The U.S. District Court for the District of New Jersey ruled that New Jersey fraud and misrepresentation claims by a venture capital firm over an unsuccessful investment in a telecom concern could proceed. See Edelson V LP v. Encore Networks Inc., D.N.J., Civ. No. 2:11-5802(KM), 5/9/13. www.blomberglaw.com/public/document/EDELSON_V-LP-v_ENCORE -NETWORKS-INC-et_al_Docket_No_211cv05802_DNJ.
The plaintiff made an investment in a failed private communications technology company that went bankrupt, but then was re-started by the defendants. The allegations related to the defendants’ failure to disclose their history, exaggerated sales and financials, and statements that various firms had contracted with them when, in fact, they had not. The company then allegedly diverted business opportunities and assets into another venture where the defendants were shareholders. The court also said that various projections had no valid basis in fact and the defendants knew it.
Essentially, this fund will be able to pursue its fraud claims.