Earlier this year, Connie wrote about how TL Ventures was in the midst of litigation with three of its former staffers, including ex-partner Bob Fabbio. At issue was more than $2.3 million in clawbacks that TL claims is owed by Fabbio, former managing director Stan Tims and former principal Stephen Andriole.
There is some dispute as to whether the clawbacks can even be requested before the funds are officially dissolved, but the larger issue is whether or not remaining TL Ventures partners used management fees to pay off part, or all, of their own clawback liabilities.
As the trio’s attorney Cindy Olson Bourland told me: “I believe the evidence will show that certain partners… engaged in self-dealing by stashing away money for clawback instead of running TL Ventures in accordance with its investment strategies.”
The trio sued TL for an accounting of its management fees. TL countered by arguing that Fabbio, et all had previously signed away their rights to a court case, with arbitration as their only recourse.
All of this brings us up to the present, and an arbitration case set to begin on December 1. Fabbio’s attorneys have already deposed TL Ventures CFO Pam Strisofsky, but TL insisted that her deposition remain confidential (I called TL for comment, but received no reply).
What’s important to note, however, is that the arbitration will be limited to issues surrounding TL Ventures’ third fund, even though Fabbio’s original lawsuit also included a request for information on Fund IV. Once this arbitration ends, expect Fabbio to revive at least part of his original lawsuit (filed in Texas), plus possibly file a new suit in Delaware or Pennsylvania (where TL is based). In other words, arbitration will not be the end of this…
Here is a copy of Fabbio’s most recent petition:
Second Amended Petition