Ex-CEO Sues Parler Over 'Arrogant Theft,' Claims Site Was 'Hijacked'

The co-founder and former CEO of Parler has sued the conservative social media platform over his firing this year. John Matze claims Parler's leadership took away his 40% stake in the company in an "arrogant theft," intimidated and bullied him in an ouster he says was illegal and left him owed millions of dollars.

The lawsuit adds to the troubles that the conservative social media site has had since the Jan. 6 attack on the U.S. Capitol, which pro-Trump rioters had discussed on Parler. Shortly after the violence, Amazon Web Services refused to continue hosting Parler, and the site went dark. It has since come back online but is not yet fully functional.

Matze lost his job after quarreling with Rebekah Mercer, the conservative megadonor who bankrolled Parler. He says Mercer resisted developing policies to crack down on posts about the QAnon conspiracy theory, neo-Nazism, violence and domestic terrorism. Mercer is named as a defendant in the suit.

"Parler was now being hijacked to advance the personal political interests and personal advantages of the Defendants rather than serve as the free expression platform as originally conceived," Matze's suit says.

The suit, which claims breach of contract and defamation, also names Jeffrey Wernick, Parler's chief operating officer; interim CEO Mark Meckler; and right-wing personality Dan Bongino as defendants. None has yet responded to the lawsuit's allegations.

NPR previously reported that Matze was stripped of his entire stake in Parler when he was abruptly terminated. But his lawsuit, filed late Monday, adds new details to the fight over a social network favored by many Trump supporters.

After the Jan. 6 attack, Mercer "sought to co-opt [Parler] as a symbol or as the 'tip of the spear' for her brand of conservatism, and plotted to force Matze out," the suit alleges.

Lawsuit reveals where Parler's money comes from

Matze and his college roommate founded Parler as an alternative to Twitter, with looser rules about incendiary speech. Matze had owned 40% of the company; Mercer controlled the rest.

Mercer's stake in Parler initially was listed under a holding company called NDMASCENDANT LLC. That was done to keep her investment secret, according to the suit.

"Mercer herself believed that her involvement would serve as a distraction and would be potentially toxic to Parler's business objectives," the suit states.

The suit for the first time sheds light on the unusual financing of Parler.

For instance, the suit says the funding Mercer provided was characterized as a loan that Parler would have to repay eventually.

"The very same dollars that were the supposed 60% equity stake were also being claimed as debt," it alleges.

The suit alleges Mercer suggested that an unnamed friend of hers invest in Parler and valued the company at about $200 million — a supposed discount that would help her friend. But Mercer, the suit says, had discussed with Matze that Parler should be valued at at least $1 billion, which is what the company has estimated that it's worth in public documents.

Mercer did not return a request for comment. News of Matze's suit was first reported by the Las Vegas Sun.

In the fall of 2019, Mercer was losing interest in Parler, the suit says. Wernick, an investor at the time, allegedly provided funding in the form of a "convertible debt agreement" through entities including Dream Seekers Limited, based in Shanghai, the suit alleges.

Wernick did not return a request for comment.

The suit says it was Wernick's idea to tap conservative commentator Dan Bongino to promote Parler. For that, Wernick allegedly said, Bongino was entitled to an ownership stake. The suit notes it is unclear whether Bongino ever received any stake.

Around the fall of 2020, Mercer became interested in Parler again, according to the suit. She and Matze discussed the future of the company but became locked in disagreements about Matze's ownership stake and just how hands off Parler should be with the messages posted to its site.

"Avalanche of legal claims and expenses if he dared defy Mercer"

After Amazon Web Services severed ties with Parler and after Apple and Google removed the platform from their app stores, Matze says in the suit that he proposed implementing moderation policies that would "preserve the right of free expression for all points of view, but would preclude content that is inciting violence and acts of domestic terrorism."

The bright lines Matze claims to have advocated for would ban the conspiracy theory QAnon and neo-Nazi posts.

"Matze's proposal was met with dead silence, which he took to be a rejection of his proposal," according to the suit.

Matze says in the suit that Mercer brought in allies, including Wernick, to "strong-arm him out of the company."

Wernick allegedly threatened Matze with an "avalanche of legal claims and expenses if he dared defy Mercer," the suit states.

Wernick, according to the suit, told Matze not to consult his own lawyer and threatened that "he would be ruined" if he did so.

When he did talk to his lawyer about the escalating tensions at the company he co-founded, Matze says he was abruptly canned.

The suit says Mercer, through her aides, informed Matze that the "fair market value" of his ownership of Parler was determined to be worth $3.

"Thus, Defendants took Matze's property and smeared his name and asserted that his sole entitlement is to $3.00. That is the true nature of these Defendants," the suit says. [Copyright 2021 NPR]