David Becker, Getty Images
Hyperloop cofounders Shervin Pishevar left and Brogan BamBrogan right

Hyperloop Co-Founder Sues Company Over Mismanagement Claims

July 13, 2016
Not long after unveiling its levitating train in the desert, Hyperloop is now riddled with infighting that includes claims of self-promotion, nepotism and an ominous hangman’s noose.

Hyperloop Technologies Inc., a startup trying to develop Elon Musk’s idea to use levitation for high-speed transportation, was sued by a co-founder over claims that the company’s financiers are killing it through their own greed.

Shervin Pishevar, the Silicon Valley venture capitalist who helped form Hyperloop in 2014, was accused in the lawsuit by fellow co-founder Brogan BamBrogan of mismanaging the company along with other “money men” by marketing their own brands and lining their own pockets.

BamBrogan, an early SpaceX engineer, claims his attempts to expose and correct the mismanagement led to a backlash when Pishevar’s brother, Hyperloop’s general counsel, left a hangman’s noose on his chair, a photograph of which is included in the complaint. BamBrogan says he was demoted and two other employees were forced out after they wrote a letter to lay out their concerns to Pishevar, board member Joe Lonsdale and CEO Robert Lloyd.

“Today’s lawsuit brought by former employees of Hyperloop One is unfortunate and delusional,” Orin Snyder, a lawyer for Hyperloop, said in an e-mailed statement. “These employees tried to stage a coup and failed. They knew that the company was aware of their actions, and this lawsuit is their preemptive strike. The claims are pure nonsense and will be met with a swift and potent legal response.”

BamBrogan accused Pishevar of nepotism for making his brother, a personal injury and criminal defense lawyer, Hyperloop’s top in-house attorney, and also claims that Pishevar pressured potential investors to invest in his own fund, Sherpa Capital.

Such actions “highlight the defendants’ treatment of Hyperloop One as their personal plaything, rather than as a serious enterprise,” according to a copy of the complaint provided by the plaintiffs after they filed it Tuesday in state court in Los Angeles.

Since 2013, when Musk proposed a network of levitating pods that zip through tubes to safely move passengers and cargo at breakneck speed, Russia has emerged as a key investor in Hyperloop’s development with President Vladimir Putin backing the technology in June at his annual forum in St. Petersburg with Pishevar. The company aims to start commercial operations by 2020.

Russian freight tycoon Ziyavudin Magomedov’s Summa Capital, a backer of Hyperloop, said it’s sticking with its investment amid the lawsuit.

“This is Hyperloop One’s internal matter,” Summa Capital’s investment arm said in an e-mailed response to questions.  ”We invested into this project and are still deeming it promising.”

The case is BamBrogan v. Hyperloop Technologies Inc., BC626780, California Superior Court (Los Angeles).

By Joel Rosenblatt, with assistance from Ilya Khrennikov

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Licensed content from Bloomberg, copyright 2016.

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