Bebop Channel, the new owner of Imaging Resource, has filed a US$25 million fraud lawsuit against US filming location marketplace, Giggster, over accusations it deliberately sabotaged negotiations to access the photo media outlet’s data.
Bebop’s lawsuit accuses Giggster of playing a ‘Jedi Mind Trick’, a Star Wars reference whereby a Jedi uses the force to ‘implant a suggestion’ in ‘the weak-minded’, according to the official Star Wars blog. The lawsuit also claims Giggster’s negotiations utilised rhetoric known as ‘gaslighting’, Merriam-Webster‘s 2022 Word of The Year that describes how one party undermines the confidence of another and makes them question reality. The term is often associated with relationship abuse and domestic violence, but applies generally when there is a perception of deception for one’s own gain.
Bebop Channel claims Giggster intentionally planned to invalidate the contract while prolonging negotiations to gain access a ‘trove of information’, such as Imaging Resource‘s subscriber data.
‘Defendants [Giggster] new their fallacious olive branches to cure contractual terms were a con to both ensure they kept receiving the [data] transfers but to also try to protect themselves on the back end of an assured Breach of Contract claim for non-payment,’ the lawsuit claims.
The value of an online media outlet like Imaging Resource is largely determined by audience figures, and subscribers – readers who sign up via e-mail – are a major component of this equation. They are considered an active target audience who are more engaged than a casual reader stumbling randomly upon the website.
Giggster, an ‘Airbnb for filming locations’ that connects content creators with private property owners, stands to benefit by gaining a direct line of communication to Imaging Resource‘s subscribers, which includes professional photographers and videographers. And it appears Bebop is accusing Giggster of criminally gaining access to these private documents by initiating a phony acquisition process.
The background
Earlier this year Bebop Channel, a publicly-traded jazz media company, acquired Madavor Media, a media company which owns a portfolio of niche publications including JazzTimes, the hugely popular Imaging Resource, and other photography publications such as Outdoor Photographer. Although Bebop only really wanted JazzTimes, and wasted no time cutting loose the unprofitable outlets it acquired.
Bebop switched off Madavor’s entire photography overnight, without issuing a statement to alert the public and explain why.
After the photo industry sought clarification and expressed disappointment with the callous shut down, Bebop’s founder and CEO, Gregory Charles Royal, launched a bizarre tirade against the photo industry, and former management of the photography publications.
He highlighted how Madavor’s various publications ‘lost a lot of money’, with over 100 contributors still owned payment, including those working for Outdoor Photography, which he described as being ‘grossly mismanaged on an unbelievable level’. He then challenged the photo industry to pool together its resources to buy its photo media portfolio for US$500K.
Giggster enters the chat
On May 31, Petapixel reported that Giggster had acquired Imaging Resource, with Bebop Channel’s COO, Sue Veres Royal, providing confirmation: ‘Yes, it was sold on Friday, May 26 to Giggster.com. It is my understanding that they will provide their official announcement in a press release on or after June 2.’
The lawsuit, filed on June 9, re-publishes digital negotiation communications between the two parties, with the deal quickly souring after Giggster misses a US$400K payment deadline. Giggster’s reasoning for failing to pay, according to the lawsuit, is because Bebop didn’t provide ‘pertinent documentation’ to undertake due diligence, including proof of ownership documents.
Early on in the negotiations Giggster founder, Yuri Baranov, asks to hurry the Imaging Resource purchase and have the website immediately turned back on. ‘With every day that passes by,’ he said, ‘the value of the assets diminishes because search engines de-index content, and permanent damage is done’.
Baranov offer is US$400K cash to be paid by June 2 to ‘rush to restore assets to reduce the damage’, as well as US$491K in ‘subscription liability’. This is to purchase all Madavor Media photography outlets.
Baranov also mentions his lawyer reviewed the Asset Purchase Agreement and came back with ‘a lot of red
lines around reps, warranties, and indemnification’. His lawyer requests Royal provide proof that Bebop owns Madavor Media, as the documentation assigns Madavor as owner of Imaging Resource and they didn’t possess the official documentation showing Bebop owned Madavor Media.
Despite various ‘red lines’, the lawsuit alleges Giggster signs the purchase agreement, and Imaging Resource is restored. Baranov then requests additional back-end administrative information, such as Profit & Loss documents, to validate various issues via his legal team, which Bebop claims to send.
The June 2 payment deadline is missed, and Bebop Channel threatens legal action.
‘Please be advised that the deadline for the June 2, 2023 required payment has passed. Therefore, we are forced to proceed with action against you both civilly and criminally. Your brazen and shocking conduct leaves us to conclude that you have conspired with each other to commit fraud and theft against our company — a scheme to get Imaging Resource back online.’
Baranov responds with what Bebop Channel describes in the lawsuit as gaslighting and Jedi Mind Tricks.
‘We are in receipt of your latest communication and are quite disappointed with the tone, the threats, and the general spirit of the email. We are genuinely interested in acquiring the assets in question and given the size of the acquisition it is not only prudent for us to conduct basic due diligence prior to moving forward with closing, it is our corporate fiduciary duty to our shareholders and investors to do so. After our legal counsel had an opportunity to review the original agreement, several issues invalidating the agreement were highlighted within the agreement which we communicated to you on May 27, 2023.
‘We have made several attempts to communicate with you to cure these inconsistencies, however, you have not been open to such discussions. Further, on June 1, 2023 we informed you that we were not ready to proceed with the closing and that no funds would be transferred until the highlighted issues were resolved. To highlight some of the issues within the agreement that must be resolved prior to moving forward: – unclear of WHO/WHAT ENTITY owns the assets in question contract is in the name of BeBop, assets appear to be owned by Madavor, signing party is an individual in individual capacity– it is not clear which entity has the right to sell/transfer ownership of assets being acquired– proper reps and warranties are not made on behalf of the entities that may own the assets in question– liabilities that are being assumed by purchaser are not defined nor have any records been provided to substantiate these liabilities.’
Baranov’s response continues, claiming Bebop Channel didn’t provide ‘pertinent documentation’ that’s ‘absolutely required’ for Giggster to do its due diligence. This includes business records, customer/subscriber information, copyrights, trademarks, IP and other information.
‘Although we would like to believe otherwise, your actions of not providing pertinent company records come across as a potential conspiracy to hide material facts with fraudulent and malfeasant intentions. Furthermore, over the past week we witnessed a lack of proper corporate governance, negligence, and mismanagement, all of which are unacceptable in highly regulated entities such as public companies, their subsidiaries, and affiliated companies.’
It’s yet another messy chapter to Bebop’s clunky ownership of several respected photo media outlets. Stay tuned!
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