RSSDid Microsoft Back SCO Against IBM?
By Scott M. Fulton, III | Published October 9, 2006, 4:51 PM
In a sworn statement last September for IBM's defense in its ongoing battle with UNIX patent-holder SCO Group, BayStar Capital Management founder Lawrence Goldfarb stated a Microsoft senior vice president -- who since left the company in a separate controversy -- approached him with an offer to "backstop," or guarantee, a $50 million investment in UNIX patent-holder SCO Group. The news was revealed on Sunday by the technology law blog Groklaw.
"Microsoft assured me that it would in some way guarantee BayStar's investment in SCO," stated Goldfarb. The person negotiating on Microsoft's behalf, according to the statement, was then-senior vice president for corporate development and strategy, Richard Emerson.
The fund did choose to make the investment, but it later appeared to Goldfarb, he said, that the company's commitment to the deal disappeared along with Emerson. "Microsoft stopped returning my phone calls and e-mails, and to the best of my knowledge, Mr. Emerson was fired from Microsoft," Goldfarb went on to say.
In actuality, Emerson left Microsoft in September 2003, amid a lingering cloud of suspicion concerning a $12 million loan granted Emerson at the time of his hiring in 2000. Personal loans as hiring bonuses were later made illegal under federal law in 2002, although Microsoft disclosed to sources that Emerson had repaid the loan, plus interest.
Emerson is currently Senior Managing Director of Evercore Partners, a firm retained by banks and financial institutions that offers advice and guidance to corporations on mergers and acquisitions.
A Wall Street Journal story this morning speculated on the possibility that SCO may have used that $50 million investment to pay for its legal services, thus making Microsoft an unofficial -- and off the books -- sponsor of the SCO v. IBM case.
But the absence of Microsoft's backing, coupled with a re-examination of the state of SCO as a company, Goldfarb stated, prompted BayStar to retire its investment in the company.
Goldfarb's statement comes in response to SCO's allegations that IBM compelled BayStar to revoke its $50 million investment, which is one of the alleged interferences for which SCO is seeking compensation.
"No one from IBM ever had any communications with me," he stated under oath, "or, to my knowledge, anyone at BayStar...about SCO, BayStar's investment in SCO, or anything else." SCO also alleges that IBM interfered with existing contracts with as many as 182 of SCO's customers and partners, though IBM contends that SCO has failed to prove any interference took place outside the boundaries of the law.
IBM is seeking a summary judgment in US District Court in Utah, which would effectively toss SCO's interference claims in the same general direction as most of its intellectual property infringement claims, which were dismissed last June with a stern rebuke of SCO from Magistrate Judge Brooke Wells.
Emerson's 12 Million dollar loan was paid off on a non-cash basis with Emerson surrendering vested but underwater stock options that had a "positive" black-sholes valuation. The options would still be underwater.
Emerson reported end date, August 31, 2003, does not jibe with the Baystar Pipe that didn't get completed until mid-October 2003. In mid-September 2003, he made a political contribution to Bush re-election where he listed his employment as Microsoft executive. His "resignation" may be conveniently backdated or entirely atmospheric.
Emerson and deputy Brian Roberts (who took over) reported DIRECTLY to Steven Ballmer. Emerson and Roberts are signatories on the July 2003 investment in Immersion [IMMR] that ended the suit against MSFT for patent infringement in game controllers, but ensured the Sony portion of the suit would continue.
The Eolas patent lawsuit against MSFT concluded in August 2003 with a $500 Million judgement against MSFT. MSFT lawyers had tried to implicate IBM in the suit, because it purchased (for $50MM) the e+ at sign trademark from Eolas just before the suit was launched. It is very possible some executives (i.e. Ballmer) at MSFT saw the SCOX suit as payback for the Eolas judgement against MSFT.
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|It is pure conjecture on the part of the above poster that some executives (i.e. Ballmer) at MSFT saw the SCOX suit as payback for the Eolas judgement against MSFT.
There, fixed that for ya. :D
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|Yeah, that's a bit of a reach. However, stranger things happen in the tech biz world everyday.
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|so it is illegal to give money to help someone fight a legal case now?
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|Perhaps. And sleazy, too.
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|i dont really see how thats sleazy, i mean people donate money to help others in legal battles all the time. especially if the out come of the case can affect them.
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|No, This only came out because IBM was defending itself against the SCO claim that they (IBM) had something to do with BayStar's pullout.
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|Microsoft tried to hide their involvement and now they are still trying to deny it. Why all the deceit if they did nothing wrong?
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|Given the history behind this, the fact that you don't find that sleazy is cause for concern. I'm pretty sure I wouldn't want to do business with you. Then again, simply changing the names of the parties involved might just bring out a totally different reaction.
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|well its not like i have 50 million to give away to someone so i dont think you need to worry. i just dont see why its a big deal that money was given for aid in a legal battle, or why its anyone else's business who gives money to whom.
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|Then again, simply changing the names of the parties involved might just bring out a totally different reaction.
The same could be said for most posters in most articles.
But to get back to the original direction of this tangent...
Silentmaster101: "so it is illegal to give money to help someone fight a legal case now?"
spongy-poo: "Perhaps. And sleazy, too."
So, would you argue poor people should not have hired legal representation?
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|Now my warnings about Microsoft's ethics, or lack thereof, don't seem so cynical.
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|now why should a company have to conform to your standard of ethics?
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|It'd be nice if they had SOME ethics.
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|well as a plus they dont have and goons with baseball bats that make you buy their product, at least not yet.
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|You sure about that??
http://ars.userfriendly....990609&mode=classic
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|Any standard of ethics would be nice.
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|LMAO! Good one!
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|Yeah, so who didn't know this already. It was speculated on and vehemently denied by fanboys everywhere, who called those who understood what was going on "conspiracy theorists." Nothing new or surprising here at all.
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|Don't be so glib. If this can be proven, then these guys should go to prison for life. I'd go easier on a murderer than I would this kind of behavior.
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|Lol, you tell person not to be so glib and then make this statement:
"I'd go easier on a murderer than I would this kind of behavior."
Irony much?
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|"these guys should go to prison for life"
At least you got THAT part right.
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|"I'd go easier on a murderer than I would this kind of behavior. "
Even yours ? ;)
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|"If this can be proven, then these guys should go to prison for life"
For what? even IF microsoft did do it, it's not illegal. This only came out because IBM was defending itself against the claim that they had something to do with BayStar's pullout. Volunteering money to help with a lawsuit isn't illegal.
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|Wow, so the next time you get unfairly prosecuted and sued for stealing something you never stole, then I guess we should cheer and say "All's fair..."?
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|Huh? Are we supposed to say something like: "At least murderers get off easier?".
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|This news article is rife with incorrect grammar and missplessings. At one point, the writer states the MS investment was $50 billion instead of million, among many other issues.
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