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Scooter Braun sues Troy Carter

By | Published on Friday 14 September 2018

Troy Carter

Two superstars of artist management in the US are going head to head. Scooter Braun is suing Troy Carter for allegedly defaulting on a $10 million loan. Carter says that this misrepresents their financial arrangement, and that the action is an attempt to “falsely ruin my reputation”.

It was Braun’s Ithaca Management Holdings company that filed legal papers in Los Angeles earlier this week, listing Carter, his wife and his Atom Factory company as defendants. It accuses them of fraud and breach of contract over failure to pay back the alleged loan.

Ithaca is Braun’s multi-million dollar investment fund that launched in 2013, but it also acts as a holding company for various businesses, including his artist management firm SB Projects.

According to the lawsuit, Ithaca agreed to loan Carter the money on 3 Jun 2016. Around the same time, Atom Factory was involved in a legal dispute with another unnamed party. Under the terms of the deal, says the lawsuit, if this other dispute was settled, any money received by Carter’s company should have been transferred to Ithaca as payment on the loan.

However, Ithaca claims, that dispute was settled in March this year but no money has been handed over. It alleges that proceeds from the settlement were instead diverted to other recipients and never reached Carter’s holding company, AFACT, which is the entity liable for the payment to Ithaca.

Ithaca then says that it sent a demand for payment last month but has received nothing to date. Hence the decision to go legal.

Speaking to both TMZ and Billboard, Carter has denied that he was loaned any money by Ithaca. He says that he actually sold Atom Factory to Braun’s company, but recently agreed to buy it back. While the exact nature of the 2016 deal isn’t clear, the date given for the loan agreement by Ithaca certainly coincides with Carter’s announcement that year that he was quitting artist management and moving to a new role at Spotify.

While Carter concedes that there is still a balance outstanding on this deal, he claims the exact amount was being negotiated at the time Ithaca filed its lawsuit. He also claims that things turned sour after he bought an expensive piece of art.

Speaking to Billboard in more detail, he says: “Sadly, Scooter Braun went back on his word. The fact is that I’ve never borrowed a dime from him, nor have I needed to. Ithaca has already received in excess of $12 million for my repurchase of the company. The equity they originally held became debt with collateral attached. Nothing out of the ordinary. He decided to file a lawsuit after we reached a stalemate on interpretations of the balance of debt”.

He continues: “Our agreement on the new price was disavowed when the press ran a piece about me purchasing a piece of art at auction. Scooter called to congratulate me and within 24 hours I received an email from his attorney stating there no longer would be a discount on the deal since I could afford to purchase such a painting”.

Explaining his side of the dispute, he says: “When I lost a client I volunteered to repurchase the company as a show of good faith. Ithaca declined. After a few months, I was surprised to hear that Scooter wanted me to return the money because the settlement with the client would take too long. He threatened to sabotage my reputation with a fraud claim if we didn’t reach a deal. A claim he knew to be incontestably untrue”.

He goes on to say that this alleged threat was “the cruellest business tactic I’ve seen in my career”, adding: “I lived through Death Row Records and some of the hardest guys in Philadelphia. Not one of them ever tried to extort me. It’s ironic how it now feels like I’m being extorted”.

Going further, Carter says that any damage to his reputation has wider implications: “There are only a handful of African-American executives left in our business and yet he’s okay with attempting to falsely ruin my reputation. It doesn’t just damage me; it’s also damaging to the young black executives coming behind me. I represent and helped build a culture he financially benefits from”.

In a more strongly worded statement to TMZ, he also accused Braun of defending clients who use racist language.

Braun has not yet commented on the case.

Carter left his role at Spotify in July. Meanwhile, he continues to act as an advisor to the Prince estate.