A Los Angeles investor has sued Matthew Szulik, the former chairman and CEO of Red Hat, saying that he is pursuing an elaborate tax-evasion scheme that involves claiming millions of dollars in losses on illegal security sales.
Jason Galanis filed the suit in federal court in Massachusetts on Tuesday. It says that, beginning in 2008, Szulik started pressuring his investment advisors to get him out of investments that could not be easily sold.
The suit alleges Szulik ended up receiving $30 million in funds from Galanis or companies owned by Galanis in return for the unmarketable securities.
In a statement, Szulik said Galanis' lawsuit is an attempt to divert attention from his own efforts to recover stolen funds.
"For the past year, I have invested substantial time and resources in uncovering the fraud perpetuated on me and my family by our former investment advisor, TAG Virgin Islands, and its principal, James Tagliaferri, who have a close association with Mr. Galanis, as Galanis's complaint admits," Szulik said.
"Galanis's frivolous complaint, based entirely on speculation, not facts, is clearly just an effort to divert attention from the lawsuit we filed in federal court last month, alleging widespread fraud. The purported tax evasion scheme Galanis and his attorneys alleged against me is utter nonsense. No one would scheme to lose $60 million in order to deduct some losses on his taxes; any rational person would rather earn a profit and keep most of that profit after paying taxes.
Last month, Szulik filed a $60 million lawsuit against his family's former financial advisers. The suit accuses the investment management firm TAG Virgin Islands of losing $60 million through improper investments and fraud.
The Szuliks also accuse TAG of lending more than $4 million of their money to companies tied to Jason and Jared Galanis. The brothers were at one time affiliated with the Penthouse media group.