Torrey Point. Before Tsunami ever occupied the space, it was evicted for breach of contract.
  • Torrey Point. Before Tsunami ever occupied the space, it was evicted for breach of contract.
  • Letter to Editor
  • Pin it

Do fat cats do their homework when plunking a bundle of money into start-up tech companies?

Alex Hern: "We will probably end up occupying the building.”

Linkedin

Wealthy investors are putting big bucks behind a Del Mar company, Tsunami VR, which plans to develop virtual reality applications for business communications. The cofounder and longtime venture capitalist is Alexander Hern, who lives in a posh oceanfront home in Encinitas and drives luxury cars.

In September of last year, Tsunami signed up to be the first tenant in a newly developed Torrey Point office in Carmel Valley. But before Tsunami ever occupied the space, it was evicted for breach of contract.

Ernest Rady. His American Assets Trust sued Tsunami for $22.8 million.

The building’s owner, San Diego’s American Assets Trust (controlled by billionaire philanthropist Ernest Rady) sued Tsunami in superior court, stating that Tsunami had agreed to pay rent for 120 months, didn’t pay, and never occupied the building. The trust demanded $22.8 million.

“We’re in the middle of settlement discussions with those guys. We will probably end up occupying the building,” says Hern.

Steve Schklair: “Alex made an offer and paraded me around investor meetings."

Although the suit has been settled, Tsunami will not occupy the building, says the trust’s attorney, Adam Wyll. “We have just moved on,” he says.

Hern filed for Chapter 7 (liquidation) bankruptcy in 2012. “I withdrew that filing and it was dismissed,” claims Hern.

“There is no such thing as withdrawing a filing in a Chapter 7,” says the trustee, Ronald Stadtmueller. The debtor must ask the court to dismiss it. It was Stadtmueller who filed a motion to dismiss the case, because Hern didn’t show up at a creditors’ meeting. Then, according to a bankruptcy court filing, Stadtmueller sued Hern for missing the meeting and making “false oaths or accounts by omitting and/or misrepresenting information in his [bankruptcy] petition.” Hern, “with intent to hinder, delay, or defraud a creditor or an officer of the estate… concealed, destroyed, mutilated, falsified, or failed to keep or preserve any recorded information,” said the filing.

A spokesman for Hern insisted that Hern really did end the bankruptcy himself by not attending the meeting and not turning over records. The spokesman says Hern filed Chapter 7 initially because he was facing possible large liability in a lawsuit. Later, according to this account, he learned the lawsuit would be dismissed, so he, in effect, ended the bankruptcy.

Frankly, this is a whopper. Hern’s bankruptcy lawyer was in the process of withdrawing from the case when it got dismissed. The lawyer said in her declaration to the court that Hern “has failed to cooperate with counsel in responding to document requests” and wouldn’t say why he didn’t show up for meetings. Indeed, at one crucial point, Hern became “completely incommunicado,” wrote the attorney.

Early in the century, Hern and some of his friends formed a fund to incubate start-ups. It went through several name changes and was finally called Silicon Valley Innovation Company, LLC.

Christian Jagodzinski, a multimillionaire German software developer who is now a real estate mogul in Miami Beach, invested $1 million in the so-called incubator. In 2004, the company stopped providing reports to stockholders, and Jagodzinski could not get any information from the company.

In 2011, he went to court to demand books and records. Bram Portnoy was appointed receiver. “According to both Jagodzinski and Portnoy, the books and records investigation resulted in the discovery of ‘widespread self-dealing and corporate looting,’” according to a Delaware Court of Chancery judge. At the end, the firm had barely any assets and only one employee — a close buddy of Hern’s.

“That is all done, wrapped up,” insists Hern. The charges of self-dealing and looting were “disproven…all untrue.”

The charges “weren’t disproven,” says Portnoy. Suits were filed against several company officials, who were slapped with judgments. No suit was filed against Hern because “we felt or we had heard that he was ready to file bankruptcy and there were other judgments against him that had not been collected. We didn’t even have his address.” After they found him, Hern “offered to cooperate with us” and testified against the others.

“To my knowledge, nothing was disproven,” says Jagodzinski. Hern and his confreres milked the company, “to the detriment of shareholders,” he says. “Out of the $80 million invested by the people that put the capital in, including me, we got zero money out.”

In 2008, Mohsen Afrasiabi filed suit against Silicon Valley Innovation Company and Hern in Santa Clara, saying that Hern had promised him a 7-percent share of one start-up and 300,000 shares of another. Hern had breached those agreements, charged Afrasiabi.

“It was a frivolous claim,” asserts a Tsunami spokesman. But according to a statement by Hern’s former bankruptcy counsel, Hern filed the 2012 Chapter 7 bankruptcy as a result of the Afrasiabi suit.

Steve Schklair of Los Angeles–based 3ality Technica had put his software company up for sale. “Alex made an offer and paraded me around [investor meetings] saying, ‘We have this asset.’” Then, “I paid a logo designer to redesign the image.” But Hern “just disappeared, didn’t honor signed deals, didn’t meet contingencies. I shot a demo for him. He promised to pay and never did.” But Schklair probably won’t sue because he, too, doubts Hern has any money.

“We made a business decision,” says Hern. But after signing papers and promising to pay, can you blame a breakup simply on a “business decision?”

Glenn Karp, who brokered the Torrey Point lease, on May 30 sued Hern in superior court for fraud, failure to pay money owed, and other transgressions. He says he is owed more than $400,000. In turn, both Tsunami and American Assets Trust claim Karp fraudulently took money from both sides. He says his procedure was legal.

Hern has been sued for nonpayment by Wachovia Bank, two weight loss firms, a Tampa investor (twice), and a widow whose house he rented in prestigious Los Altos Hills. The widow, Merel Glaubiger, called me from Paris to confirm that Hern never paid a dime, and she will step up pursuit of him when she returns to the U.S. in July.

I talked with some former employees. They said that Hern was perpetually late meeting payroll and sometimes failed to pay. They agreed that Hern is gentle one day, volcanic the next. Hern drives Rolls-Royces and Porsches to work. That does not sit well with employees who have not been paid.

When I began asking Hern about that, he said he had to catch a plane and hung up.

  • Letter to Editor
  • Pin it

More from SDReader

Comments

swell June 21, 2018 @ 8:13 a.m.

Isn't it interesting that a hungry person who steals a loaf of bread at 7-11 goes to jail while a white collar thief can rip off millions and live the good life? Even on those rare occasions that they go to prison- they get a luxury facility with the comforts of a fine hotel. (I won't publicly include our president and his family in the category 'white collar thief')

3

Don Bauder June 21, 2018 @ 11:26 a.m.

swell: Yes, our society lets off millionaire/billionaire crooks and concentrates on pursuing the little guy. I remember an employee of the SEC saying to me (privately), "The fellow who knocks over a gas station for 15 bucks goes to jail. The guy who swindles investors for millions goes free." And it's true. The Securities and Exchange Commission, and also criminal authorities, seldom chase after the big crooks. There is too much pressure from the top, and the big crook has more money with which to hire top lawyers than the government agency has. Best, Don. Bauder

0

Don Bauder June 21, 2018 @ 11:30 a.m.

Mike Murphy: I don't know that disguising Skype is involved here. Best, Don. Bauder

0

concernedcitizen77 June 21, 2018 @ 6:20 p.m.

Hern sounds like he got his degree and training in high level scamming from Trump U.

I betcha Hern would be welcome with open arms in the Trump WH.... He would probably get a Cabinet Post and or Special Title "Special Assistant and Advisor to the President of the US...

Hern is probably and improvement on many in the Trump Family and inner circle..

1

Don Bauder June 21, 2018 @ 8:10 p.m.

concernedcitizen77: Hern does not pay his bills, but lives in a rented luxury home where he parks his luxury cars. Repeatedly, I learned from doing homework on his explanations, he does not tell the truth. He and his confreres have left a number of investors naked while running off with money. You can make up your mind on whether he belongs in Washington, D.C. Best, Don Bauder

1

concernedcitizen77 June 22, 2018 @ 4:22 p.m.

Definitely sounds like a flake and white collar scammer...Thanks for posting this including picture in case he turns up trying to pitch or buy into any more investments or companies..

This guy is trouble..

0

Don Bauder June 22, 2018 @ 9:12 p.m.

concernedcitizen77: I suggest that any potential investor swayed by Hern's seductive talk should check his background, as I did. Best, Don Bauder

0

Don Bauder June 24, 2018 @ 11:09 a.m.

Ross Love: I was hoping to hear from somebody in Tampa. Yes, he prowled there. He left owing money to several people lots of money, according to court records. You might pass this column around to others in Tampa. Best, Don Bauder

1

Rossalove June 30, 2018 @ 6:32 a.m.

Don: I tell anyone that will listen. I hear he says I am just an disgruntled employee. I was inner circle. I go back to Saint James Ventures, Acquisition Ventures and then SVIC. Was there at its birth. I was like a brother to him. I helped put the SOBs wedding together. I lived in the Palo Alto house and guest house mentioned in the Article. I was the one that made the initial introductions to George Yukum and Barry Sears and his brother to create Medizone. I also designed the CRM for MediZone.

Now I hear he is trying to say I am just mad. Your dam right I am mad. That 500K was earned commissions... not some salary. According to those that did the books, he used my money for whores and strip clubs.

Anyone supporting this pirate and his sidekick Rip are nuts.

Don.. anyone that wants my story can contact my lawyer Dr Paddy Deighan PhD. Easily found on Facebook.

Trust me the reason he is in San Diego is because he is not welcome in Tampa anymore. They know!

Can someone tell me how this Pirate was able to sign a 22 million dollar lease after all the lawsuits and hurt investors and employees?

Doesn't anyone do Due Diligence anymore..... ?

0

Don Bauder June 30, 2018 @ 3:03 p.m.

Russalove: That's what puzzles me. Does anyone do due diligence anymore? Those putting money in startups are supposed to be sophisticated. Anyone could do homework on Hern and track his ugly record, particularly in Tampa and the Bay Area. Best, Don Bauder

0

Rossalove July 1, 2018 @ 11:25 a.m.

Don, he is a master at deception and misdirection. He has an impressive CV and relies on personal recommendations from others in good standing. He moves you off failures, blaming everyone but himself for them. What always amazed me was the self inflicted wounds. He has great ideas and hires the best. But his nature is to deceive and cheat, Zone was a complete winner and the SOB still got greedy and destroyed a cash cow.

His ego and his cock get in the way of his success and always destroy all the good work.

I once brought him access to the entire Atkins network of Docs to convert to ZONE, My attorney Dr Paddy Dieghan was Adkins personal attorney and is still representing the estate. Alex did now want to pay me the commission. I was told he could not live with paying me out that much in commissions. I would have had a bigger pay check then he had. Feel free to confirm that with Michael Ross or Susan G. they can also verify that most of the money he did not pay me, that he said he needed for the business was actually used to pay his personal expenses and to keep me under his thumb.

It was very common for Alex to withhold pay to control his staff.

0

Don Bauder July 2, 2018 @ 1:50 p.m.

Rossalove; Any psychologist could explain the personality of someone who always blames somebody else for his failures. I have heard from several people of his very dubious personal expenses, with the money pulled from the company. That, too, is a psychological syndrome. Best, Don Bauder

0

Rossalove July 2, 2018 @ 2:18 p.m.

Don. I feel you. Maybe we should start a support group for those that have had the unfortunate experience of being a part of his world.

BTW, I hear I am now going to be sued for slander for giving my opinion which is truthful and fully verifiable information here on your blog... LOL I hear Rip is searching for me. Good luck with that. Truth is my defense.

Doesn't matter. He will probably do the same "look over here" routine that is his M.O. Distraction is a tool he uses very skillfully. I will be sued in Cali... he will tell everyone I am a liar and I am broke. He will use this to justify dropping the suit he filed against me. Similar to what you report about his "story" about the bankruptcy removal. I will never be served and I will never even know he sued me. Not sure what damages I caused him by telling the truth but boy wouldn't it be cool to get Alex in a deposition. Maybe I should post a list of the big names I will invite to that party and depose under penalty of perjury.

I guess if he gets judgement he will just attach the $317,000 plus interest he owes me. (he never included me in the bankruptcy). But he did try to conflict my attorney out... too bad he never paid him the $5000 retainer that would have accomplished that.

Anyone doing Due Diligence is welcome to contact Don if you wish to contact me. I am happy to help out and answer questions based on my 10+ years of working with Alex and his crew.

0

Don Bauder July 2, 2018 @ 8:26 p.m.

Rossalove: He sounds like so many of his ilk that I have run across in more than 50 years of investigative financial reporting. Threats (sometimes of murder) are part of the expected response when I do a story such as this one. I have had five or six murder threats, along with threats to throw acid in my eyes. You will get them too, in this case. Pay no attention. Best, Don Bauder

0

Rossalove July 4, 2018 @ 10:09 a.m.

Don,

Is it true that Hern is claiming to be a 3x Billionaire? I can't make claims that is true or not... but here was my reaction when I heard his claims. Can anyone confirm his true wealth?

My reaction to this claim:

https://www.youtube.com/watch?v=KpGO2VTksIw

0

Don Bauder July 4, 2018 @ 2:12 p.m.

Rossalove: In my reporting, I never heard anyone say Hern claims to be a billionaire three times over. Most people I interviewed said that Hern has no money at all. This is one reason why he rents homes and doesn't buy them. He owes money all over the place -- to investors, to ex-employees, ex-partners, etc. Best, Don Bauder

0

Sign in to comment

Let’s Be Friends

Subscribe for local event alerts, concerts tickets, promotions and more from the San Diego Reader

Close