Def Jam Rapstar publishers sued for alleged fraud
City National Bank alleges publishers Konami and Autumn Games lied to secure $14M loan to distribute 2010 karaoke rap game, seeks $8.9 million.
City National Bank (CNB) has sued Konami and Autumn Games for millions over claims that the game makers lied to secure a $14 million loan to distribute rap karaoke game Def Jam Rapstar. According to a report at Courthouse News, the publishers assured CNB that revenue from the game would cover the loan, but the bank has yet to receive a dime of reimbursement.
"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 complaint reads. "Rather than paying game-related proceeds directly to CNB as agreed, defendants have kept all game-related proceeds for themselves and have refused to remit any such proceeds to CNB."
As a result, CNB is seeking more than $8.9 million in damages for the alleged "fraud, negligent misrepresentation, breach of contract, breach of covenant of good faith and fair dealing, money had and received, unjust enrichment, recovery of personal property, and punitive damages."
An Autumn Games representative told GameSpot it cannot comment on ongoing litigation, and as of press time, Konami had not responded to GameSpot's request for comment.
Following the approval of the loan, CNB says Konami and Autumn Games made "baseless and unrealistic projections" that Def Jam Rapstar would ship 2.5 million units during its first year. The game was released in October 2010 and did not make the NPD's top-ten list during its launch month. Just two months after it launched, the MSRP for the game dropped from $60 to $40.
This is not the only lawsuit over Def Jam Rapstar. Last month, music giant EMI sued game developers 4mm Games and Terminal Reality for at least $8 million over allegations that the title includes numerous unlicensed songs.
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