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Former Sequoia Partner Wins Extortion Suit Against Ex-Mistress

Lizette Chapman

(Bloomberg) -- A salacious three-year legal battle involving a former partner at Sequoia Capital, a onetime exotic dancer and a promised $40 million hush money payment has come to an end.

A California Superior Court judge ruled in favor of venture capitalist Michael Goguen, finding his former mistress Amber Laurel Baptiste committed fraud and extortion when she threatened to publicize false claims, including that he gave her a sexually transmitted infection. The judge ordered Baptiste to pay back the full $10.25 million she got from Goguen. After a three-day trial that Baptiste didn’t attend, the court also approved a restraining order to protect Goguen and his current wife, Jamie Goguen.

Unless an objection is filed by the end of next week, the Dec. 20 ruling becomes final and caps a saga that sent Silicon Valley’s gossip mill into overdrive and extinguished Goguen’s two-decade investing career at one of world’s most prestigious venture firms. Baptiste’s allegations surfaced just as the #MeToo movement was beginning to take shape, drawing heightened scrutiny of executive wrongdoing. The decision is a rare moment of possible redemption for a powerful man accused of sexual misconduct.

Baptiste said she stands by every claim she made in her initial lawsuit and plans to file an objection to the ruling before the deadline. She said she has already spent nearly $5 million of the money Goguen gave her on legal fees and is in the process of hiring what would be her sixth attorney. “I will continue to fight this all the way to the end,” Baptiste said.

Goguen said by phone from his home in Whitefish, Montana, that the ruling concludes a “heartbreaking and devastating” chapter of his life. He said many friends and colleagues have treated him “like a leper” since Baptiste went public with her allegations in 2016. Even after defeating Baptiste’s original suit in September, the scandal continued to impede Goguen’s efforts to operate his new VC fund. Goguen stopped short of celebrating the verdict as a victory. “I’ve become jaded,” he said.

At Sequoia, Goguen specialized in finding and funding technology startups that specialized in networking and cybersecurity. Initial public offerings and sales of some of those companies to Cisco Systems Inc. delivered riches to Goguen and the VC firm. Baptiste’s suit in 2016 had an immediate impact, with Sequoia scrubbing Goguen from the company website and removing him from the boards of 11 companies. Sequoia said at the time that the allegations against Goguen were “unproven and unrelated” to the firm. “Still, we decided his departure was appropriate,” Sequoia said. A spokeswoman for the firm declined to comment on the new ruling.

Goguen and Baptiste have said they met in 2002 at strip club in Dallas where she was working, and they began spending time together. In 2014, Goguen paid Baptiste $10 million in what was to be the first of four installments to sever communication and keep details of their affair and other allegations under wraps.

In her 2016 complaint, Baptiste alleged that Goguen sexually abused her for more than a decade, infected her and then reneged on a promise to pay the full $40 million. Goguen countersued, calling the affair consensual and accusing her of extortion. Goguen claimed he stopped paying her because she violated their contract by continuing to contact him and then broke their confidentiality agreement with her suit.

Baptiste soon parted ways with her attorney and claimed that Goguen’s lawyers were working with a private investigator to stalk her. She has said Goguen was using his wealth and power to overwhelm her.

Last year, Goguen defeated Baptiste’s suit before it went to trial. A judge ruled in September that Baptiste had failed to provide evidence for her claims or undergo mental and physical examinations required by the court.

In the December decision on Goguen’s countersuit, Judge Danny Chou ruled that Baptiste forged the date and results of medical tests accusing Goguen of giving her the infection. He found that Goguen agreed to the payment in order to stop Baptiste from spreading false claims to create a “media circus.”

Chou also found Baptiste fraudulently solicited donations from Goguen for a nonprofit she established called Every Girl Counts. The organization was supposed to help feed, clothe and shelter three dozen young girls. But Baptiste didn’t provide any such services and instead spent more than $40,000 of the charity’s funds to commission fantasy paintings of herself, according to the ruling.

Seeing the countersuit through was a necessary step toward clearing his name, Goguen said. After defeating Baptiste’s suit a few months ago, Goguen said the conclusion had the opposite effect of what he expected. Silicon Valley Bank and an angel investing group refused to work with him because, even though the allegations weren’t true, they didn’t want to invite negative news coverage, Goguen said.

Goguen hopes the new ruling puts the matter to rest. He said if Baptiste pays back the money, he’ll donate it to charity. Goguen is now focused on his Montana-based VC firm, Two Bear Capital. He said he contributed $15 million to the initial fund, which has backed seven startups. He has no plans to return to Sequoia or Silicon Valley.

The case is Baptiste v. Goguen, CIV537691, Superior Court of California, San Mateo County (San Mateo).

(Updates with Baptiste comment in the fourth paragraph.)

To contact the reporter on this story: Lizette Chapman in San Francisco at lchapman19@bloomberg.net

To contact the editors responsible for this story: Mark Milian at mmilian@bloomberg.net, Peter Blumberg

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