By Ray Downs
By Lindsay Toler
By Danny Wicentowski
By Lindsay Toler
By RFT Staff
By Lindsay Toler
By Allison Babka
By Lindsay Toler
The software industry badly needed products such as OutProtect, Briscoe recalls. Kalishman and Elbring, he says, saw that need early.
"It was a great idea."
By 2008, however, resentments that had smoldered for two years began to crackle. Elbring oversold the software's progress, Kalishman would claim in court filings, and was "hostile, abusive and demeaning."
Meanwhile, Elbring counters that Kalishman was "disruptive" in the office, a Blackberry slave who frequently broke up business conversations by taking personal calls. Worse, he was "literally obsessive compulsive" about expenditures, Elbring says, devoting hours to save a pittance on patch cables or desk chairs.
At one point, Elbring recalls, his partner shared an article about a psychological disorder he claimed to suffer from, a condition in which spending money causes actual, physical pain. (In a later affidavit, Kalishman denied that.)
Of course, the money was Kalishman's to spend. But Elbring says his partner's cheapness broke the company's stride: "We were trying to do something that had never been done before, and it was cool, but we needed to spend money to do it. We needed servers, real servers. Jim wanted to buy used servers. You just couldn't get anything done."
Kalishman did shell out for certain items, though. Such as condoms.
In the fall of 2008, Kalishman dropped hundreds of dollars on "OutProtect" condoms for a major trade show.
"He thought it was an attention-grabber," Elbring says. "There he was, handing out condoms as the company is falling apart."
By late 2008, the financier appeared to be losing faith. The big launch slated for the third quarter had to be delayed. The software still needed work. Loans that the start-up had received from family and friends the previous year were coming due, but Kalishman refused to renegotiate them.
Elbring grew distraught, fearing his vision and work would be wasted.
"This was my baby," Elbring says. "I really believed in it, to the point where I had a trust set up, and I put some of my shares in the trust for my kids."
Briscoe offered a solution. He would quit as the company's CEO, even while remaining on the three-man board of directors as a tie-breaker. Operations would shrink to just Elbring and two programmers — funneling all the remaining cash solely toward development.
Kalishman and Elbring agreed, and Elbring took the reins from Briscoe as the new CEO.
His first move was to get rid of several people from the office — including his partner and chief investor, Jim Kalishman.
"I would like to start fresh next week with...the operational team that is moving forward," Elbring wrote to Kalishman on November 7. "You are not a part of that team.
"So, can you please clean out your office and leave your keys and parking card on my desk over the weekend or first thing on Monday? Thanks."
Any goodwill that remained between the two partners quickly evaporated.
On November 22, Kalishman e-mailed Elbring to ask about the status of VeriPlay, the movie-rental software they'd sent to Russian subcontractors for tweaking.
"Complete," Elbring responded tersely, sparking the following e-mail exchange:
Kalishman: So you have a demonstrable VeriPlay product?
Elbring: In Russia. I can give you the address to go get it.
Kalishman: Is that a URL or physical address...
Elbring's tart little message was clear: The software is across the ocean, Kalishman. Go get it yourself.
Convinced he'd soon be out of work, Elbring set up a new limited liability company in December 2008. His plan for Cloud Entity LLC was vague, he says, but he wanted to keep his team intact and possibly keep working with the software he'd been toiling over — provided SecureAxis granted permission.
He floated the idea to Kalishman and Briscoe, offering them a 7.5 percent stake in the new venture in exchange for rights to the company's OutProtect software. They shot it down.
By this time, Tom Kalishman — Jim's older brother, and also a noteholder — had entered the fray. He lobbied to shut down SecureAxis and distribute the remaining $90,000 in funds. Elbring and Briscoe resisted.
The Kalishmans deny in court documents ever threatening to "ruin" Elbring, but the CEO certainly believed they intended to. He wrote to the Kalishmans on December 22: "What I would like to understand is how a lawsuit or threatened lawsuit against me personally helps further the cause of [the company]."
On January 6, Elbring tendered his resignation.
"I still believe in the OutProtect platform and idea," he wrote. "That being said, there is plenty of blame to go around for why we are in the situation we are in, and I am sickened at how far this has devolved."
The same day, Briscoe resigned as a board member.
"Words cannot strongly enough express my disappointment in the irrational behavior and immature patterns of engagement that have been demonstrated over the past several weeks," he wrote. "I hope you can find a forum to set your emotions aside and...preserve the value of the [company] assets."
His wish would not come true.
In Russian, that means "Jew." During Elbring's four years at SecureAxis, he referred to Kalishman as "the yevrei" at least seven times in correspondence with a friend in Russia.