Investor sues ‘Stargate’ computer game developer

Mesa-based Cheyenne Mountain Entertainment and its founder and principal owner are named as defendants in a lawsuit filed by investors who claim he took and used company funds.

Gary Whiting’s company was granted a license by MGM in 2006 to develop an online roleplaying game based on the Stargate film and TV series. Those efforts stalled as the game’s financial backing came into question, but one executive expressed optimism as recently as Aug. 31.

The suit also names as a defendant Mmoguls, another company owned by Whiting. Mmoguls is described in the court documents as “an incentivized gaming network marketing company through which customers would pay to play online computer games and have the opportunity to create a network through which a customer could be paid by encouraging others to sign up with Mmoguls, Inc.”

If that looks and sounds like it’s too good to be true, you’re not alone. How does MGM feel about their brand’s involvement with such a business model … especially with a brand-new TV series, Stargate Universe, launching TODAY on Syfy, and no lucrative video game to go with it?

I wrote in July about Mmoguls pitch materials that feature the Stargate brand. An investor’s affidavit filed in support of the plaintiffs in the lawsuit potentially reveals more of the relationship between Stargate Worlds and Mmoguls:

At that time, Gary Whiting also owned Cheyenne Mountain Entertainment, Inc. (“CME”) and its subsidiary, Cheyenne Mountain Games (“CMG”).
CME and CMG partnered with Mmoguls to provide Mmoguls with video game content for MMoguls subscribers.
CME presently owns the license to develop a massive multi-player online role-playing game based on the Stargate franchise. The game will be entitled Stargate Worlds.
Mmoguls, Inc. was designed to be the company through which CME would market the Stargate Worlds video game and make it available to the public.
Despite the other online games provided by CME and CMG, Stargate Worlds video game was/is essential to the viability and stability of Mmoguls, Inc. as a company.

The investor, identified as Vick Deauvono, says Mmoguls brought in about $900,000 within a month of its launch, $400,000 of which was released to accounts authorized by Whiting to pay earned commissions and operating costs — but checks began bouncing due to insufficient funds, and the investor “learned that Gary Whiting had transferred the money from the Mmoguls, Inc. account to his own personal accounts and that the money had been used for Gary Whiting’s personal use.”

In all, Gary Whiting took at least $350,000.00 from Mmoguls, Inc. unbeknownst to anyone else, including the CEO, Brent Barton.
I was in a meeting, after I discovered that Gary Whiting had taken Mmoguls, Inc. money for personal use, with potential investors in Mmoguls, Inc. and Stargate Worlds when I overheard a conversation between Jeff Knowles of Vision Bankcard and Gary Whiting.
From that conversation, I learned that Gary Whiting asked Jeff Knowles for additional funds from the Vision Bankcard account in order to pay the commissions that were due the affiliates.
Due to this self-dealing by Gary Whiting, the majority of the management of Mmoguls, Inc. left the company taking with them extensive experience in and knowledge of the network marketing arena.
These former employees, including former CEO Brent Barton, have created a new multi-level marketing company called MonDelis, which employs a business model almost identical to Mmoguls.

He then goes on to describe the business model again and how Cheyenne Mountain obtained the licenses, raised the money from investors, and created the studios necessary to create Stargate Worlds, which was to be marketed in part through Mmoguls’ social network — and how he has learned that MGM is reviewing the license and could revoke it from Cheyenne Mountain if the company cannot show it can fund the game:

Without the license for Stargate Worlds, Cheyenne Mountain Games, Cheyenne Mountain Entertainment and Mmoguls will not maintain the viability necessary to pay its obligations or to make money.
Without the license for Stargate Worlds, the entire money making opportunity of Mmoguls, CME and CMG will have disappeared.

Stargate Worlds is a game with a ready-made market of sci-fi fans. It stood to rival online RPGs like World of Warcraft and the upcoming Star Trek Online and Star Wars: The Old Republic. But this lawsuit shows that it may have been doomed by its affiliation with multi-level marketing.

A copy of the lawsuit, dated Sept. 9 and obtained by the online RPG news site Ten Ton Hammer, identifies the plaintiffs as Rob and Nedra Roney McKell, who are represented by the Dodge & Vega law firm of Mesa. The case is assigned to Maricopa County Superior Court Judge Karen Potts.