WorldPoint A SHAREHOLDER of high-tech firm WorldPoint Interactive Inc. has countersued the state, saying the government breached its fiduciary duty, interfered with WorldPoint's business and committed fraud.
shareholder claims
fraud in suing state
The plaintiff, facing foreclosure
on one of her homes, is the
spouse of the chairmanBy Tim Ruel
truel@starbulletin.comAikahi resident Karen Cross, spouse of WorldPoint co-founder and Chairman Larry Cross, is seeking to collect an unspecified amount of damages to recover the value of her stock in WorldPoint, which is now virtually worthless. Cross became the firm's chairman after Robert Peterson, another WorldPoint founder, stepped down two months ago.
Karen Cross filed the countersuit Wednesday in First Circuit Court.
The state sued WorldPoint in June to collect $810,000 from a government loan issued to the firm in 1995, when WorldPoint called itself Universal Resource Locator Inc. WorldPoint has offered to settle the case, and has until the end of the month to answer the suit.
The company has said it is running out of money. One of its creditors is its own legal counsel, bankruptcy firm Wagner Choi & Evers.
Karen and Larry Cross were both named in the state's suit, because one of their homes in Kailua was listed as collateral for the state loan. The state is seeking to foreclose. In response to the state's suit, Karen Cross admits she signed over her home, but denies that the state has the right to foreclose.
Cross claims that the state legally can't collect on the loan because the state once agreed with WorldPoint to convert the debt to an equity stake in the company.
WorldPoint stopped making payments on the loan in 1996. Fuchs, a native Swiss banker, joined WorldPoint in July 1996 and started talking with the state to covert the loan to an equity stake.
The talks dragged on for the past five years. The state department that furnished the loan had only one officer. When WorldPoint failed to offer its shares publicly in September 2000, the state told WorldPoint it wanted to close the matter. Fuchs offered in writing to pay the loan in cash, but the state refused, saying it still wanted the company's stock. After the Nasdaq stock market dipped below 2,000 points earlier this year, however, the state wanted the cash.
Cross accuses the state of reneging on its promise for equity.
WorldPoint Chief Executive Massimo Fuchs said that the company has lost business because of the state's lawsuit, which he calls unreasonable. In 1998, the state failed to approve WorldPoint's merger with Pacific Coast Software Inc. of California, the countersuit says.
The state Attorney General's Office declined comment. WorldPoint, meanwhile, has battles on other fronts.
An auction firm hired to sell WorldPoint's assets has sued the company, primarily as a defensive maneuver after items were removed prior to the sale and the auction yielded far less than expected. Fuchs said he plans to countersue.
The state's Securities Enforcement Branch said earlier this week that it is looking into complaints against WorldPoint by two of its investors and three of its former employees. The company fired all 100 employees, except Fuchs, earlier this year in an effort to cut costs.
The two investors are claiming the company committed securities fraud, while the former employees say they bought into a stock option plan that never existed. WorldPoint representatives have dismissed the claims, saying they amount to sour grapes following the collapse of the once-hot market for technology issues. The company's stock was available only to sophisticated investors who sported $1 million in net worth and $200,000 in regular income.
WorldPoint has since closed its headquarters at the penthouse of 1132 Bishop St. Fuchs continues to run the firm alone from his home in Aina Haina, but he won't be doing that for long. He's in a rent dispute with the landlord of the beachfront property. The owner is WorldPoint's largest investor, Japanese businessman Hiroshi Teramachi.