One group of BottleRock investors is suing another BottleRock investor for fraud and demanding the return of $3 million the group says it lent to BottleRock 11 days before the start of the festival.

In a lawsuit filed this week in Napa County Superior Court, plaintiff Saratoga Festival Investments, a California LLC, claims that BottleRock investor Jason W. Johnson was fraudulently paid $3 million for his investment in last May’s five-day Napa music event, reaping a quick profit of at least $1 million before the first acts took the stage.

According to the lawsuit, the $3 million Saratoga investment was used to pay off Johnson at a time when festival organizers were running out of cash to mount the music extravaganza, set to start a week later, the suit contends.

According to court documents, Johnson invested $1 million in BottleRock at the end of 2012. He also supposedly lent BottleRock another $1 million, although no note exists reflecting that agreement, according to the lawsuit.

In April, Bob Vogt and Gabe Meyers, the public face of BottleRock, decided to buy out Johnson but “did not have cash available” to do so, according to the suit.

The two men subsequently sought additional investors to make the payment, according to the court documents. Saratoga Festival Investments say they were then approached by Vogt and Meyers as an investor.

“Due to omissions regarding the financial health” of BottleRock, Saratoga Festival Investments — managed by Brad Buss and John Keller, both of California — invested $3 million in BottleRock, the suit asserts. That agreement was finalized on April 26.

BottleRock organizers then used that money to buy out Johnson on April 30, according to the court filing. BottleRock paid Johnson $3,026,849.32 “representing a $1 million profit on his original contribution less than six months earlier,” plus interest.

Johnson, who has Solano County business ties, accepted the payment, even though he knew that money represented the majority of BottleRock’s assets, said the suit. By doing so, Johnson’s conduct was “willful, wanton, malicious and oppressive and undertaken with the intent to defraud,” the lawsuit reads.

The lawsuit acknowledges that BottleRock, referred to in the suit as BR Festivals, had the right to buy out Johnson at any time prior to April 30 for $2 million above his initial contribution of $1 million. However, those provisions “were extremely favorable” to Johnson. Those provisions “unfairly discriminate” against BR Festivals, its other members and creditors, the statement said.

Johnson should have known that BottleRock could not afford to buy him out, as the festival did not have “monetary reserves or an expectation of income” sufficient to make that payment and keep the festival going, the suit alleges.

The filing asserts he knew that such a buyout would result in BottleRock becoming insolvent, and therefore, the payment to Johnson was fraudulent.

“Saratoga would not have agreed to the Johnson buyout if Johnson did not withhold material information from Saratoga,” the lawsuit states.

Indeed, within days of the buyout and “on the eve” of BottleRock, Keller was “forced to make an emergency loan” of $100,000 to BottleRock so that the festival could pay the vendor who was supplying the electrical generators for the five-day show.

“Without the emergency loan, BottleRock may have been forced to shut down,” said the lawsuit. “Vogt and Meyers also scrambled to pay other creditors immediately prior to or during BottleRock to avoid any substantial disruption.”

As a result of the Johnson buyout, BottleRock had “unreasonably small assets remaining” and was unable to repay Saratoga, the suit alleges.

The court filing provides new details into the inner workings of the financially troubled festival held May 8-12 at the Napa County Expo. According to a December 2012 operating agreement, BottleRock partners included Willpower Entertainment, Johnson, Amos Flint and Micah Malan.

Willpower Entertainment was founded by Vogt, a Napa native. Johnson is the son of the founder and CEO of Copart Inc., an auto auction company formerly based in Fairfield. He is also the CFO of Deville Enterprises and co-owns the Deville Theatre in downtown Vacaville.

Flint and Malan are both listed as a “sales associate” on a 2013 BottleRock contact list provided to the Napa Expo.

The agreement said that Willpower made an initial “contribution” of $250,000, Johnson paid $1 million, Flint paid $100,000 and Malan $10,000. It’s unclear how the ownership was calculated but the agreement states that Willpower owns 59.5 percent of BottleRock, Johnson 35 percent, Flint 5 percent and Malan .5 percent.

No mention is made of Meyers, another BottleRock organizer who has been named in lawsuits against the festival.

Vogt and Meyers have been named in numerous other BottleRock lawsuits for non-payment, but this is the first such document to name Johnson as a key investor.

In recent months, as many as three different potential investors have been touted as the savior of the festival, including Live Nation and Musiek Media Group Inc. However, no purchase or new investor has been announced.

While a hit with concertgoers, BottleRock “ultimately proved to be a financial and public relations disaster,” the lawsuit said. Including the $3 million owed to Saratoga, BottleRock’s unpaid debt tops $5.5 million, including $630,000 owed to the 142 union employees who worked at the festival.

As much as $1 million in promised donations to a group of nonprofits remains undistributed. Vogt and Meyers are also engaged in a financial dispute with CP Cooks, the organization that managed the food and beverage operation at the festival.

In other BottleRock news, neither union or BottleRock representatives attended a court hearing on Thursday morning to ask BottleRock to begin arbitration over the $630,000 owed to union workers.

An attorney for Buss and Keller declined to comment on this story. Buss or Keller could not be reached for comment. Attorneys for Johnson and Vogt and Meyers could not be reached for comment on this story. Cell phone mailboxes for both Vogt and Meyers were not accepting new messages. Neither Johnson, Flint or Malan could be reached for this story.

Advance tickets for an announced 2014 BottleRock festival remain on sale on the festival’s website.

(15) comments

bigmac1257

I bought tickets for 2014 Bottle Rock back in June and a couple of weeks later this whole scandel shows up. Who know's if it's even going to happen! I went to the website to try and return the tickets, they said no REFUNDS!!! Really, with all of this drama going on surrounding BR, they wont issue refunds for people who are rightfully uncomfortable with this whole situation???? who's going to watch out for the locals who suported the show and know may get burned????

jtdodd

Buss and Keller didn't take their smart pills

Punk Rocker

The more I think about this the more absurd it sounds. So, did Bob Vogt raise $3 million just in the nick of time to save BottleRock? And did he keep the money to pay off the $2.6 million owed to the vendors, so he would have a contract in hand right now for next year, and be collecting bucket loads of money on the website and be getting ready to make a fortune next May? Had he done this, his company (Willpower) would own 57% of a great opportunity. Did he instead use that $3 million to buy out an investor so that he now owns 95% of what is left? Bob Vogt is way too smart to have made a move that sounds this financially off base. After all he's a lawyer and a "successful businessman". We need all the "friends" who have professed faith in him to step forward now and give us more insight into how all this makes sense.

Bauhausfan
Bauhausfan

No one is going to step forward to help make sense of this and no one is going to step forward to "save" the festival either.

The 3 million paid off Johnson. Why they decided to "buy out" Johnson when they didn't have the money to do so is a mystery.

Punk Rocker

After a little research, here's how the legal side stacks up: an organization cannot pay investors ANY money ahead of normal creditors. When money is paid out to investors ahead of creditors, the investor money must be returned. If true, it means that Johnson will need to return his entire $3 million, and that money will be ordered by the court to go to the $2.6 million of creditors -- NOT the Saratoga investors. Pretty funny! It looks like BottleRock will be solvent after all, with the Saratoga investors being the ones holding all the cards. The big question is why would Vogt have decided it was better to repay an investor 150% of his investment shortly before knowing he'd need those funds to pay BR's creditors. It's possible he thought the gate would be $3 million more than it was but, if he knew things would come up as short as it did, then the fraud question (and the Ponzi question) would likely be raised. Vogt's a lawyer -- that means he's probably on top of this and all is good.

Jane Esters

I realize that the wheels of justice move slowly, and I acknowledge I am not a lawyer, but this is getting ridiculous. What is required to prove that something illegal has occurred here? Are the powers that be struggling to find out if a crime was committed? Is it possible that a crime WASN'T committed? I understand that people have rights, and I further understand that we are all innocent until proven guilty, but for god sake are we to believe that nothing in this mess is criminal? Really? At this point I am not even sure that our local government acted in the best interests of the community. Likewise I am not sure that Joe Anderson acted in the best interests of the State of California. Too many risks without due diligence. Illegal? Perhaps not. Ethical or professionally responsible? Highly unlikely. They all need to be held accountable.

Bauhausfan
Bauhausfan

There will be no investors to "save" this mess and anyone who peddles that nonsense like people were a couple of months ago in comments on this site are deluded.

There will be no 2014 festival and I hope hardly anyone bought tickets for it and if they did they get their money back in a hurry. I suspect that won't be happening, but one can try.

Between the bounced checks and now this information it appears there was a lot of money being moved around and last minute investments to try and keep this festival afloat. A case for deliberately writing checks with insufficient funds seems more secure now.

I can't figure out why someone who invested 250k got 59.5% and the guy who invested a million got 35% of the festival.

hubble

Isn't this the very definition of a Ponzi scheme?!

Napa742

The lawsuit sounds like a bit of a stretch, but I am glad it was filed as the ownership structure of this debacle has been brought to light as well as the large cash transfers that were made as the festival was ramping up. Before I was somewhat sympathetic to the organizers just being inexperienced or overly optimistic. But "buying out" an investor when you still have bills to pay and incurring more debt at the same time sounds a lot more like fraud than just stupidity.

Though who knows how many more lawsuits will need to be filed to figure any of this out. Sad indeed.

glenroy
glenroy

Don’t know any of these players but we’ve done shows up to the Elvin Bishop level at the same venue, reading the complaint as summarized by the Register the morel of the story is lending without due diligence is the ‘fastrak’ to bankrupting all of the players…..but there is a the flipside.
Incidentally…seems to me the ‘investors’ did not bother to write a competent business plan with something called a 'budget' which would include a timeline of cost accounting... to know where you were in the process along the way...see which way the wind is blowing as in a ROI or filing for BK…they just seemed to go on the fly…caught up in a moment of a quick buck, maybe even illusions of grandeur who knows...but in the end a sad story.
…it's another trip to Fat City for the lawyers though…that being the flipside...

Crosscountrykid
Crosscountrykid

I fail to see the liability of Mr. Johnson. Instead, it all seems to fall back on Mr. Vogt and his group. My own guess about the entire mess is that two men had the best of intentions but soon got in way over their heads. Realizing their predicament, they ultimately started operating like a Ponzi scheme, as noted by Punk Rocker.

Punk Rocker

Back in the summer when this was all breaking loose I made a couple of comments in this space on exactly this! Back then I said that the vendors should look to see if investors had been paid off with money which should have been held for them. Vendors being stiffed by paying back investors is pretty bad, but getting new investors to buy out older ones at a profit -- instead of keeping the money to pay back the vendors is really hard to believe. If what is in this article is true, wouldn't this look a little bit like a Ponzi scheme? If what is in this article is true, BottleRock had plenty of money from this $3 million investment made 11 days before the event to pay the entire $2.6 million owed to the vendors. Did Vogt decide to pay ALL that money to investors instead? And why pay it in the days immediately before the festival? Why could it not wait just a few more days until all the results were in?

crooked6pence

Where's Lieberstein? Quick to prosecute medical marijuana growers within the state limits but somehow this gets a pass?

TruthPlease

This fraud is almost on par with Obamacare! Almost!

Bauhausfan
Bauhausfan

Nice. The ACA isn't "fraud". The ACA originated at the Heritage Foundation 20 years ago and was implemented by Governor Romney.

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