Konami accused of bank loan fraud over Def Jam Rapstar
by Steve Watts, shacknews.com, May 24, 2012 4:30PM PDT
We know that Def Jam Rapstar developer 4mm Games is in financial and legal troubles. But the game's publishers, Konami and Autumn Games, are now facing their own court battle, as a bank has accused the companies of fraud over a loan to finance the game.
City National Bank in Los Angeles has filed a claim that it was defrauded of $14 million by Konami and Autumn. The bank accuses the companies of lying about their financial conditions to secure the credit for the game, without ever intending to pay it back as promised. The bank also points out that it hasn't been paid back at all for the loan yet.
The bank alleges that the companies made "baseless and unrealistic projections" that Def Jam Rapstar would ship 2.5 million units in its first year, and that Autumn Games promised to use a $1 million advance to pay down the loan, reports Courthouse News. That payment never materialized and CNB accuses Autumn of spending it on other things. The bank is seeking $8.9 million in damages.
"CNB has recently learned that defendants' representations concerning financial conditions and repayment of the loan - both before and after the loan was approved - were false at the time they were made and that defendants never had any intention of repaying the loan as promised," reads the complaint. "Rather than paying game-related proceeds directly to CNB as agreed, defendant have kept all game-related proceeds for themselves and have refused to remit any such proceeds to CNB.
"By the time CNB learned the true state of affairs, Autumn had drawn down $13,987,003.15 of the $15 million line of credit. To date, defendants still have not paid CNB a single penny of the principal amount that is due, and they continue to insist that none of the proceeds from sales of the game are owed to CNB and/or available for repayment."