Yesterday, RideApart broke the news that Damon Inc., which was formerly Damon Motors, the all-electric motorcycle startup out of Canada, was being sued by multiple sources and was down to just 11 full-time employees. There was a lawsuit involving back rent by its landlord in Canada, a lawsuit from investor Andy DeFrancesco, and the company's 10-K filing stating that it had 13 employees in total, including two contractors.
It also had a bunch of debt, little to no revenue, no production schedule for its promised 200 mph, 200 miles of range electric superbike, and about half of those employees were executive-level leadership, the latter of which are important as they're all named in the last big lawsuit we're here to discuss today.
See, while the other two lawsuits have big implications for the company, the one brought by Damon's co-founder and former CEO, Jay Giraud, is the messiest of them all, and revolves around what Giraud believes to be his rightfully owed separation package when he was forced out of the company last year. Damon, for its part, has denied it's done anything but deliver what Giraud and the company agreed upon, but that's not what the founder thinks, hence the lawsuit.
However, the evidence presented by Giraud doesn't exactly paint him in the best light, brings DeFrancesco back into things, and saw the company deny nearly every single allegation made by Giraud.
According to Giraud's lawsuit, which was filed in February with the Supreme Court of British Columbia, he alleges that the board called him in one day on a whim, told him he could either resign or be forced out, gave him an ultimatum of taking their proposed severance and separation package or get nothing, and have to agree to everything that day.
"On or about December 4, 2024, at around 2:00 PM, the Board informed the Plaintiff that they were offering the Plaintiff a severance package in exchange for his resignation and required his attendance at a meeting with the Board later that day. On or about December 4, 2024, at around 6:00 PM, during a meeting between the Plaintiff and the Board (the “Meeting”), the Plaintiff negotiated the offered severance
package and reached an agreement with the Board regarding the terms of the severance package," states Giraud's lawsuit.
It added, "Given the approximately four (4) hours notice of the Board’s intentions before the
Meeting, the Plaintiff was unable to obtain independent legal advice prior to the Meeting. During the Meeting, the Board informed the Plaintiff that if he did not resign, the Board would terminate the Plaintiff for cause without legal basis. The Board knew that it did not have cause to terminate the Plaintiff’s employment agreement. On or about December 4, 2024, following the Meeting, the Board sent the Plaintiff an email confirming the agreed upon terms of the severance package, Board responses italicized, in exchange for the Plaintiff’s resignation," and resulted in a host of supposed concessions by Damon's board and executives, including Giraud's immediate resignation.
It's here, however, where the contention lies as Giraud states that he's owed not only back pay for his position, but also bonuses that were supposedly promised to him both in his resignation settlement and prior contract. Damon, for its part, has since responded to Giraud's claim and stated unequivocally that it denies all his allegations. In no uncertain terms, Damon responded with, "The Defendants deny each and every allegation contained in the Notice of Civil Claim." And so the case is still ongoing.
However, one part of Giraud's lawsuit must be put into the record, as it pertains to a letter that Giraud himself submitted as evidence to his claims, which doesn't paint the founder in any sort of good light, and was authored by Andy DeFrancesco, the same investor who's also suing Damon Inc. at present. Here's the letter.
"Mr. Giraud, We, the undersigned shareholders of Damon Inc. (the “Company”), are writing to formally place you on notice that certain shareholders are actively contemplating the commencement of legal action against you, personally, in connection with your conduct during your tenure as Chief Executive Officer of the Company. It has become evident that under your leadership, a series of decisions and actions resulted in significant harm to the Company and its shareholders, which include, but are not limited to, the following:
1. Under your oversight, shareholder capital was recklessly squandered. The Company’s funds were depleted without accountability, tangible results, or returns, reflecting gross negligence and a blatant disregard for fiduciary duty. You consistently made misrepresentations regarding the progress of the Damon motorcycles, as shareholders were led to believe that the motorcycles were advancing toward production. Despite the expenditure of approximately $75 million, the motorcycles remain in a non-production stage, raising serious concerns about the accuracy and integrity of public representations made under your leadership. 2. The decision to take the Company public through the business combination with Graffiti was executed in a manner that lacked proper diligence, strategic foresight, and planning. Instead of enhancing the Company’s value, this rushed transaction destabilized the Company’s
financial position and exacerbated existing challenges. 3. You engaged in nepotistic conduct by appointing your spouse to an executive role with a substantial and unjustified salary. This appointment was wholly unwarranted and constituted a clear misuse of corporate funds and a flagrant abuse of your position. 4. We have been apprised of credible allegations concerning your misappropriation of corporate funds during your time as CEO. This conduct, if substantiated, constitutes a severe breach of your fiduciary duties to the Company and its shareholders. 5. It has also come to the shareholders' attention that you made
significant financial commitments without the necessary board approvals, which have severely harmed the Company’s financial stability. Such actions represent a breach of your responsibilities and have compounded the damage already inflicted upon the Company. Given the foregoing, we wish to make it unequivocally clear that any attempt by you to interfere with the Company’s affairs or seek or compensation beyond what is lawfully outstanding for your prior service will not be tolerated. Should any such action be taken, we will immediately pursue all available legal remedies against you personally, and against the Company to the extent it enables or facilitates any such disbursement. Your departure from the Company must mark the end of your involvement. Any further disruption, interference, or entitlement you
attempt to assert will be met with swift and decisive action. This letter serves as a formal warning, and we strongly advise you to govern yourself accordingly.Yours truly,
Andy DeFrancesco, Sol Global and Benevolent Capital and Other Major Investors"
That's a damning appraisal of Giraud's tenure at the company, and wild that Giraud himself included it, but it brings up questions RideApart asked when we first started looking into Damon's tenuous situation last year. And it speaks to a number of allegations we heard from former employees who described Giraud's leadership in similar ways, i.e. petulant and chaotic, his appointment of his fiancee, Amber Spencer, who started in the marketing team and rose to Chief Marketing Officer in short order, and where all the investment made by folks like DeFrancesco went.
If this letter is true, however. Again, according to Damon Inc.'s response, it denies any and all allegations made, but Giraud states that "The Letter was broadly distributed to shareholders of the Corporate Defendant, directors of the Corporate Defendant, former directors of the Corporate Defendant,
potential investors, inter alia. The Letter contained allegations which were untrue and harmed the Plaintiff’s reputation. The Letter contained allegations which have a negative and harmful impact on the
Plaintiff’s ability to find a new employment or perform capital raising activities as might be expected of chief executive officer. The Letter was sent by or at the direction of the Corporate Defendant."
Either way, Giraud is looking for what he's supposedly owed, Damon Inc. is denying everything, and there are two other major lawsuits on the table against the company's dwindling workforce. Again, RideApart reached out to Damon Inc. for comment, but has yet to hear back at the time of writing. If and when we receive anything, we'll update our story.
