Allegations include forgery, contract breach, conversion and more. . .
By Bryanna Fissori
Legal Analyst
Two time world heavyweight boxing champion Shannon Briggs filed suit in New York State Supreme Court at the beginning of the year with claims arising primarily out of a dispute regarding compensation over Briggs’ fight with Vitali Klitschko on October 16, 2011. The bout left Briggs not only defeated, but in a German hospital for 12 days with injuries that included a broken left orbital bone in his face, an injured ear drum, a broken nose and a torn left bicep. The crux of the complaint is that Briggs had agreed to a purse of $750,000 for the bout, but only received $25,000.
Briggs is asserting causes of action for breach of fiduciary duty, conversion, unjust enrichment and breach of contract. Defendants named include Empire Sports and Entertainment (Empire) which is the promotional company that was contracted by Briggs as well as CEO Shelly Finkel, investor Barry Honig and Gregory D. Cohen. Cohen has recently been released as Empire’s President, COO and Director, but currently remains a defendant in the case.
In November of 2009, Briggs and Cohen formed Golden Empire, LLC. Briggs was granted a 50 percent ownership interest in the corporation in exchange for his efforts to identify new boxing talent and them with promotional agreements from Golden Empire. Briggs contends that he obtained payments described to him as salary and compensation for his service. It was also agreed that Briggs would resume his boxing career under Golden Empire.
Just months later things began to change when defendant Honig became an investor in Golden Empire. The change came in January followed by the incorporation of a company referred to as “Empire” and entered into by Cohen and Honig. Golden Empire’s assets, liabilities and promotional rights agreements were then transferred to Empire supposedly without Briggs’ knowledge. Briggs’ promotional agreement was also transferred. Briggs now contends that he did not agree to the transfer, but in May of 2010 after knocking out Dominique Alexander, Briggs was quoted after a bout as calling Empire the “Hottest promotional company ever to get into boxing.” This may be enough for a court to find that though he may not have originally consented, he ratified the contract by knowingly using and promoting Empire.
In July of 2010 defendant Finkel joined Empire as its CEO. In September of 2010 another big change came when Empire entered into a share agreement with a Nevada shell company called Holdings. A “shell company” serves as a vehicle for business transactions with out itself having any significant assets or operations.
A couple months prior to the Holdings business agreement, Briggs entered into a “provisions of services” agreement in which he agreed to a heavyweight championship bout against Klitscko. Briggs contends that his signature on the agreement was forged by Cohen. This was the first of two forgery assertions. Briggs also states Cohen forged his signature again in September for the bout agreement. A handwriting analyst was brought in and found asserts that the signatures on the documents were copied and pasted. Briggs is not asserting a cause of action specifically for the forgery though the contract, if found to be forged, would be voidable at his discretion. Most of the terms which involve the execution of the bout have already been fulfilled and the point would be moot. Although Briggs probably wishes he could take that one back.
The first of Briggs’ claims is for breach of fiduciary duty. A fiduciary duty is created when a person or party is obligated to act in the best interest of another person or party. Paragraph 22 of the filed complaint states, “At all the times mentioned herin, including the time when the proposal for a bout against Klitschko was made to Briggs, Cohen, Honig, and Finkel were in a fiduciary relationship with Briggs, as an officer of a company in which Briggs held an ownership interest, which obligated these defendants to act with scrupulous good faith in their dealings with Briggs.” Among other contentions, the allegations of the fiduciary breach stem from the forgery of documents pertaining to Briggs fight career, altering business relationships without his knowledge and not paying the promised purse.
Conversion is the second of Briggs’ claims, which entails a wrongful transfer of assets to which another party has a clear legal right. The dilution of Briggs’ ownership interest through a series of business transaction of which he was not made privy is the primary grounds for the claim. The legal criminal charge counterpart to conversion is theft.
For those of you who may have seen the movie “The Social Network” about the founders of Facebook, there are some similarities to the legal merit of the claim. In the movie, Facebook Co-founder Eduardo Saverin was originally given a 34.4 percent interest in the business which was diluted to less than 10 percent without his knowledge or consent, thus terminating his business relationship with the company. Though the two cases may not be perfectly parallel the similarities may clarify the situation a little, at least for you movie-goers. Briggs contends that his 50 percent interest was diluted to 3 percent.
The third cause of action is for unjust enrichment. Briggs contends that the original promise for the Klitschko fight was $750,000 of which he was only paid $25,000. Empire contends that parts of the funds already paid to Briggs previously were“advancement” for the fight. Briggs asserts that said money was salary and compensation for his work as a promoter. If the Briggs claim prevails, Empire would be found unjustly enriched by a sum of $725,000.
Exhibit 2 submitted by Briggs in response to the defendants’ motions to dismiss, is a signed affidavit stating that from November 2009 to June of 2010 Briggs had been paid $96,061.38 in advancements and that any additional funds granted were to be considered advances that could be recouped at the company’s discretion. Apparently, hospital fees are also subject to being recouped. Like ones for a 12 night stay.
Briggs’ legal counsel rebuts the evidence by asserting that Briggs did not receive the actual agreement, but only the signature page, therefore he was unaware of the consequences of the document. Even if this is true, it speaks to the fact that when hundreds of thousands of dollars are being discussed one should obtain a lawyer. . . immediately!
Breach of contract is the final cause of action declared by Briggs. The claim asserts that the breach is for multiple agreements and though they are not expressly stated it can be reasonably assumed that the reference is to the original contract with Cohen when Golden Empire was founded and the $750,000 agreement for the Klitschko fight.
The defendants have filed a motion to dismiss all boxing related claims, change court division, dismiss defendant Honig for lack of personal jurisdiction and compel arbitration. The case is currently in the discovery phase of the litigation, which means that evidence is still being gathered to submit to the court. Briggs is asserting actual and punitive damages for all causes of action.
Briggs’ attorney Jethro M. Eisnstein was previously quoted as saying, “This guy got screwed. It defies belief that anybody would get in the ring with Vitali Klitschko for $25,000.”
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