Rapper Dr Dre and record producer Jimmy Iovine are being accused of being scam artists in a lawsuit that alleges they duped one of their former partners in Beats Electronics LLC before selling the headphone maker to Apple Inc for US$3 billion last year.
The complaint filed on Tuesday in California’s San Mateo Superior Court accuses Dre and Iovine of double-crossing Noel Lee (李美聖), the founder of video and audio cable maker Monster LLC.
Lee once held a 5 percent stake in Beats as part of a partnership between the headphone maker and Monster that ended in 2012. The lawsuit alleges Dre and Iovine orchestrated a “sham” deal with smartphone maker HTC Corp (宏達電) in 2011 that led to the termination of the Monster alliance.
The suit alleges the maneuvering prompted Lee to pare his stake in Beats to 1.25 percent before selling his remaining holdings for US$5.5 million in the autumn of 2013 after being assured by Beats executives that there were no plans to sell the company for at least several years.
Beats announced its sale to Apple in May last year, opening the door for Dre and Iovine to become executives at the iPhone and iPad maker. Had he held on to his 1.25 percent stake, Lee would have received more than US$30 million in the Apple deal. His original 5 percent stake would have been worth roughly $150 million.
Dre, whose real name is Andre Young, and Iovine, a recording industry executive, reaped the biggest jackpots in the Apple deal, though the precise size of their windfalls has not been disclosed.
Lee’s lawsuit says Dre and Iovine each owned 15 percent stakes in the early stages of the Beats partnership.
Apple, which now employs Dre and Iovine, declined to comment on the lawsuit. Apple is not named in the complaint. The lawsuit also targets HTC America Holding Ltd, and Beats investor and board member Paul Wachter.
This is not the first time that a former Beats partner has taken Dre and Iovine to court. David Hyman, who sold his music streaming service MOG to Beats in 2012, is suing the two men for bad faith. That action, filed shortly before the Apple deal was sealed, is unfolding in Los Angeles Superior Court.
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