.
Yet the GlobalScholar acquisition soured quickly, according to the complaint, with the business's performance falling far short of expectations.
"Much of the software was 'vaporware,' " said the complaint. The lawsuit describes vaporware as "software that appears to be robust and fully functioning, but that is no more than a mirage intended to appear complete but not actually functional."
In its complaint, Harland Clarke takes direct aim at Mr. Milken, who over the last several decades has become an influential player in the profit-making education field. He serves as the chairman of a group of education companies called Knowledge Universe. Among his holdings are KinderCare Learning Centers, a chain of day care centers. Knowledge Universe also had an investment in GlobalScholar, and in 2010 it began discussions to sell the business to Harland Clarke.
"Milken represented that his 30 years of experience in the education and technology field assure the success of Knowledge Universe and its related companies, specifically GlobalScholar," the complaint said.
The lawsuit highlighted a meeting, just months before the deal was struck, that Mr. Milken attended with the chief executive and another senior official at Harland Clarke. During the negotiations, Harland Clarke said its officials were misled about GlobalScholar's relationship with Houghton Mifflin Harcourt, an educational publishing company in which Mr. Milken also had an investment. Mr. Milken and others made false representations that Houghton Mifflin would play a crucial role in GlobalScholar's growth, the complaint said.
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In addition to Mr. Milken, Harland Clarke also named as defendants Knowledge Universe and Kal Raman, the founder and former chief executive of GlobalScholar, who left just eight months after the acquisition. Mr. Raman now serves as chief operating officer of the online coupon provider Groupon.
The lawsuit seeks $135 million in financial damages, as well as punitive damages and other costs.
Mr. Moore, the spokesman for Mr. Milken, noted that the transaction was a heavily negotiated deal with a 77-page purchase agreement. "This is a baseless action brought by a sophisticated buyer of technology represented by equally sophisticated counsel," said Mr. Moore, alluding to Skadden, Arps, Slate, Meagher & Flom, which advised Harland Clarke on the deal. "They negotiated a comprehensive agreement and had abundant opportunity for extensive due diligence before they completed the purchase."
Mr. Perelman has also recently been wrangling with federal regulators. Last month, MacAndrews & Forbes agreed to pay a $720,000 civil penalty to resolve accusations that the company violated reporting requirements related to acquiring shares in the Scientific Games Corporation. And a week before, Revlon, which he still controls, said it would pay $850,000 to settle claims that it deceived shareholders during an attempt to take the company private.
—By Peter Lattman of The New York Times