City National Bank says Konami and Autumn Games defrauded it out of $14 million.
Two of the companies behind Def Jam Rapstar are facing more legal trouble, this time from City National Bank, which claims in a lawsuit that Konami and Autumn Games lied in order to secure a $14 million line of credit, which would be covered by revenues from the sale of the game.
"CNB has recently learned that defendants' representations concerning financial conditions and repayment of the loan - both before and after the loan was approved - were false at the time they were made and that defendants never had any intention of repaying the loan as promised," the lawsuit says. "Rather than paying game-related proceeds directly to CNB as agreed, defendant have kept all game-related proceeds for themselves and have refused to remit any such proceeds to CNB."
Even after the loan was approved, the companies made "baseless and unrealistic projections" that Def Jam Rapstar would ship 2.5 million units in its first year of release. The bank also claimed that Autumn Games said it would use a $1 million advance from Konami to pay down the loan, but failed to do so. Furthermore, it's allegedly blown through nearly the entire line of credit.
"To date, defendants still have not paid CNB a single penny of the principal amount that is due, and they continue to insist that none of the proceeds from sales of the game are owed to CNB and/or available for repayment," the suit claims.
The lawsuit follows one filed earlier this year by EMI over ownership rights to several of the songs in the game, which has already made life miserable for producer 4mm Games. That suit is keeping 4mm from getting more funding, which has left the future of the studio in doubt.
City National Bank is seeking nearly $9 million for fraud, negligent misrepresentation, breach of contract and other such things. Neither Konami nor Autumn Games have commented.