Hyperloop One, a LA-based startup developing Elon Musk's futuristic transportation system, is coming under fire for allegedly mistreating employees and abusing funds.
According to court documents obtained by CNBC, co-founder and former chief technology officer, Brogan BamBrogan, and several other employees are suing Hyperloop One on claims that company executives misused funds, breached their fiduciary duty, violated California labor code, and even assaulted at least one employee by placing a noose on his desk seat.
According to the suit, which was filed Tuesday, high-level execs used venture capital money "to augment their personal brands, enhance their romantic lives, and line their pockets (and those of family members.)"
BamBrogan, who left the company in June, is the main plaintiff in the case.
Defendants include Shervin Pishevar, co-founder and chairman; Afshin Pishevar, Shervin's brother and the company's chief legal officer; Joseph Lonsdale, vice-chairman; as well as Robert Lloyd, the company's CEO.
Will Wei/Tech Insider
For example, the suit states that defendent Shervin Pishevar dated the company's PR vendor and raised her salary from $15,000 to $40,000 per month. However, when the engagement fell through, he "finally heeded suggestions that her work was worth little, and terminated the arrangement."
In another example cited in the suit, the plaintiffs allege that Pishevar hired his brother, Afshin Pishevar, as general counselor, even though he was a personal injury and criminal defense attorney.
According to the lawsuit, the plantiffs are also claiming that they were mistreated at the company once they raised their concerns to top level executives about mishandled funds and nepotism.
Other plantiffs include Knut Sauer, the company's former president of business development; David Pendergrast, the former assistant general counsel; and William Mulholland, the former vice president of finance.
The plantiffs and seven other employees quietly approached management in a letter stating their concerns in late May. The letter was sent to Shervin, Lonsdale, and Lloyd, the suit states.
"Defendents reacted swiftly, seeking to divide-and-conquer the group of eleven employees, and ensure Defendents' continued control," the suit states.
In one particular instance cited in the suit, plantiff Afshin Pishevar allegedly placed a hangman's noose on BamBrogan's chair, and the action was caught by the company's security cameras.
"Shervin became agitated when the issues were raised at the dinner," the lawsuit states. "Then, just hours after that dinner, at 11:28 p.m. California time, Shervin's brother and Chief Legal Officer of Hyperloop One, Defendant Afshin Pishevar, strolled through HyperloopOne's office and placed a hangman's noose onBamBrogan'schair. Hyperloop One's security cameras captured it all."
Security cameras captured the incident, which the suit claims happened the evening of June 14.
"The message was clear, and made even more so later that day, when Hyperloop One presented its final offer in response to the group of eleven employees' letter: no core changes would be made, and three heads would roll: Plaintiffs Pendergast and Mulholland would be fired, and BamBrogan would be demoted and forced to take a leave of absence (and would not be terminated outright only if he promised to 'behave.') If the group of eleven accepted the proposal, then Defendants promised not to 'pursue them to the ends of the earth,' threatening economic and legal warfare by millionaires with extensive networks," the suit states.
Hyperloop One declined a request for comment. BamBrogan's legal team did not immediately respond to a request for comment.