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Hyperloop One files $250 million countersuit against co-founder

(L-R) Hyperloop One Co-Founder & Executive Chairman Shervin Pishevar, Hyperloop One Chief Executive Officer Rob Lloyd and Co-Founder & Chief Technology Officer Brogan BamBrogan speak during the first test of the propulsion system at the Hyperloop One Test and Safety site on May 11, 2016 in North Las Vegas, Nevada.
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(L-R) Hyperloop One Co-Founder & Executive Chairman Shervin Pishevar, Hyperloop One Chief Executive Officer Rob Lloyd and Co-Founder & Chief Technology Officer Brogan BamBrogan speak during the first test of the propulsion system at the Hyperloop One Test and Safety site on May 11, 2016 in North Las Vegas, Nevada.

Hyperloop One, the futuristic ultra high-speed transport system that was sued by a co-founder, is fighting back against the ex-employee Brogan BamBrogan, claiming he was part of a "gang of four" that was engaged in misconduct and abusive behavior.

The company filed a countersuit on Tuesday in the Superior Court of California, Los Angeles County, seeking money and punitive damages of at least $250 million.

A week ago, BamBrogan sued Hyperloop One, claiming the company's top leaders misused funds, breached their fiduciary duties and conspired "to augment their personal brands, enhance their romantic lives, and line their pockets (and those of family members)." BamBrogan was forced to resign last month.

It's the latest explosive lawsuit to come out of Silicon Valley, and the defendants portray it as a spectacle designed to capture maximum media attention against a group of visionaries. The suit, they say, followed a plot by BamBrogan and others to take over the company by manipulating a group of employees. When that failed, the countersuit says, the plaintiffs attempted to create a separate entity — "Hyperloop Two" — and then finally launched a smear campaign.

"Today's lawsuit demonstrates that these four men staged a failed coup to try to take over Hyperloop One and then conspired to start their own competing company," said Orin Snyder, Hyperloop's attorney and a partner at Gibson Dunn, in an e-mailed statement. "Hyperloop One's board and management are unified in standing up to this illicit attack on the company, and today the company is stronger than ever in its mission to bring the Hyperloop to the world."

Hyperloop One, based in Los Angeles, has set out to create a transportation network that will move passengers at a faster pace than air travel using electric propulsion through a low-pressure tube with little environmental impact. The idea of the Hyperloop was conceived by Elon Musk and Hyperloop one was established in 2014 by Shervin Pishevar, a venture capitalist, and BamBrogan, a former SpaceX engineer. The company has raised over $100 million.

BamBrogan's complaint centered around nepotism and abuse of funds. He claimed that Pishevar started dating the outside public relations representative and raised her pay from $15,000 a month to $40,000 a month, more than any employee. Vice chairman Joe Lonsdale allegedly hired his brother's small advisory shop as its exclusive investment bank. And after BamBrogan voiced his issues with outside investors, Pishevar's brother Afshin (the company's former general counsel) put a hangman's noose on BamBrogan's chair, an act that was caught on Hyperloop's security camera, according to the complaint.

On top of seeking money, Hyperloop is suing BamBrogan and plaintiffs for breaking confidentiality and non-disparagement agreements and violating their fiduciary obligations.

The countersuit attempts to refute each claim against Hyperloop One point-by-point.

The payment to the PR person was actually related to the company's hiring of the agency Pramana Collective. The initial $15,000 a month was below the firm's price, and Hyperloop One later raised it to the normal rate. As for Pishevar's relationship with the representative, the filing says it began after Pramana was hired and was disclosed to both companies. When the couple became engaged, the Pramana employee handed over control of the account, according to the filing.

Lonsdale's brother, Jonathan, runs an investment bank called Fideras LLC. The hiring of the firm was approved by independent members of the board and Joe Lonsdale recused himself from the vote. By the time it was brought on, Fideras "had advised several mutli-billion dollar technology companies and helped raised hundreds of millions of dollars." In raising money for Hyperloop One, Fideras has done "an exceptional job, to the full satisfaction of the board," the suit said.

The noose, according to the filing, was actually a lasso indicating BamBrogan was "acting like a cowboy" and had been caught. On July 14, a judged concluded that there was no threat to BamBrogan, and dismissed his attempt at a restraining order against Afshin.

More than 100 times in the 46-page document does the phrase "gang of four" appear. In addition to BamBrogan, the group consists of BamBrogan, David Pendergast, former assistant general counsel; William Mulholland, ex-vice president of finance; and Knut Sauer, ex-vice president of business development.

Here's the first video of what traveling inside a Hyperloop looks like

The countersuit portrays BamBrogan as a disruptive force at the company, frequently engaging in "erratic, sexist and inebriated outbursts towards management." BamBrogan reeled in Pendergast and Mulholland, who were out of favor with top management, and Sauer, who had allegedly racked up inappropriate charges on his credit card and was viewed as "dismissive and unprofessional" by CEO Rob Lloyd.

Knowing they were on the outs at Hyperloop One, the gang attempted to launch a coup in late May, pulling together a group of seven additional employees to sign onto a letter to the board demanding changes to the company's equity structure. Some changes were made to the equity compensation program.

Meanwhile, the gang was conspiring to "raid the company's workforce" to launch Hyperloop Two, and from May 9 to May 11, BamBrogan even went so far as to purchase three web addresses — hyperlooptoo.com, hyperlooptwo.com and hyperloop2.com.

Members of the gang of four were fired, but the seven others who joined them "have since returned and continued their mission of creating the Hyperloop," according to the filing.

The plaintiffs' attorney Justin Berger responded to the countersuit on Tuesday calling it "pure fiction." Rather than a "gang of four," it was a group of 11 "top employees" who wanted to straighten out the company and had no desire to leave.

The plaintiffs also say that the employees had received "stellar" performance reviews and that the noose was a "threat of violence."

A jury trial has been requested, but we can expect more wild back-and-forth commentary in the meantime.

Read the whole countersuit below.

An earlier version of this story had an incorrect name as the plaintiffs' attorney.