• by Steve McClellan  @mp_mcclellan, March 13, 2015

In December of last year David Gottlieb, Trustee for the KSL Media Estate, sued three of the bankrupt media agency’s former leaders for gross negligence -- derelictions that Gottlieb alleged were largely responsible for the company’s demise.

Now the trio has responded, basically saying that all of their actions were proper and that it was the actions of other unnamed persons that led to the company’s downfall.

The three former KSL executives -- founder Kal Liebowitz, former CEO Hank Cohen and former CFO Russell Meisels are represented by different attorneys although their responses to Gottlieb’s allegations are very similar. And each asked the judge hearing the case to toss Gottlieb’s complaint.

In each instance the three former agency executives cited a “not me” defense, stating: “Because of the conduct of persons and entities other than defendant constituted the intervening and superseding cause of all damages alleged in the complaint, the Trustee cannot recover on the claim for relief alleged.”

Cohen and Liebowitz also used identical language in their separate replies asserting that they “at all times relied upon the business judgement rule and acted in good faith in dispatching his duties to KSL and acted in its best interests.”

Meisels used similar verbiage declaring that he “at all times acted in good faith, was not grossly negligent and did not violate any duty of loyalty to KSL.”

The trio of former KSL managers also cited a number of technical reasons why Gottlieb’s suit was flawed, including an unreasonable delay in filing the complaint and statutes of limitations.

Gottlieb sued each of the former KSL executives for a minimum of $6 million (possibly more depending on his continuing investigation into the agency’s demise) for gross negligence and breach of their fiduciary duties while running the media shop.

KSL Media filed for bankruptcy in September of 2013, although Gottlieb alleged in his suit that the agency was insolvent for years before going belly up and that at least since 2006 the firm’s survival depended on its use of prepaid ad dollars from clients to fund expenses and operating losses.

Shortly after filing suit against Liebowitz, Cohen and Meisels, Gottlieb struck a deal with former KSL Client Cumberland Packing Corp. -- marketer of Sweet ‘N Low -- under which the company agreed to return to the KSL Estate $1.75 million of a settlement originally paid to the company by the agency in order to settle claims that millions in pre-paid advertising dollars had been used for other purposes by the agency when it was still in business. Gottlieb, who first petitioned the bankruptcy court to force Cumberland to return the money, termed the deal a “fraudulent transaction.”

According to court papers, Liebowitz and Cohen both received payments linked to that settlement and signed so-called “negative covenants” making them liable for any portion of the original $7 million in settlement money not paid to and retained by Cumberland.

Since leaving KSL Liebowitz has filed for personal bankruptcy. He has operated a consulting company and a barter trading company, Eworld Asset Trading, which in court papers Liebowitz indicated was being dissolved.

Since 2013 when he left KSL shortly before its bankruptcy filing Meisels has been CFO at a Beverly Hills, CA firm called Mob Scene Creative + Productions.

And Cohen, who left KSL at about the same time Meisels did, formed a new media agency called Windstar Media -- described as a “full service omni-channel media planning and buying company,” that has the backing of the InterMedia Group of Companies. Earlier this year, WindStar reported winning two new clients including Jim Fannin Brands, run by motivational coach and speaker Jim Fannin.

Windstar also said it won the media account for Health First Nutrition, which is launching a product called “EyeComplexCS Nutraceutical.”