Babenet Files $1M Suit Against AVN

Nov 13, 2009 3:45 PM PST
CHATSWORTH, Calif. — Babenet has filed suit against co-founder and chairman Paul Fishbein and AVN at Los Angeles Superior Court, claiming fraud and breach of contract, among other charges.

Babenet, which at one time was a collection of membership sites and TGPs, said it’s owed an amount exceeding $1 million.

In 1999, Babenet made a $300,000, five-year loan to Fishbein’s AVN to help jumpstart the Internext trade show, then known as IA 2000.

As part of the agreement, Babenet was to receive eight percent of the gross revenue collected from Internext.

Babenet also was to receive no less than the “favored nations pricing” for exhibitor space at the show and two full pages of advertising in the Internext showguide.

According to court documents, the suit agains Fishbein and AVN got its legs during an April 2008 lunch.

At the lunch, it became clear to three Babenet execs— Jack Gallagher, Rob Gould and Andy Garroni — that their deal had gone south.

Babenet contends that the funds they received from AVN were “substantially less” than eight percent of the gross receipts and that AVN “secretly” provided free exhibition space to other companies at the same time it was charging Babenet up to $25,000 per show for space.

Babenet also said AVN and Fishbein had “induced exhibitors and attendees of the shows to migrate to other adult trade shows wholly owned by AVN in order to avoid paying Babenet its eight percent.”

The suit further contends that AVN and Fishbein never accounted to Babenet the gross revenue associated with the show, including commissions, affiliate marketing, trade or barter and revenue from a spin-off show.

Babenet’s claim seeks accounting of Internext’s finances for an undetermined number of years. It also seeks to have all of Internext’s funds held by a trust until the court can adjudicate the case.

The contractual fraud case has a status hearing March 2 at the downtown courthouse.

Fishbein referred questions to his attorney, Paul Cambria, who was unavailable for comment late Friday. XBIZ was unable to reach Babenet attorney Allen Grodsky for comment by post time.

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