MOD Systems CEO placed on leave following fraud allegations |
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MOD Systems CEO placed on leave following fraud allegations
Two of the top executives at heavily-funded startup MOD Systems have been placed on administrative leave, a move that comes a little more than a month after an angel investor filed a lawsuit accusing executives of fraud and embezzlement.
Chief Executive Mark Phillips and Chief Operating Officer Kenneth Gordon were placed on leave last Friday, according to sources familiar with the situation. Company spokeswoman Adrienne Lenhart confirmed the information, though she said both Phillips and Gordon remain employed at the company.
She did not know the length of the administrative leave nor the reason for it, though a source said it was directly tied to the fraud and embezzlement allegations.
Vice Chairman Anthony Bay -- who was traveling -- has assumed the interim CEO position.
In February, Bay, Gordon and Phillips were named in a lawsuit brought by Seattle angel investor Robert Arnold. It alleged -- among other things -- that Phillips "deliberately engaged in a massive fraud" against the company that included inappropriate travel and consulting agreements.
At the time of the lawsuit, MOD said that it was taking the charges "very seriously" and had formed an independent committee to investigate the matter.
The bios of the entire management team have been removed from MOD's Web site, with one source describing the company as a "rudderless ship." Lenhart had no further comment on the situation this afternoon.
Last September, the company landed one of the largest venture deals in the state when it attracted $35 million from Toshiba and NCR. MOD is the maker of a digital media kiosk technology that allows retailers to distribute music, movies, games and other entertainment products directly to consumers.
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