Las Vegas Sun

March 28, 2024

Las Vegas Internet company sues a founder

A young Las Vegas Internet company sued one of its founders, claiming he sold all of the company's assets to a Canadian firm and then pocketed all of the compensation.

WebData Inc. and two of its founders, Joel Stone and Michael Razar, filed the suit last month in Clark County District Court against Rafael deNoyo, who founded the company with Stone and Razar in early 1998. The lawsuit also named Alphatrade.com Inc. of Vancouver as a defendant, as well as that company's principals. deNoyo now serves as Alphatrade's chief technology officer.

An Alphatrade official, Sam Halim, said there was "absolutely no basis" for the lawsuit, alleging that WebData was bankrupt when Alphatrade acquired the assets, which consisted mainly of software. He declined to comment further.

WebData's attorney said he was unaware if WebData was bankrupt, but said it remained a viable corporation. The founders could not be reached for comment, and WebData's Las Vegas office is now occupied by a computer consulting company.

According to a shareholders' agreement entered into evidence by WebData, Stone and Razar each received about 25 percent of the company's stock when it was founded, while deNoyo received a 50.01 percent share. Stone put up the company's initial $200,000 capital investment, the plaintiffs allege.

The company was to be formed around a software product that would allow both retail and wholesale customers to automatically and instantly conduct trades of stocks, bonds, foreign currencies and other types of investments over the Internet. It would also provide data and other types of financial information and resources to investors. deNoyo was responsible for developing the product.

In late 1998, the plaintiffs allege deNoyo and Razar began searching for additional capital investment. The lawsuit alleges deNoyo told his partners that WebData would receive $1 million in capital, and a 50 percent stake in Alphatrade. The suit says that in February, all employees and equipment were moved to Alphatrade's offices in Vancouver.

Alphatrade acquired the software assets from Unicorn Trade and Commerce Ltd., an Ireland holding company controlled by deNoyo, in January, according to Alphatrade's SEC filing.

Alphatrade said it paid 4 million shares, currently valued at $9.52 million, to Unicorn. WebData said it received no compensation from the deal. deNoyo is being paid $90,000 a year by Alphatrade, according to its SEC filing.

WebData is seeking compensatory and punitive damages from Alphatrade. It also is seeking an injunction that would prevent Alphatrade from selling the software commercially, as well as an injunction preventing deNoyo from competing with WebData.

Alphatrade says it will release deNoyo's software product as part of a general Internet financial package this summer.

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