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Uber's Former CEO Sued for Fraud by Major Investor

By George Khoury, Esq. on August 11, 2017 | Last updated on March 21, 2019

Uber's former CEO, Travis Kalanick, has found himself in the media limelight once again. But this time, it's not for any one thing in particular, but rather for all of it.

One of Uber's largest investors, the venture capital firm Benchmark, has filed suit against the former CEO for fraud, and in order to rescind a 2016 vote adding more seats to Uber's board of directors. In the lawsuit, the investment firm cites the gross mismanagement, culture of gender discrimination and sexual harassment, and even the company's deception of law enforcement using "greyball."

So Much Drama in the SCC

Benchmark's case rests upon the alleged fact that Kalanick intentionally deceived investors by not informing them of the issues they cited, and that Kalanick did so in order to benefit himself solely, rather than for the benefit of the investors and shareholders. Central to the lawsuit is the 2016 board of directors vote that expanded the board from eight to eleven seats, which after going through, Benchmark alleges that Kalanick appointed board members that would serve to insulate his position as CEO.

According to the Silicon Valley rumor mill, Kalanick was planning a bid to be reinstated as CEO and that he has interfered with the search for a new CEO. Benchmark led the charge to oust Kalanick after the repeated public scandals that have recently befallen the ride sharing goliath.

Small Fries Write Letter to Big Fish

In response to the lawsuit, a small group of investors sent a letter to Benchmark to voice their opposition and shock over the lawsuit. While the letter does raise some interesting points, it doesn't do any favors for Uber's culture problem. The letter specifically states, seemingly straight-faced (and without even realizing how sketchy it sounds), that the public airing of these problems in court should not be done, but rather, it should have been dealt with in closed door board room meetings.

Additionally, the letter goes on to demand that Benchmark divest itself from its major position in the company and divest 75 percent of their Uber holdings due to the alleged conflict caused by the lawsuit. Surprisingly, the small fry investors that signed the letter claim that there are investors ready, willing and able to buy out Benchmark's shares, despite the double digit billion dollar price tag.

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