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Former Friendfinder Executives Face Civil Suit

Former Friendfinder Executives Face Civil Suit
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May 18, 2005 11:48 AM PDT    Text size: 
PALO ALTO, Calif. — Various Inc., the parent company of Friendfinder, has filed a suit against two former executives for breach of contract, misappropriation of trade secrets and defamation, among other charges, after they left the company and formed their own.

The suit filed in Santa Clara Superior Court names Jack Mardack, a former affiliate manager, and Sean Barrett, a former affiliate coordinator.

After Friendfinder terminated Mardack and Barrett, the Palo Alto, Calif.-based online dating website company said that Mardack poached the company’s affiliate list while working there and that both executives embezzled and diverted company funds, the suit says.

In the suit, the company further alleges that Mardack shared its affiliate list with competitors, helped set up a competing joint venture while employed at Friendfinder and brokered unauthorized payouts while paying those funds to himself and Barrett.

The suit also said that Mardack made false statements that the company’s “payment processing was in jeopardy due to Friendfinder’s bad financial condition.”

Mardack, in an interview with XBiz, denies all of the suit’s allegations, and said he was not fired but left Friendfinder because of a “hostile environment.”

Later, Mardack formed a new company, Profit Lab, and tapped Barrett as a vice president.

Mardack’s Profit Lab does consulting work for Sex Search, a direct competitor of Friendfinder.

“I am saddened by the retaliatory sentiment and paranoid tone from Friendfinder,” said Mardack, who noted he had worked at Friendfinder for two years. “I’m a working stiff and did no harm.

“Ultimately, I didn’t take away such an affiliate list,” he said. “One who does business in this industry knows that everyone who works in it also has a personal list.”

Various said in the suit that Friendfinder, as a result of the allegations, sustained loss of income and future business and garnered a loss of reputation.

Friendfinder attorney Ira P. Rothken told XBiz that “the crux of the case is about individuals who were in a position of trust who decided to camouflage traffic and links for their own benefit.”

“This is something that the industry as a whole should be wary of — the situation where employees hide in a sea of company links,” he said. “This is a new form of cyber-embezzlement.”

Friendfinder’s parent is asking the court to award damages and attorneys fees, as well as a permanent restraining order against Mardock and Barrett from future use of its affiliate list.

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