Jul 03, 2012 07:34 AM EDT
Facebook Inc's explosive growth has spawned a $380.6 million lawsuit by a former Interpublic Group of Cos executive seeking payment for having persuaded the advertising giant to make an early, enormously profitable investment.
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Ray Volpe, a former senior account executive at Interpublic, said his former employer had thought he was "out of his mind" for having urged in 2006 that it enter an alliance with Facebook and buy $2.5 million of preferred stock, a 0.48 percent stake.
But he said the second-largest U.S. advertising company eventually agreed to the investment, jumping ahead of other prospective investors when Volpe agreed to personally guarantee advertising revenue for Facebook.
Volpe claimed that Interpublic sold half its Facebook stake in August 2011 for $133.5 million, and the remainder on May 18, 2012 when Facebook went public for $249.6 million, yet he has been paid nothing for his work.
The lawsuit seeks to recover Interpublic's alleged pretax gain from the sales, and alleges breach of contract, breach of fiduciary duty and unjust enrichment. It was filed on Monday with the New York State Supreme Court in Manhattan.
"You have to transport yourself back to 2006," said Neal Brickman, a lawyer for Volpe, in an interview. "Facebook was a fledgling start-up. Interpublic thought it was a stupid investment. But Mr. Volpe was incredibly persistent. Not a whit of credit went to him, and he has never been paid a penny."
Interpublic spokesman Tom Cunningham said the lawsuit has no merit and that the company will defend against it.
"The Facebook transaction was entered into at the corporate level," and Volpe is seeking "to garner personal gain from a very successful commercial decision taken by IPG," he said.
Interpublic is based in New York, and has more than 20 brands including McCann, Draftfcb and Lowe and Partners. Brickman said Volpe left the company at the end of October.
Facebook's share price has fallen 19 percent since the initial public offering.
The case is Volpe v. Interpublic Group of Cos, New York State Supreme Court, New York County, No. 652308/2012.
Copyright 2013 Thomson Reuters. All rights reserved.
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