Despite repeated assurances from ScoreBig’s top officials including CEO David Goldberg, SeatGeek officials allege they were repeatedly lied to about payments to their member brokers and were shorted over $1 million as the company plunged into insolvency.
A civil complaint filed against ScoreBig and two officers at the company reveal new details about the financial health of the company during its last year in operation. As a cash flow crisis engulfed ScoreBig, company officials continued to sell inventory from SeatGeek brokers and then lied to SeatGeek officials about payments for the inventory, according to the lawsuit.
Lawyers for SeatGeek first filed suit against ScoreBig in October, but in a filing dated Dec. 30, lawyers further detailed their claims against the company, Goldberg and its Senior Manager of Finance and Accounting Tyler Honaker. In September, ScoreBig suddenly shut down operations after a liquidity crisis plunged the company into financial straits. As a result, hundreds (possibly thousands) of fans had their tickets canceled and many brokers reported five and six figure losses. Eventually TicketNetwork purchased several assets from ScoreBig including its domain name and APIs, but indemnified itself from any legal liability.
SeatGeek’s filing (read it here) names ScoreBig, Goldberg and Honaker as defendants, accuses the men of fraud and seeks “damages arising from ScoreBig’s failure to pay its brokers for tickets for events listed on SeatGeek’s online ticket platform and related fraudulent misrepresentations.”
The lawsuit is an attempt to get to the bottom of how ScoreBig spent the revenue it generated from selling SeatGeek ticketing inventory. According to the filing, Goldberg and Honaker made multiple false promises to pay SeatGeek the money it was owed while “misappropriating proceeds from selling a particular broker’s tickets for other purposes without first compensating the broker.”
According to the suit, ScoreBig began experiencing financial difficulties in February and started falling behind on invoices sent over by SeatGeek.
“In order to induce SeatGeek to continue listing its tickets, ScoreBig misrepresented to SeatGeek that it had sent a payment check in the mail,” the suit read. “Specifically, on April 11, 2016, Travis Reinhard, an employee in ScoreBig’s finance group, misrepresented by email to Becca Simmons, Senior Accounting Manager at SeatGeek, that ScoreBig had sent a check in the mail to pay for the long past due January 2016 invoice.”
That check never came, although ScoreBig did finally make good on outstanding invoices in May and the two companies resumed doing business together.
“Had ScoreBig informed SeatGeek of the truth – that ScoreBig was having financial difficulties, was having trouble paying vendors, and that there was no proverbial ‘check in the mail’ – SeatGeek would have removed ScoreBig from its website at that time and would not have risked further exposure to problems arising from ScoreBig’s ticket listings,” said the suit.
Lawyers allege that “ScoreBig lied to SeatGeek” and “repeatedly made misrepresentations to SeatGeek about how its brokers had all been paid, when in reality they had not.” Lawyers for Seatgeek said Goldberg and other ScoreBig executives mislead the company on three separate occasions about repayments to brokers before the company eventually admitted it was broke.
SeatGeek spent $649,549 trying to make the brokers whole on nearly $1.3 million in orders, offering to pay its brokers 50% for orders sold through ScoreBig. The company also spent $69,539 in replacement tickets and customer refunds.
“If SeatGeek had not made these payments, thousands of customers would have endured the worst possible outcome on a ticket purchase: attempting to enter events they had paid for with invalid tickets,” the lawsuit reads.