Hyperloop One co-founder claims harassment in lawsuit

By Michael J. de la Merced, New York Times News Service

Thursday, July 14, 2016 | 2 a.m.

SAN FRANCISCO — When Elon Musk proposed a very-high-speed train from San Francisco to Los Angeles, many analysts and observers regarded the idea as ludicrous. Shervin Pishevar and Brogan BamBrogan thought otherwise and began building a company to prove the naysayers wrong.

Now that startup, Hyperloop One, is mired in legal infighting between the two men and other former senior executives of the company as accusations of nepotism and threats of physical harm rise.

BamBrogan and three other former executives sued the company Tuesday, claiming they were harassed and wrongfully fired by Pishevar and other senior Hyperloop One managers. The lawsuit claims breach of contract, defamation, unlawful infliction of emotional distress and assault. BamBrogan accuses Pishevar’s brother, Afshin, Hyperloop One’s former chief legal officer and formerly a personal injury lawyer, of placing a noose on his office chair while the two worked there.

Last month, BamBrogan sought a restraining order against Afshin Pishevar.

The lawsuit by the former executives, filed in California Superior Court in Los Angeles, paints a picture of disarray and nepotism at what was one of the most aspirational startups around. At the heart of Hyperloop One’s mission is building a high-speed train that can shuttle people or cargo in minutes rather than hours.

“Hyperloop is not a party trick,” the plaintiffs write in the lawsuit. “It is a serious concept that deserves serious development.”

A spokesman for Hyperloop did not have an immediate comment.

Despite the skeptics, Hyperloop was promising enough that it drew a number of prominent executives from the world of technology. Pishevar is a well-known venture capitalist who invested in the likes of Uber and Warby Parker, while BamBrogan was a senior engineer at Musk’s SpaceX rocket company. In May, Hyperloop One announced a new $80 million investment round from current and new investors, including GE Ventures. Russia’s President Vladimir Putin also reportedly likes the concept.

One of Hyperloop One’s directors and a defendant in the case, Joe Lonsdale, is also a well-known venture capitalist who helped found data-analysis firm Palantir.

But, according to the lawsuit, Hyperloop One was run as the personal fief of Shervin Pishevar and Lonsdale, who together control 78 percent of the company’s voting rights. The two men rarely spent time at the startup except, the court filing claims, to give tours of the place to friends, celebrities and even a nightclub doorman.

BamBrogan and his fellow plaintiffs — Knut Sauer, formerly Hyperloop One’s vice president of business development; David Pendergast, formerly assistant general counsel; and William Mulholland, formerly vice president of finance — accuse Pishevar and Lonsdale of unfair favoritism toward relatives and associates.

Pishevar, according to the lawsuit, once pressured a prospective investor into investing in his Sherpa Capital venture fund in order to invest in Hyperloop One as well.

The suit describes an atmosphere of waste. Once Pishevar began dating Hyperloop One’s public relations consultant, it says, he nearly tripled her monthly retainer to $40,000 from $15,000, more than any other employee in the company — only to dismiss her after their engagement to be married was subsequently broken off.

The plaintiffs also accused Lonsdale of forcing Hyperloop One to retain his younger brother’s financial firm as an exclusive adviser, “with no notable experience with companies building hardware and engaged in infrastructure development, and few independent contacts with international and top tier investor funds,” when better investment banks were available.

But the main trouble for the plaintiffs arose after they wrote a letter to Pishevar, Lonsdale and the company’s chief executive, Robert Lloyd, on May 26, expressing their concerns.

Soon after, according to the lawsuit, Pishevar’s brother, Afshin, left “a hangman’s noose” on BamBrogan’s chair. The complaint includes a still image from security camera footage that, the lawsuit contends, depicts the act.

Later, Lloyd told the signatories of the letter that the company planned to fire Pendergast and Mulholland and demote BamBrogan. The lawsuit says BamBrogan, fearing for “his physical safety,” subsequently resigned, as did Mulholland, Sauer and Josh Giegel, a senior engineer.

Pendergast was fired outright, the lawsuit states.

On June 16, Lloyd told Hyperloop One employees that Giegel was joining the board — though Giegel, according to the lawsuit, was sending in his resignation.

And Lonsdale, according to the lawsuit, sent an email to Hyperloop One’s board and the company’s engineering team describing BamBrogan as “unstable” and having “gone haywire.”

On Hyperloop One’s website as of Tuesday morning, before the lawsuit was filed, Giegel, BamBrogan and Mulholland were still listed as team members. Afshin Pishevar’s LinkedIn profile still describes him as chief legal officer, though Hyperloop One’s website does not.