Meet Jonathan Roberts, a venture capitalist at Ignition Partners and board member of Entellium. Previously, I blogged about the arrest of two former Entellium executives for cooking the company books and deceptively raising nearly $50 million in venture money.
Paul Johnston, the former CEO, remains in jail. Parrish Jones, the former CFO, has been released awaiting indictment. Both seem to be negotiating plea deals to reduce their wire fraud charges.
Now, Jonathan Roberts, basically the guy left holding the bag at Entellium, is making news as the maligned company files for Chapter 11 bankruptcy, while selling assets to Intuit.
Jonathan has asked the bankruptcy court to approve retention bonuses for the 15 remaining Seattle employees, as well as severance packages for three key employees should they be let go. He asserts that these three employees have been identified as key personnel by Intuit, critical to the transition as Intuit takes over assets. In addition, Jonathan requested retention bonuses for the 13 remaining Malaysian employees.
Some former Entellium employees are angry for not having received severance packages after their abrupt terminations shortly before the news of fraud broke out. Leif Jensen filed suit last month for his lack of a severance package after signing a separation agreement “under pressure”.
Jonathan’s request for the retention bonuses and severance packages have further aggravated some former Entellium employees. They point out that Jonathan needs to bear some responsibility for the situation. After all, he and the other board members obviously did not conduct proper due diligence on the business.
The question now is should Jonathan be asking to honor the severance packages that were voided by he separation agreements that many former employees say were signed under considerable pressure?
Right now, Jonathan has a fiduciary duty to all share holders to make the most of a bad situation. That means he needs to get the assets sold to the potential buyer at the best possible value. It also means that he needs to salvage as much of the money back to investors and creditors as possible. The retention bonuses and severance packages are a way to ensure that the assets are successfully sold. No brainer there.
But beyond the fiduciary duty, Jonathan also has the responsibility to make sure that the company does what it can to fulfill obligations to its former employees. Whether the separations agreements were signed under duress will be determined by the court of law. But Jonathan has an opportunity right now to stand up and take some accountability along with the board by righting what may have been a wrong.
My first “Entellium” post was mostly about how we need strong societal valuation of personal integrity to offset some of the unbridled greed that sometimes our capitalist system creates. So, again, I’m addressing the Entellium issue with what may be another personal integrity issue.
No one likes to be duped. As a person who has dealt with Jonathan, I’m certain he is tremendously embarrassed by the whole ordeal. He trusted Paul Johnston, someone he saw at his church Sunday after Sunday. Jonathan is a brilliant marketer with great passion in all he does. Brainstorming with him on business ideas was one of the highlights of working at CSG Openline. I consider him a man of tremendous talent and integrity. I trust he will act accordingly.