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Author Topic: BREAKING NEWS: Kohnke Sues Perpetual Entertainment!  (Read 2072 times)

Offline Zach

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BREAKING NEWS: Kohnke Sues Perpetual Entertainment!
« on: 11 December 2007 05:16 PM »
Kohnke Communications, a public relations firm which represents a number of MMO developers, is suing Perpetual Entertainment for breach of contract, several counts of fraud, and transferring assets, including Star Trek Online, to a new company before liquidating their assets.  The suit also claims that Gods and Heroes was canceled so that PE could avoid payments owed to Kohnke on the game's launch. Ten Ton Hammer has obtained court documents, and has further details on this story.

    December 11, 2007 - Details surrounding Perpetual Entertainment's dealings subsequent to the cancellation of Gods & Heroes are coming to light as Ten Ton Hammer uncovered court documents of a new complaint just submitted to California's Superior Court last week. The allegation: the San Francisco-based developer fraudulently transferred valuable assets (like the Star Trek Online license) to an insider-owned corporation at a loss, leaving those with a financial stake in the now-defunct MMORPG Gods & Heroes: Rome Rising without hope of payment save legal recourse.

    According to documents received last Friday in California's Superior Court for the County of San Francisco, public relations firm Kohnke Communications, Inc. – best known for promoting the efforts of numerous MMORPG developers like EA Mythic, Red 5, Turbine, and NetDevil – is suing Perpetual Entertainment, Inc. for breach of contract, fraudulent transfer, fraud, and various other charges for damages between $80,000 and $290,000, perhaps much more in terms of punitive or exemplary damages.

    The complaints stem from allegations that Perpetual sold valuable assets like the Star Trek Online (STO) license to P2 Entertainment, Inc., a thinly veiled yet separate corporate entity, before executing the Perpetual ABC or "Assignment for the Benefit of Creditors" (a liquidation mechanism allowed by states like California as a less expensive alternative to the extensive litigation surrounding bankruptcy). The case could have drastic implications for future of the pre-alpha Star Trek Online title.

Read the full story on Ten Ton Hammer @

Hailing Frequency is trying to obtain a statement from Executive Producer Daron Stinnett Regarding this action - Any response will be posted here as soon as it comes in.

« Last Edit: 11 December 2007 05:24 PM by Zach Nicodemous »

Offline Malle

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Re: BREAKING NEWS: Kohnke Sues Perpetual Entertainment!
« Reply #1 on: 11 December 2007 05:28 PM »
urgs, I just read this part at the end of the report:

Quote from: tentonhammer
But Kohnke saved its strongest words to inveigh against perceived fraud on the part of Keene, McKibbin, Perpetual, and P2. Kohnke alleges that, as early as September 27th, Perpetual knew that Gods & Heroes: Rome Rising would be cancelled and, subsequently, Perpetual would not be able to satisfy its contractual obligations to Kohnke. Still, as late as October 9th (a day before the ABC's execution) and according to Kohnke, Perpetual asked Kohnke to prepare promotional materials related to a new round of funding. Such actions in bad faith were, in Kohnke's words, "fraudulent, oppressive, and with malice."

if that's bearing any truth in it, it's a shame to say the least. Hope this is all nonsense but then I must say PE's in bad company (not a bad company but in bad company) with the companies they make deals with if the tone is that rough amongst them...


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Re: BREAKING NEWS: Kohnke Sues Perpetual Entertainment!
« Reply #2 on: 11 December 2007 05:43 PM »

Offline Zach

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Re: BREAKING NEWS: Kohnke Sues Perpetual Entertainment!
« Reply #3 on: 11 December 2007 05:49 PM »
I just spoke to Daron Stinnett - His statement is as follows:

This lawsuit does not in any way affect Star Trek Online. Even if STO was in danger - I have been informed that this filing is without merrit and does not jeopardise Perpetual in any way.
« Last Edit: 11 December 2007 05:54 PM by Zach Nicodemous »

Offline Kinneas

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Re: BREAKING NEWS: Kohnke Sues Perpetual Entertainment!
« Reply #4 on: 11 December 2007 10:57 PM »

So who is Kohnke?

About Kohnke Communications
Founded in 2002, Kohnke Communications is the premier public relations agency for interactive entertainment companies. Based in San Francisco, New York, and Los Angeles, and with international access around the globe, the agency is a full service firm providing a range of services from product and company launches to crisis consultation, corporate branding, media training, business development, design, and event management. All of the agency’s staff are gamers, whose deep knowledge of all the industry stakeholders provides clients with a comprehensive, in-depth approach to this unique industry.

For companies looking for a simple press release instead of a sustained campaign, the agency's Game Wire™ service is a cost-effective method used by publishers, developers, and other newsmakers to reach the journalists who cover this vibrant space. For more information, please visit:

Just got off the phone with Chris Schmidt at Kohnke...they have declined making any further statements at this time and just refer us to the existing articles on the subject.

FROM DRACUS at (You rock, D).

A summary from the Court Documents

PE spent nearly $20 million (USD) for Gods & Heroes
PE obtained exclusive rights for a MMO Star Trek
PE agreed to pay Kohnke $15,000/mo for services, but an agreement was made for seven months of which $10,000 per month ($70,000) would be held back. That $70,000 would be paid up to 400% return after launch if the PR campaign was successful.
A successful PR campaign could earn Kohnke $280,000.
Successful PR campaign is going to be one of the arguments for the Jury to decide. (Is Kohnke correct that its PR campaign was successful?)
PE made no announcement either in public or in private to Kohnke of canceling Gods and Heroes.
PE delayed Gods and Heroes for technical reasons, but also stated that additional funding was required.
PE still requested Kohnke to continue with PR work up to Oct 9th.
PE requested Kohnke to help assist with PR effort for PE in acquiring the new funding and Kohnke agreed to do so.
On Oct 9th, PE informed that the new funding would be used for Star Trek Online and that Gods and Heroes would be canceled.
On Oct 9th, PE cut off communication with Kohnke and did not publish the PR draft by Kohnke.
On late Oct 9th, PE announced the delay of Gods and Heroes and the focus with Star Trek Online and did not mention the new funding (on its website)
Kohnke made several requests to PE to know if its services were still needed and to bring the account up-to-date (paid).
On Oct 26th, Kohnke sent out a letter for payment, no express response from PE.
On Oct 30th, Kohnke receives a letter from PE about the liquidation of assets (the ABC) that occurred on Oct 10th.
Kohnke claims that PE, Keene, KcKibbin and P2 were engaged in conspiracy to defraud PE's creditors.
Citing examples of PE making statements that everything is ok and moving forward.
Citing that on Nov 28th, Daron Stinnett made a statement on the site here of "...flatly denying that Perpetual was in the process of liquidating and representing that Perpetual was still an ongoing concern"
On Nov 29th, Keene consoled Kohnke that Perpetual had executed the ABC.
Perpetual received less than market-value for its assets when transfered to P2.
Perpetual ABC was formed on Sept 27th 2007
P2 was formed on Oct 3rd, 2007
No public announcement of the formation of Perpetual ABC and P2.
COUNT 1: (Breach of Contract) Perpetual owes Kohnke a minimum of $80,675 for services, with the maximum of $290,675 had Gods and Heroes not been canceled.
COUNT 2: (Fraudulent Transfer) Transfer of assets to P2 is in violation of California Codes 3439.01 and 3439.07. Kohnke claims, "... Perpetual knew that, by transferring assets to P2, it would lack the assets to pay its debts or other claims owed to Kohnke..."
COUNT 3: (Intentional Interference with Contract) Kohnke considers its PR campaign successful and believes that by canceling Gods and Heroes with the transfer of assets (to minimize remaining value of Perpetual) to interfere with the obligations of the contract.
COUNT 4: (Fraud) Reinstating the references made that Keene, McKibbin and P2 knew of the liquidation with Perpetual and executed it, while not informing Kohnke.
COUNT 5: (Fraud) Essentially the same as above, but with Perpetual. Perpetual was insolvent (had no or little money) and continued for request of service by Kohnke.
COUNT 6: (Constructive Trust) Kohnke states that Perpetual owes it at least $80,675.
COUNT 7: (Resulting Trust) Kohnke seeks immediate transfer of the money.
End of document, Kohnke seeks at least $80,675, plus attorney fees and cost, and other associated costs.
« Last Edit: 11 December 2007 11:01 PM by Kinneas »