On January 28 2010, Sylvester Stewart, popularly known as Sly Stone, filed various complaints with the Superior Court of Los Angeles County against his former manager Jerry Goldstein. Some of the allegations included fraud, duress, breach of contract, and undue influence. As Reuters (2010) explains, Stones’ lawyer Allen Robert argues that Goldstein entered into a long-term contract with Stone, with Goldstein having properly planned how he would leave Stone, a penniless musician. Stone signed a contract with Goldstein, which he believed was a standard management agreement, but which turned to be a document designed to allow Goldstein to collect all Stone’s royalties. Following the signing of the contract, Stone became entirely dependent on Goldstein, as he was told he could not collect or receive any royalties directly. According to Stone’s lawyer, the fraudulent deals occurred in a period of 20 years, which by the end, Goldstein had told Stone that he could not receive any assets under his name. According to the allegations, Goldstein seized this opportunity to create his own companies and diverted many of the Stone’s payments under his name and his numerous companies.
As Kreps (2010) explains, Sly Stone also accused his former manager of filing a trademark for Sly and the Family without his permission and used it in diverting an estimate of $20-$30 of royalties to finance a lavish standard of living. It also argued that Goldstein had entered into a scheme with his collaborators in which they borrowed money from Mercantile National Bank against Stone’s future payments. Stone also argues that he was never provided with any accounting for his albums from the year 1989 and 2009 and, therefore, his former manager breached his fiduciary duty.
There is enough evidence that some of the allegations against Goldstein fall under fraud. From its definition, fraud is any intention to deceive for personal gain or to cause damage, especially financial damage to another person. From the allegations, Goldstein had been deceiving Stone for a period of twenty years, telling him that he could not get any assets under his name or his payments directly and instead used the royalties to enrich himself. This is fraud because from the signing of their contract; there were signs that Goldstein wanted to use the opportunity as the manager to use Stones’ royalties in enriching himself. Another allegation falling under fraud is whereby Goldstein files a trademark for Sly and the Family without Stone’s permission and uses it in financing a lavish lifestyle. This is a statement of a material fact in which the alleged had the knowledge that the trademark he was registering was untrue because they had not entered into any form of agreement with Sly Stone. He even goes ahead and uses the trademark not for the benefit of the company but for his own gains.
The other allegation that Goldstein collaborated with some other people to borrow money from Mercantile National Bank to damage Stone’s future royalties also falls under fraud. From this allegation, it is evident that Goldstein wanted to damage Stone financially by borrowing money from the bank under his name to indebt him in the future. The signing of the contract is also another form of cause of action that can be categorized under undue influence. It is evident that Stone signed the contract because he believed that it was an agreement in which Goldstein could serve Stone’s best interest. However, it seems that Stone had been wrongly influenced because the contract gave Goldstein the powers to transact all Stone’s royalties. However, according to me, there are no allegations that fall under duress. This is because for any duress to take place, some kind of coercion or violence must be involved for a person to act. From the complaints filed, there is no instance that Sly Stone was threatened, coerced, or put under any form of violence by the former manager in order to sign the contract.