Mosiman and Gordon’s legal fight has stretched out over at least eight different lawsuits in five states, but the San Diego superior court case is the first time Mosiman has named Felts, partner Marc Hagle and their company Virgin Fest LLC as defendants in the lawsuit. In the 12-count civil complaint, Mosiman alleges that the September sale was actually a “civil conspiracy” to “intentionally defraud” Mosiman by secretly transferring the festival from the old owners to the new owners "in an attempt to hide their assets" and conceal their holdings from the court.
The conspiracy theory, however, is contradicted by a very public legal fight between Gordon and Felts that began just weeks after the sale of the five-year-old festival closed. Felts had previously worked for Gordon and KAABOO as the festival's chief brand officer, but said Gordon and Madison Companies had sole authority of the festival prior to the sale. After the deal closed, Gordon changed the named of the holding company that carried millions of dollars of KAABOO's debt, and then sued Felts and Virgin Fest LLC for allegedly “pursuing a Trojan Horse strategy” to “infiltrate KAABOO" and “and take possession of its most valuable assets,” according to the complaint, a charge Felts denies.
"KAABOO is now controlled by people who had no involvement in the management control of the former Kaaboo. In fact, those same previous owners/founders are suing the new owners, trying to rewrite history and blame the new owners for the old ownership’s failure to pay its debts," Felts' spokesperson tells Billboard. "Furthermore, this lawsuit also falsely claims that the sale of the KAABOO brand was simply a transfer of money from KAABOO to itself. As the new owners, we paid millions to acquire the KAABOO assets and brand, and paid that money directly to vendor/creditors owed by previous ownership in order to ensure a successful 2019 Kaaboo Del Mar festival. As the new owners of KAABOO, we understand that outsiders may not fully understand these details, but we look forward to a prompt dismissal of this lawsuit as the true facts become known.”
Lawyers for Felts tell Billboard that the closing payment on the sale (which Billboard previously reported totalled $10 million) was paid directly to vendors and creditors of KAABOO and not to Gordon or his holding company. Gordon told investors in an Oct. 11 letter that he was essentially forced to sell the festival to Felts because no one else would buy it, and without an immediate cash infusion, would likely be cancelled.
Documents obtained by Billboard showed that KAABOO was facing a serious liquidity crisis in the weeks leading up to the sale, brought on by unprofitable attempts to expand into Texas and the Cayman Islands. Even after the $10 million cash infusion, the festival still held at least $9 million in debt and unpaid bills.
“Unfortunately there were not any distributions to provide to investors as part of this transaction,” Gordon and Wolkov wrote to investors, who held $22.8 million in equity according to financial documents.
Untangling the KAABOO sale drama is made even more difficult by the myriad of holding companies and shell corporations used by Gordon and Madison Companies, where Gordon works as chairman. Madison Companies and Gordon are involved in 15 different lawsuits (by Billboard’s count) over KAABOO with at least six different parties spread out over five states. In 2017, a marketing executive at KAABOO was fired weeks after returning from surgery for liver and kidney cancer and then sued by Madison Companies for violating the Colorado State Secrets Act. Weeks later, the executive's friend and former business partners were fired and sued by Madison Companies in two separate states for not signing post termination documents and allegedly stealing company secrets.
Mosiman’s fight with Gordon, now mostly consolidated in Kansas district court, has dragged on for five years with over 40 depositions and 100,000 pages of document production. Mosiman had operated a successful festival business in the Midwest for a number of years when he first met Gordon in 2014 and explored a sale of 51% of Mosiman’s company for $6.5 million.
The two eventually agreed on a smaller deal to co-produce Thunder on the Mountain. Eventually Gordon agreed to pay "$750,000 for a 51% interest in Thunder, fund $500,000 of operating capital for the festival, and pay Backwood/Pipeline $80,000 to produce and operate Thunder," Kansas district court judge Kathryn H. Vratil wrote in a recent ruling. Gordon ended up wiring $272,000 in artist deposits, according to Vratilm, but allegedly got cold feet over the loss the festival would incur that year. On April 14, 2015 Gordon sued Mosiman in Delaware, arguing that his investment was really a "line of credit" and demanded repayment of the $272,000. The next day, a Madison Companies attorney allegedly told Mosiman if he fought Gordon, he would “face scorched-earth litigation."
The funding loss led to the cancellation of the festival and multiple class action lawsuits from Thunder on the Mountain ticket holders, as well a legal fight between Gordon and Mosiman that continued to grow and ensnare more entities. In August, an amended complaint was filed by Mosiman that named KAABOO as a co-defendant. Mosiman’s attorney alleges that Gordon and Wolkov "made false and misleading statements" in court about their involvement in KAABOO and the September sale of the festival.
Mosiman's attorney Michael Weiner says he doesn't believe that the sale proceeds were paid to vendors but allleges "that most, if not all, funds went directly to Madison/Horsepower and Kaaboo owners (Gordon, Wolkov, and Walker) in various forms."
"In fact, throughout the Kansas lawsuit, (Madison Companies) objected to any and all discovery requests, deposition topics, and subpoenas that sought information into their corporate structure and organization and the transfer of assets and ownership," Weiner writes.
An attorney for Gordon called the San Diego lawsuit "meritless" and "riddled to the core with error."
"Brett Mosiman and his defunct companies’ newest lawsuit -- this one filed in California -- follows two significant adverse rulings in their long-running Kansas litigation against many of the same parties, " the attorney tells Billboard . "This latest lawsuit -- which is riddled to the core with error -- will fare equally poorly regardless of Mr. Mosiman’s efforts to forum shop for a favorable judicial venue."