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Reel FX Lawsuit Alleges Studio Co-Founder Pocketed $2.6M

Lawsuit accuses Reel FX co-founder Dale Carmen and other former employees of stealing Virtual Reality-related business opportunities and pocketing more than $2.6 million in revenue.

‘The Book of Life’

Reel FX, the Dallas-based studio behind last year’s acclaimed animated feature The Book of Life, is suing one of its co-founders and other former employees, according to a report by the Dallas Morning News.

The lawsuit accuses Reel FX co-founder Dale Carmen and former employees Gary Banks, Keith McCabe and Dan Ferguson of “abusing their positions of loyalty and trust in order to steal critical business opportunities [and] pocket over $2.6 million in revenue.” Banks previously served as executive producer at Reel FX, while McCabe served as general manager of RFX’s commercial division, and Ferguson served as director of digital interactive.

That case, filed on August 31 in Dallas County court, was moved to federal court on Monday by the defendants, who have denied the allegations. The defendants also filed for Chapter 11 bankruptcy protection on September 28, the same day they received a temporary injunction from Dallas County Judge Staci Williams. A trial date has been set for November 2016.

The lawsuit alleges that Carmen, Banks, McCabe and Ferguson went after new accounts for Reel FX’s recently announced Virtual Reality division with the intention of funneling that business to Carmen Industries, the company Carmen founded in 2011.

Reel FX’s lawsuit says that “in carrying out the scheme to steal the VR Opportunities, not only did defendants misappropriate and wrongfully disclose and use RFX’s confidential information, they also actively dissuaded RFX from pursuing the attractive VR Opportunities. Defendants’ motive for discouraging RFX from pursuing VR opportunities and for failing to apprise the board of these opportunities was revealed after their web of lies began to unravel.”

The lawsuit alleges the diversion of VR projects for Porsche, American Express, PepsiCo and Verizon to Carmen Industries, including AmEx’s much-vaunted U.S. Open virtual-reality experience that let users “play” Maria Sharapova.

Carman and his co-defendants filed a response on September 18, claiming that Carmen Industries took on “economically risky business projects” Reel FX wanted nothing to do with and that Carmen was ousted only after he “told them he had finally made the risky business venture profitable.”

Head over to the Dallas Morning News to read the full story.

Jennifer Wolfe's picture

Formerly Editor-in-Chief of Animation World Network, Jennifer Wolfe has worked in the Media & Entertainment industry as a writer and PR professional since 2003.