MX1 alleges former managers stole its customers

MX1, a global distributor of digital content, was acquired by European company SES.

"To the astonishment of MX1, the company uncovered a shocking picture… a depressing picture of ungrateful, swindling, and faithless employees acting utterly illegally and in complete violation of agreements they signed… After the three former senior executives were awarded special bonuses and options, they began to transfer the company's customers to a competing company founded by them, they resigned and continued working for the competitor… The case concerns concrete deceit and fraud by three very senior employees of media services company MX1. The three conspired to steal the company's customers and use its commercial secrets in order to found a competing business. They did this not only after leaving their jobs in the company (during which they received huge sums of money), but also when they were still employed by MX1." These allegations were made as part of a NIS 60 million lawsuit filed this morning against the former CFO, VP global sales, and Europe and Middle East sales manager of MX1.

MX1, formerly RR Media, a global manager and distributor of digital content to customers, was acquired a year ago by European corporation SES for $242 million. Before the acquisition, RR Media was listed on Nasdaq. The lawsuit was filed through advocates Livian Segal, Tafat Reif Kerber, and Itay Segal of the Meitar Liquornik Geva Leshem Tal law firm against former MX1 executives CFO Shmuel Koren, global sales manager Shalom Izkovitz, and Europe and Middle East sales manager Rami Goldberg.

The lawsuit alleges that while being employed by MX1, the three former executives took action to transfer the company's customers to a competing company they had founded in the British Virgin Islands and Switzerland, for which they work to this day, "in total violation of their employment agreement, duties as officeholders or senior executives in the company, and the most basic rules of fairness and goodwill."

According to the statement of claim, Koren, Izkovitz, and Goldberg occupied very senior positions in MX1, and enjoyed total trust, thereby being exposed to the company's most confidential secrets. At the same time, it is alleged, they conspired while still working at the company to establish a competing business, stole lists of customers, commercial terms, liaison personnel, commercial mediators, and other information. The statement of claim alleges that they established the infrastructure for the competing business within MX1.

The lawsuit states that after the three respondents "had received the special bonuses and options, and had transferred (or had begun to transfer) the company's customers to the competing company they had founded, they resigned from their jobs, and continued doing business for the competitor (in violation of the agreements they had signed), and solicited customers to switch to their company, thereby causing damage to MX1." The statement of claim indicates that MX1 learned of this a few days ago, when Goldberg mistakenly sent an e-mail to Koren and Izkovitz at the latter's e-mail address at the company (which had meanwhile been given after he left to Yaniv Lior, who replaced him as VP global sales at MX1).

MX1 is now a fully-owned subsidiary of SES, which is listed on the stock exchanges in France and Luxembourg, and is managed by CEO Avi Cohen. The company specializes in global media services for customers from all over the world.

Published by Globes [online], Israel business news - - on December 25, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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