The title seems correct to me.

The unscrupulous founder tried to screw the author, but the author is legally protected. As a result of the potential resulting lawsuit, Mark Cuban will lose any investment that he made in the new company. Therefore Mark Cuban is the one who gets screwed here.

Presumably the next step is for Mark Cuban to either not put his money in that doomed corporate shell, or to open up a negotiation with the original investors and produce a mutually beneficial arrangement. Actually litigating this is in nobody's interest because that will just pay lawyers to verify the obvious result.

Did they not get screwed, though?

As far as I could tell from the article, StartEngine's contract was solid. The Style Club LA had no legal right to transfer assets and IP to a new company without permission from StartEngine, which they did not receive.

So Cuban and Shark Tank invested in a company which came to them under false pretenses, with a significant undisclosed liability. If that's the case, they absolutely got screwed - they probably aren't culpable for Style Club's lack of disclosure, but they did get tricked into a bad investment.

But is there evidence beyond the episode that the deal actually went through? I mean, it's just reality TV, surely a real negotiation happens afterwards where this stuff is checked, no?

A commenter below posted a link to prweb touting the Cuban investment in the company. So it seems like Cuban did the deal...

Edit: typo

I wouldn't take a press release from the company as evidence that the deal actually closed, especially if you suspect some slightly shady dealings.

Mark Cuban and Shark Tank did get screwed because somebody at the show production thought viewer rating is more important than filtering out entrepreneurs with bad intentions before being asked to put their reputation on line by announcing investments on national television which would expose the Sharks to real risks with implications.

If I was Mark Cuban, I'd be fucking livid at the production for not seeing the risks of doing due diligence at his own expense, both intangible and tangible costs.

"did get screwed because somebody at the show production thought viewer rating is more important than filtering out entrepreneurs with bad intentions before being asked to put their reputation on line by announcing investments on national television"

Listen - you have to take 'Shark Tank' with a little bit of 'Trumpiness'.

It's entertainment man.

The companies are chosen at least as much for their entertainment value as anything else.

Mark Cuban is not concerned about his 'reputation as a serious investor'. In fact, he's probably a joke in serious investment circles.

Mark is a 'pop culture' investor, he cultivates an image of what 'joe street' thinks a 'business investor' ought to be. Obviously - he is that to a great extent, he's putting real money on the line, but he's not a VC in the the more orthodox sense.

He'll have his team do due diligence after the fact, and do a no/go later on.

All of the ridiculous fights, 'isms' and 'sayings' etc. - they are like 'Trump tweets' - you think it will damage him, it won't. It's pop culture ... where having the eye-balls matter. He has legions of 'at home followers' who look up to him. That's his audience.

He might lose an inch of cred with people like you and I, but gain at least as much back from of the kinds of people that watch this show.

Because, for a television production company, ratings fundamentally are more important. Cuban knows it's an entertainment show first-and-foremost and he bought into that (and frankly, from what I can tell, loves that aspect of it).

I've never looked into the details, but I imagine the paperwork Shark Tank entrepreneurs sign includes something along the lines of "all deals agreed are non-binding and subject to completion of satisfactory post-show diligence blah blah". I'd be shocked if a decent percentage of the deals featured don't ultimately fall through for one reason or another at the diligence stage with zero impact on the investor's reputation, so I don't think Cuban will lose too much sleep over it.

Can't remember where I saw it, but recall reading that a significant number of deals do fall through. Mark Cuban actually had one of the higher success rates with about 80% of deals actually succeeding, and I think both Lori and Robert were at around 45%.

Edit: From this AMA on reddit with Mark Cuban 3 years ago, he says that about 25% of deals have something wrong (and therefore presumably don't work out).

https://www.reddit.com/r/IAmA/comments/15doqt/mark_cuban_thi...

Presumably Mark Cuban got screwed because if The Style Club ever scaled up and became a massive success, there is an obvious and near-indefensible (if Howard's evidence is accurate) shareholder lawsuit from the previous investors patiently waiting on the sidelines.

> Style Club LA vs Style Club Global

It's pretty much a done deal here. What's so special about Style Club? Why not something completely different like 21 Forever, Nasty Gal to keep in trend?

It seems like she made a critical error.