SACK & SACK, ESQS.

110 East 59th Street, 19th Floor

New York, New York 10022
Tel.: (212) 702-9000
Attorneys for Claimant, Andrew Sutton
AMERICAN ARBITRATION ASSOCIATION

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ANDREW SUTTON,
Claimant,
STATEMENT OF CLAIM

-against-

Case No.:

LAMBDASTAR INFRASTRUCTURE PARTNERS,

LLC, JACOB FRYDMAN, individually, and LEONARD
SHAYKIN, individually,
Respondent.

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Claimant, Andrew Sutton ("Sutton" or "Claimant"), by his attorneys, Sack & Sack, Esqs., as
and for his complaint against his former employer,

LambdaStar Infrastructure Partners, LLC

("lAmbdaStar"), Jacob Frydman ("Frydman"), and Leonard Shaykin ("Shaykin", together with
LambdaStar and Jacob Frydman, "Respondents") alleges as follows:
INTRODUCTION
1.

The claims made herein are based upon Respondents' breach of the express terms and

conditions of Plaintiffs written employment agreement entered into as of June 14, 2010 between
Claimant and Respondents (the "Employment Agreement'). A copy of the Employment Agreement
is annexed as Exhibit "A."
2.

As described herein, the Employment Agreement was the successor agreement to

Claimant's initial employment agreement with LambdaStar that was effective November 4, 2008.

3.

Claimant also seeks to hold the individual Respondents, Jacob Frydman and Shaykin,

personally liable as they exercised complete domination and control of LambdaStar by misusing the
company as their personal piggy bank by siphoning investor monies from the companys coffers to
distribute money to Jacob Frydman and Shaykin, pay money to, and pay expenses for, entities
affiliated with Jacob Frydman and Shaykin, pay expenses for the pursuit of transactions to benefit
Frydman and Shaykin and to make tax payments on behalf of Jacob Frydman and Shaykin, leaving
LambdaStar unable to pay its contractual obligations to Claimant.
PARTIES
4.

Claimant, Andrew Sutton, at all relevant times, lives at 12 Tarry-a-Bit Drive,

Waccabuc, New York 10597.

5.

At all relevant times herein, LambdaStar maintained its corporate headquarters at

885 Second Avenue, 34th Floor, New York, New York 10017. It currently maintains it headquarters
at 75 Rockefeller Plaza, New York, New York.
6.

Respondent Jacob Frydman is a Managing Partner at LambdaStar who works in New

York, New York.

7.

Respondent Shaykin is a Managing Partner at LambdaStar who works in New York,

New York.

Facts
The claims set forth herein arise from the following set of facts:
THE EMPLOYMENT
AGREEMENT
8.

From November 4, 2008 to July 9, 2010, Claimant worked for Respondent as Chief

Financial Officer.
9.

From November 4, 2008 to June 14, 2010, an employment agreement effective

November 4, 2008 governed the terms of Claimant's employment.

10.

On or around June 14, 2010, Claimant and Respondents entered into revised written

contract (the "Employment Agreement") governing the terms, privileges and conditions of
Claimant's employment with Respondents.
11.

The Employment Agreement specified the terms of Claimant's employment as

follows:

1.

Duties: Annual Salary

(a)

As Chief Financial Officer of the Company,

you shall serve at the reasonable direction
of Leonard Shaykin (the performance of
such service, the "Company Duties"). In
consideration for your performance of the
Company Duties, from the Effective Date
until September 30, 2010 (the "Contract
Period")...

(Exhibit A, 1.)

1. All directly quoted statements, unless otherwise specified, are the sum and substance of such statements as recalled by Plaintiff.

12.
Pursuant to the Employment Agreement, Plaintiff was entitled to compensation
specified as follows:
1.

Duties: Annual Salary

(i)

a base salary (a "Base Salary'') at a rate of

$187,500.00 per annum. For purposes of
this Agreement, Base Salary shall be
payable in accordance with the Company's
normal payroll procedures;

(Exhibit A, (a).)

13.

The Employment Agreement also specifies severance payments that shall be paid to

Claimant as follows:
8.

Severance Payments

Subject to all withholding and offset rights of the Group with

respect to the Contribution Note, Your Profits Interest or as
otherwise described herein and your and the Company's execution
and non-revocation of the release substantially in the form
attached hereto as Exhibit A, which release must be executed and
no longer subject to revocation within sixty (60) days of your
termination of employment (the "Effective Release Date"), if, during
the Contract Period, (i) you voluntarily terminate your employment
with Good Reason, (ii) the Company terminates your employment
without cause or (iii) the Company breaches any payment
obligation to you under this Agreement, then the Company shall
pay an amount in readily available funds (the severance Amount")
equal to the sum of (i) the amount of your Base Salary, and
other benefits that the Company would have paid to you from the
Termination Date through the end of the Contract Period, (ii) the
Success Bonus and (iii) two hundred thousand dollars ($200,000).

(Exhibit A, '18.)

14.

Furthermore, the Employment Agreement specified that:

10.

Miscellaneous

This Agreement supersedes any prior representations or

agreements, whether written or oral between you and us in
relation to the terms addressed herein.
(Exhibit A)
11.

No other written agreements were entered into between Claimant and Respondents

governing the terms, conditions and privileges of Claimant's employment with Respondents.
12.

The Employment Agreement was executed by Leonard Shaykin and Jacob Frydman,

authorized signatories on behalf of Respondents and by Claimant, who executed the Employment
Agreement as of June 14, 2010.
13.

On or about July 9, 2010, Respondents failed to pay Claimant $7,211.54 due as

payment of Annual Salary for the two week period ended July 9, 2010 and subsequently terminated
his health insurance for July 2010.
14.

As a result of Respondents' breach of their payment obligation to Claimant,

Claimant's employment was effectively terminated.

15.

Accordingly, as of July 9, 2010, in accordance with the severance provision of the

Employment Agreement (S),Claimant is entitled to (i) the $7,211.54 of unpaid salary through the
period ending July 9, 2010, (ii) Base Salary and benefits from the Termination Date (i.e. July 9,
2010) through the end of the Contract Period (i.e. September 30, 2010); and (iii) two hundred
thousand dollars ($200,000), which equals $297,211.54 (the "Severance Payment).
16.

Despite the express terms set forth in the Employment Agreement, Claimant was not

paid any of the remaining monies due and owing under the Employment Agreement, specifically the
Severance Payment due to be paid under Paragraph 8 of the Employment Agreement.

JACOB FRYDMAN'S AND SHAYION'S EXERCISE AND COMPLETE DOMINATION OVER LAMDASTAR

17.

Shaykin and Jacob Frydman created LambdaStar for the purpose of raising a

private investment fund focused on the acquisition of infrastructure assets in the United
States. LambdaStar would be responsible for identifying, executing and managing investments
acquired by the investment fund.

Shaykin and Frydman were direct or indirect owners of

100% of the membership interests in LambdaStar.

18.

Upon the commencement of his employment at LambdaStar and while he

constructed initial financial statements, Claimant was surprised to learn Respondents were drawing
money from LambdaStar at a rate of $600,000 per annum.

Claimant noted to the Managing

Partners at the time that this was the first firm he had heard of or experienced where Managing
Partners were drawing funds from the Management Company as the norm for start-ups is for funds
to be used for expenses and that founders usually forego any compensation until a Management Fee
is collected from the investment funds raised. In addition, other irregular payments to Shaykin and
Frydman and unconventional arrangements existed.
19.

LambdaStar's inability to pay Claimant the unpaid salary and the Severance Benefits

stems from Frydman's and Shaykin's exercise and complete domination over LambdaStar.
20.

As a result of the Respondents' cash outflows, the Management Company did not

have sufficient funds to honor Claimant's Employment Agreement.

21.

Respondents, at a minimum, directly or indirectly received benefits of at least $3.3

million from the Management Company as detailed below:

Respondent Cash Outflows

Respondent Compensation & Benefits, Real Estate payments and Other $ 2,634,185
Respondent Personal Assistants Compensation
506,995
Transaction Costs - Non Management Company related
114,000
Other Personal Payments
59,831
Total
22.

Specifically, Jacob Frydman's and Shaykin's compensation and benefits, real

estate payments and other expenses include:

o

amounts distributed directly to Respondents ($2,140,085),

o real estate payments to Respondent Frydman's White Acre Equities of

$365,216,
o benefit payments to Oxford Healthcare for Respondent Shaykin ($59,800),
o payments to Respondent Frydman to equalize payments made on behalf of
Shaykin ($59,800), and
o payments to Respondent Frydman of $9,284 made to equal car service
payments made for Shaykin's usage for business travel.
23.

In addition, Respondents' personal assistants' compensation includes:

o $429,395 in compensation; and

o $77,600 for health insurance.
24.

Frydman's and Shaykin's personal assistants primarily performed non-LambdaStar

functions. Respondent Frydman's assistant performed substantially all work on behalf of White

Acre Equities, Senergy USA (a startup entity formed by Frydman in 2009), construction of
Frydman's Hyde Park personal residence, and other personal matters.
25.

Shaykins personal assistant was engaged primarily in running all administrative

aspects of Shaykins personal life including bill paying, vacation planning, personal event
scheduling, and assistance in taxation, banking and investment activities, and processing of
Shaykin's family matters.
26.

Shaykin and Frydman both maintained that potential fees and profits earned on

transactions would not be payable to LambdaStar and not be used as a source of funds for
operations. However, Shaykin and Frydman allocated the following transaction costs:
o $47,000 incurred in pursuit of the City of Harrisburg Pennsylvania public
parking lease concession; and
o $66,000 incurred in pursuit of the City of Pittsburgh and Allegheny County
Airport parking lease concessions.
27.

Furthermore, Frydman and Shaykin allocated the following costs to LambdaStar

before meeting Claimant's contractual guarantees:

o $30,000 paid to the CEO of Senergy USA, a start-up company formed by
Frydman;
o $18,000 deposit made on office space paid on June 11, 2010 (at a point when
Respondents were fully aware of Management Company's inability to pay its
contractual obligation);
o $8,000

paid to an unsecured creditor in preference to LambdaStar's

contractual obligations; and

8

o $3,831 of payments of statutory and filing fees made on behalf of entities

owned by Respondents.
28.

Frydman and Shaykin directly or indirectly own 100% of LambdaStar and made an

unfunded nominal investment in capital.

29.

As of the date of Respondents' breach of Claimant's agreement, Respondents

provided no funds to LambdaStar.

All distributions to Frydman and Shaykin were recorded as

"guaranteed payments" for tax purposes.

Frydman and Shaykin utilized LambdaStar's "Seed

Capital" funded by outside investors to provide themselves with cash flow thereby ensuring
LambdaStar's inability to meet their obligations under Claimant's Employment Agreement.
30.

Consequently, the actions undertaken by Frydman and Shaykin resulted in a fraud or

wrongdoing against Claimant, which resulted in Claimant's claims hereunder.

31.

Pursuant to Paragraph 8 of the Employment Agreement, as result of Respondents'

breach of their payment obligations, Claimant is entitled to at least $297,211.54 in unpaid

compensation ("Accrued Obligations").
32.

As of the date of this Statement of Claim, despite prior good-faith demands,

Respondents have refused to pay Claimant any portion of the Accrued Obligations.
33.
Claimant fully performed his duties and obligations under the Employment
Agreement.
34.

Claimant has made both written and verbal demands for all payments due him under

the Employment Agreement, but to no avail.

35.

Accordingly, Respondents owe Claimant an amount of at least the Accrued

Obligations, of which zero was paid.

CLAIMS AND DAMAGES

COUNT ONE
(Breach of Express Written Contract)
36.

Claimant repeats, realleges, and incorporates by reference each and every

allegation previously made herein as if the same were more fully set forth at length herein.
37.

As of the date of this Statement of Claim, Respondents remain in material

breach of its express written agreement to pay Claimant compensation comprised of the
Accrued Obligations.
38.
Despite prompt demand to do so, Claimant was not paid any portion of the
Accrued Obligations as promised in writing to Claimant by Respondents.
39.
Accordingly, based upon the express promises to Claimant, Claimant is
owed and entitled to receive the full amount of his Accrued Obligations due to be paid to
him, of which he was paid zero.
COUNT TWO
(Breach of Fiduciary Duty- Respondent Jacob Frydman and Respondent Shaykin)
40.

Claimant repeats, realleges, and incorporates by reference each and every

allegation previously made herein as if the same were more fully set forth at length
herein.
41.

Jacob Frydman and Shaykin have violated their fiduciary duties of care,

loyalty; candor and independence owed to Claimant and have acted to put their personal
interests ahead of the interests of Claimant and LambdaStar.
42.
In their capacity as Managing Partners of LambdaStar, Frydman and
Shaykin were charged with performing their duties in good faith and with the degree of
care that an ordinarily prudent person would have.
43.

However, Jacob Frydman and Shaykin have violated their fiduciary duties

of loyalty by putting their personal interests over Claimant's and LambdaStar's interests.
44.
In addition, as a result of the Respondents' cash outflows, the
Management
Company did not have sufficient funds to honor Claimant's Employment Agreement.
45.
As a result of the foregoing breach by Frydman and Shaykin, Claimant
has been damaged in an amount to be determined at trial, but in no event less than
$297,211.54.
REQUEST FOR
RELIEF
WHEREFORE, Claimant requests that this Arbitrator order the following relief in
favor of Claimant:
I.

On Count One in the amount of not less than $297,211.54, plus

interest and costs;
ll.
On Count Two in the amount of not less than $297,211.54, plus
interest and costs;
Ill.
An award of prejudgment interest, costs and attorney's
fees; and
IV.
Such other and further relief that the Arbitrator may deem just
and proper.
Dated: New York, New York
December 7, 2010
Respectfully submitted,

Attorneys for Claimant

110 East 59th Street, 19th Floor
New York, New York 10022
Tel.: (212) 702-9000
Fax: (212) 702-9702