A bankruptcy judge is hearing from a number of investors who claim they were misled to plopping down millions of dollars to fund the online game Stargate Worlds, and now want their money back.
A group of investors who provided $4 million in funding have sued Cheyenne Mountain Entertainment Inc. through the bankruptcy court, saying they were told a massively multiplayer online game was much further along in development than it really was. They claim they were deliberately told false information, leading them to believe they were making a sound investment, and not just throwing money down a bottomless pit.
The plug was pulled on Stargate Worlds in 2010 after MGM cancelled a licensing agreement, according to The Arizona Republic. The game was in development by Cheyenne Mountain, named for the U.S. military base where Stargate Command was located in various Stargate television series, and was based in Mesa, Ariz. Cheyenne Mountain said it was developing a game as early as 2006, and started fundraising from investors to help pay for research and development of the game.
However, investors claim that Cheyenne didn’t use the funds its collected toward game development, and that a lot of the money might still be sitting in accounts somewhere.
Yet, Cheyenne said in 2008 that it was ready to soon start beta testing for the game, and even scheduled a launch date for 2009. However, that date was never hit, and the game itself never materialized. Instead, Cheyenne released a non-MMO game called Stargate Resistance, which flopped. Cheyenne filed for bankruptcy in February 2010.
But before the bankruptcy could really take off, investors were firing back at Cheyenne, claiming its chief executive — Gary Whiting — created a number of separate companies that presented themselves as independent of Cheyenne, according to two previous investor lawsuits against the company. These other companies were intended to create an arms-length promotion of securities in the company, which investors say made the product look more stable.
On top of that, investors say more shares in the company were sold than what were disclosed to those buying them. Lawsuits said as many as 500 million shares were issued, meaning even if someone purchased millions of shares, their actual ownership stake could be far less than 1 percent.
Investors also claimed that Cheyenne never disclosed to them that the company was missing deadlines for game development, and that because of those dropped balls, MGM was threatening to revoke its license of the Stargate franchise.
Whiting could not be reached by the Arizona paper for comment, but he did tell reporter Jayson Peters back in 2010 that all he wanted was a “fair shake.”
“Besides my personal property, they took my good name,” he said at the time. “I founded this company, I’m the brains behind this company, I’m the creative guy behind this company.”
Whiting and Cheyenne have already been found to owe $6.2 million in judgements from the previous investor lawsuits.
Cheyenne has yet to officially respond to the most recent lawsuit, so any claims made by the investors have yet to be fully substantiated and feted by a judge. Such claims should be treated as nothing more than claims until a court has had a chance to make a final ruling.