Investors of the failed “Nerds” musical are suing lead producers Carl Levin and Vicki Halmos claiming they mislead them into believing the musical had the needed funding in place.
The 13 investors, with Marc Stanley Goldman and Judith Nath as the lead plaintiffs, allege that the show was never “adequately capitalized” and say that Levin falsely cited the loss of a major investor for the closing of the show before it began previews. In presentations to co-producers, Levin reportedly named Facebook’s Randi Zuckerberg and Microsoft as investors, but the plaintiffs say those claims were not true.
The plaintiffs are seeking relief for their capital contributions, which amounted to more than $600,000, as well as a minimum of $5 million in punitive damages to be determined at trial.
The cast was in rehearsals and the musical, about the rivalry between Bill Gates and Steve Jobs, was slated to open at the Longacre Theatre on Broadway in April 2016, before it shuttered due to insufficient funding.
The investors filed suit in the New York County Supreme Court Monday.
The musical initially had an estimated cost of $7.45 million, but by Dec. 31, 2015, just $200,000 had been raised, according to the suit. However, the producers decided to move forward, and as part of a contract with the Shubert Organization, the venture was required to pay a $600,000 advance, the suits says.
As of February 2016, the production company was $96,209.49 “underwater,” the suit says, citing the company’s general ledger.
“Given the reckless financial commitments Defendants had caused the company to undertake, the venture was never close to financial viability,” the suit states.
Halmos said neither she nor Levin had been aware of the suit until media reports.
“I am incredulous as allegations are far cry from facts…neither Carl nor myself have met these people,” Halmos wrote in an email to Broadway News.
Levin did not respond to a request for comment in time for publication. He is also listed as the director of business affairs for the Tony Awards.
In the winter of 2016, the capitalization costs for the musical had risen to $7.5 million and the lead producers were seeking additional investors to contribute capital, according to the suit.
To raise additional money, the plaintiffs claim that Levin was “affirmatively misrepresenting” how much the company had raised, stating that it was “adequately capitalized.”
In the days leading up to the show’s cancellation, an additional $100,000 was raised, largely by existing investors, with some from outside sources, the suit reads.
On March 8, 2016, Levin announced that the show would not go forward “to the complete shock” of the co-producers, according to the suit. The entirely of the investors capital was lost.
Levin told the public that a major investor had backed out at the last minute, causing the production to end, but the plaintiffs say that was not the case.
“The failure of the venture was the foreseeable and inevitable result of the reckless financial commitments Defendants caused the LLC to make without adequate capitalization,” the suit reads.
The Nerds LLC is also facing a default judgement of close to $195,000 from another suit, decided as of June 2018.