An L.A.-based law firm has filed a billion-dollar class action lawsuit against the company behind Chicken Soup for the Soul and Redbox, accusing the company of engaging in an elaborate "Ponzi scheme."
As KNX News' Nataly Tavidian reports, the lawsuit alleges that the entertainment company defrauded employees, taking money away from them by deducting wages from medical insurance and allowing policies to be canceled.
Attorney Michael Alder says about 2,000 employees are left with millions of dollars of unreimbursed medical expenses.
"We certainly anticipate over a billion dollars worth of damages, " said Alder. "Just alone, we anticipate half a billion dollars worth of stolen money based on the losses of wages, withholding, et cetera, punitive damages, and other damages we expect also to follow. So given the breadth, magnitude, and scope, this will certainly exceed a billion dollars."
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KNX News reached out to Chicken Soup for the Soul Entertainment and Redbox for comment, but its former spokesperson said they are no longer with the company since it entered Chapter Seven bankruptcy and is being liquidated.
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