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CMG Shareholders File Suit Against New Stargate Resistance Developer Dark Comet Games

Updated Tue, May 15, 2012 by Martuk

Things have been quiet out of Cheyenne Mountain Entertainment in recent months, but according to Courthouse News the Stargate Worlds developer is back in the news. Shareholders of the company state that, "After spending "tens of millions of dollars" to develop a video game, the developer fraudulently transferred assets in bankruptcy and bought it all for only $100,000." The game in question, Stargate Resistance, was launched on February 10th, 2010, a mere 10 days before CME CEO Gary Whiting filed the company for bankruptcy. However, after the company's bankruptcy filing and ensuing legal trouble that followed, Stargate Resistance was sold to Fresh Start Studios (FSS) and development resumed under Dark Comet Games.

CME is not named as a defendant in the complaint. That honor belongs to Dark Comet Games, Fresh Start Studios, Karl Hiatt and his wife (referred to as Jane Doe Hiatt), Mark Renberg, Chris Lombardo, and Harlan James Brown II. The complaint states that CME transferred assets without the bankruptcy court's approval and on February 12th of this year, FSS tried to remove all CME assets from its office, but were prevented when the police were called.

Timothy Jenson then allegedly began to negotiate the transfer of assets to FSS without approval from the courts or board members, allegedly leading to the transfer of Stargate Resistance for only $100,000, however, the transfer is dated as taking place on March 2nd, 2010, and almost a month after CEO Gary Whiting allegedly fired Jenson. But that date may too be in question as FSS was not established as an entity until March 4th.

With Stargate Resistance gone and CME in receivership, the company was left with no way to generate additional revenue. The Receiver appointed to CME informed the board members of the dilemma in June and proceeded to inform FSS to return the assets or face litigation. After seeking to have the appointed Receiver pursue legal actions against Dark Comet Games, CME was asked to provide $2 million for the receiver's legal fees. After that was rejected and alternate legal funding negotiations with the Receiver failed, the Receiver filed a motion in the Deering-Renberg-Lombardio Litigation seeking to be discharged from his duties and to have CME's remaining funds to be paid to the Receiver and his counsel, essentially wiping out what little was left of CME's financial assets.

The plaintiff's in the case are Cheyenne Mountain Games shareholders David Roberts, Sam Dalembert, and Hetal Shah M.D., who are seeking to have the agreement with FSS declared null and void as a fraudulent agreement and have the assets returned to CME with financial compensation for punitive damages for alleged breach of contract, civil conspiracy, fraudulent transfer, tortious interference and unjust enrichment.

What does this mean for Stargate Resistance? It's hard to say as the game is already burdened with heavy luggage. CME is for all intensive purposes finished and this could just be the last hurrah as the entity goes down swinging.

Check out the full court document here.

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