By Amir Helmer

The Tel Aviv District Court on Thursday heard and discussed declarations submitted in the suit for damages submitted by real-estate tycoon Alfred Akirov and his company, Alrov against startup Net2Wireless and its chairman David Rubner.

In his declaration to the court, Rubner categorically denied the allegation that he had deceitfully persuaded Akirov to invest $5 million in Net2Wireless by saying that billionaire investor George Soros and Goldman Sachs were making strategic investments in the startup.

Akirov and his company petitioned the court to impose temporary liens up to a value of NIS 22 million on assets belonging to Rubner and Net2Wireless. They claimed the defendants might not be able to fulfill damages the court might grant in the future.

During questioning by Akirov's attorney, Rubner was asked whether other Net2Wireless shareholders might sue. He answered that he had hinted to Akirov that a settlement could be reached with the shareholders, but that Akirov had not wanted to wait.

Rubner declared that he had not mentioned Soros or the investment bank as strategic investors or as lead investors. Akirov explicitly claims that he agreed to invest in the startup after Rubner made such claim.

Rubner also declared that all the information he had provided to Akirov during their meeting was anecdotal in nature, and not made as a misleading presentation during negotiation. He said he had never stated that Alrov could not carry out due diligence on Net2Wireless. Moreover, Rubner claimed, he never stated that any strategic investors carrying out due diligence proceedings for the startup's other investors.

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Moreover, Rubner added, after it made its investment Alrov received the list of investors. The list did not include Goldman Sachs and Soros, but Alrov did not protest, he says.

During his turn for questioning, Akirov was asked whether he had threatened to ruin Rubner and bury him. Akirov said they had had a very hard conversation, and that he had said he'd sue Rubner and all his scams would come to light.

The case will continue on January 10, 2001.

Leor Mohr adds:

Akirov and Alrov claim that Rubner presented Net2Wireless as a promising technology company without rivals in the middle of a $30 million financing round. The plaintiffs claim Rubner said that due to the nature of the investment, the company did not intend to raise capital from Israeli investors. They claim Rubner said a group of investors was in the process of conducting due diligence on Net2Wireless, and that the strategic investors leading the financing round were Goldman Sachs and the investment funds led by billionaire George Soros.

Rubner, the plaintiffs claim, said the timetable for investment was very tight, that the financing round would be completed within days, and that it was doubtful whether there was room for Alrov to come on board. But Rubner said he'd see if he could wedge Alrov in, contingent on Alrov reaching a decision on the spot, the plaintiffs claim. The plaintiffs also claim Rubner told Akirov that if he could work it out, he Rubner would be doing him Akirov a big favor, because it was a one-time opportunity.

Six days after the initial conversation between the two businessmen, Rubner allegedly informed Akirov that he had persuaded the group of investors to allow Alrov in. Three days later Alrov committed to investing $5 million in Net2Wireless. Alrov did not conduct any due diligence tests, relying totally on Rubner's good name and the due diligence conducted by Goldman Sachs and the Soros funds, as Rubner had said.