KAABOO Festival Investor Wins $2M Verdict for Breach of Contract

An eccentric Florida real estate mogul who lost millions investing in two West Coast festivals linked to Virgin Group co-founder Richard Branson won a bittersweet legal victory Friday (April 12) when a Delaware judge awarded him a $2 million breach of contract verdict over the collapse of KAABOO festival — but rejected larger fraud claims that could have netted him millions in damages.

Delaware judge Paul Wallace found that KAABOO’s previous owners had lied and misrepresented the financial health of the festival to investor Marc Hagle, who bought KAABOO in 2019, but ruled that Hagle likely knew the projections were fake because one of the festival’s board members had been sharing confidential data with Hagle during sales negotiations.

All told, Hagle, a 75-year-old Orlando commercial real estate developer, is estimated to have lost approximately $23 million investing in the festival business, including spending $10 million to buy the ill-fated KAABOO festival in September 2019, before going on to lose millions more unsuccessfully developing the Virgin Fest in Los Angeles.

While the loss certainly stung, Hagle isn’t hurting for cash, having made his fortune building shopping centers for Walmart. In 2020, he donated $10 million to his alma mater, Purdue University, and two years later pledged $5 million to the University of Central Florida. In 2022, Hagle and his wife became the first married couple to travel to space on a flight from Amazon founder Jeff Bezos’ Blue Origin and are currently constructing a massive $33 million, 45,000-sq.-ft home in Winter Park, Fla., that will include a basement gun range and an indoor pool.

Friday’s ruling, absent an appeal, likely represents the end of Hagle’s attempt to recoup his $23 million loss through the court system. Earlier this year, a California appeals court refused to overturn a 2022 Los Angeles Superior Court decision allowing Lizzo, Ellie Goulding and Kali Uchis to keep millions in fees Hagle had advanced the artists in February 2020 to secure their performances at Virgin Fest. Weeks after the artists were announced, much of the United States went into lockdown due to the COVID-19 pandemic, forcing the cancellation of the festival.

Former Bear Stearns investment banker Bryan Gordon launched KAABOO in 2015, modeling the event’s high-end food and hospitality offerings around Napa’s BottleRock festival with headliner talent that included Pink, Red Hot Chili Peppers and the Foo Fighters.

Marketed to an older, more affluent audience, KAABOO quickly grew in popularity, but behind the scenes, Gordon’s brash style led to lawsuits from former investors, ex-employees and former partner Brett Mosiman, a Kansas promoter who won a $7 million judgement against Gordon in 2020.

While Gordon allegedly presented himself to Mosiman and others as a highly successful businessman who “owned so many hotels” he couldn’t “even count them” and regularly bought “$400 bottles of wine like they’re Chiclets,” financial documents obtained by Billboard showed Gordon had lost $30 million on KAABOO in less than five years.

Without an immediate capital infusion, Gordon would have to cancel the 2019 version of the festival, bankrupting KAABOO and prompting dozens of class-actions lawsuits from ticketholders that could have spread to Gordon’s other festival investments, like Virgin Fest, which Gordon co-owned with KAABOO’s chief marketing officer Jason Felts.

At the time, Virgin Fest was a holding company that owned the rights to license the Virgin trademark for music events and festivals from Branson. Running out of options for saving KAABOO, Gordon entered negotiations with Hagle for a deal that would eventually see Gordon resign from his position at Virgin Fest and sell his controlling shares in KAABOO to Virgin Fest in a $10 million deal financed by Hagle. As part of the agreement, Gordon would continue to produce KAABOO on behalf of Virgin Fest.

While the last-minute acquisition averted cancellation, it wasn’t long before both sides ended up in court, kicking off a five-year legal battle over the sale of KAABOO, which has been defunct ever since.

Gordon fired the first shot in the legal battle, filing suit against Virgin Fest weeks after the sale closed, alleging that Hagle and Virgin Fest had failed to pay KAABOO’s invoices in retaliation for Gordon’s decision to fire most of the KAABOO staff and place his daughter in charge of the company. Hagle and Virgin Fest countersued, arguing that Gordon had misled them about the festival’s financial outlook and falsified KAABOO’s financial records.

After a seven-day trial took place in a Delaware courtroom in January, Judge Wallace issued his ruling on Friday, finding that email evidence in the case indicated Gordon and company officers Robert Walker and Seth Wolkov spent hours systematically deleting expenses and overstating revenue so that KAABOO’s 2019 financial projection would show a modest $275,000 profit for the year instead of the more accurate $3 million loss company officials had previously forecast.

Wallace wrote that “KAABOO management made knowingly false representations” to Hagle and his attorneys and accused Gordon, Wolkov and Walker of “deliberate acts of concealment” and having “a clear motive to commit fraud.”

That wasn’t enough to win a fraud ruling, however, Wallace wrote in his 70-page decision. That’s because Hagle didn’t adequately prove he relied on the financial documents handed over by Gordon’s team and likely knew the claims were fake, Wallace explained. Emails produced during the trial showed that Felts — who was on the board of KAABOO at the same time his company, Virgin Fest, was trying to buy KAABOO, had been sending updates about the festival’s worsening financial health to Hagle, encouraging the real estate investor to play hardball with KAABOO and win concessions to sweeten the deal.

Wallace did, however, find that Gordon’s misrepresentations breached a transparency clause in the asset purchase agreement between KAABOO and Virgin Fest. According to the asset purchase agreement’s own guidelines, damages resulting from the breach of the document are capped at $2 million. Wallace thereby ordered KAABOO to pay Virgin Fest $2 million in damages, plus attorney fees.

For his part, Gordon was awarded a $360,000 consulting fee that Virgin Fest never paid him after he resigned from the company.

It’s unclear if Hagle plans to appeal the verdict. Without a legal option for recouping his investment, Hagle’s chances of recovering his investment hinge on the success of a group of new investors who have reportedly begun trying to raise money to license the KAABOO brand from Hagle as part of a brand revival. The investment group has not yet announced whether they will be reviving the festival brand in 2024 or 2025.

Related Images: