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Hyperloop One co-founder paid his girlfriend $400K for PR work, lawsuit alleges

Anita Balakrishnan
John Gurzinski | AFP | Getty Images. Hyperloop One files countersuit and claims there was no improper relationship with PR vendor.

A co-founder of Hyperloop One paid his girlfriend as much as $40,000 a month for public relations services at one of his companies, a fiery new lawsuit alleges.

Hyperloop One paid about $400,000 for PR services between January 2015 and March 2016 to a woman who was the girlfriend of Shervin Pishevar, managing director of Sherpa Capital and co-founder and executive chairman of Hyperloop One, the lawsuit said. The payments started at $15,000 per month and reached as high as $40,000 per month, the lawsuit complains, "far above market value."

She is not identified in the lawsuit. But her former employer, Brian O'Shaughnessy, Pramana Collective partner and co-founder, said Pramana worked with Hyperloop, and that the complaint inaccurately portrayed the two companies' professional relationship.

"I have numerous relationships with numerous clients, so the money doesn't go directly to an individual — it goes to the firm," O'Shaughnessy said. "She was one of four or five employees, including myself, that worked on that account."

O'Shaughnessy declined to comment on the fees in the Hyperloop One contract.

Pishevar and his girlfriend became engaged to be married, but eventually broke it off, after which Pishevar terminated her relationship with the company, the lawsuit said.

O'Shaughnessy said that Pramana's role increased from an advisory capacity to a project role, and that the contract ended mutually around March 2016. He said he knew of the personal relationship between Pishevar and his staff member.

"The Pramana relationship goes back nearly a decade with Shervin Pishevar, founder of Hyperloop One," O'Shaughnessy said. "During the entire time, there were several Pramana team members on the Hyperloop One account."

Mixing business with pleasure is one of many gripes against Pishevar , who is accused in the suit of using the high-profile start-up for his own personal gain, such as holding parties, bolstering his venture capital fund and providing top-tier payouts to his brother, Afshin.

The lawsuit, filed by former employees, rips into a company that is considered at the forefront of a futuristic transportation project , the Hyperloop, that was originally envisioned by Tesla Motors (NASDAQ: TSLA) CEO Elon Musk .

Shervin Pishevar, who is well-known in Silicon Valley, was an early investor in Uber and hosted President Barack Obama at his home last year.

CNBC has asked for comments from both Pishevar brothers. Neither have responded, but Hyperloop One called the suit "unfortunate and delusional."

"The claims are pure nonsense and will be met with a swift and potent legal response," Hyperloop One said in a statement. "Frivolous lawsuits like this one have become all too common against start-ups that achieve breakthrough success."

The plaintiff's attorney responded: "The company's statement is long on rhetoric and short on facts."

This story has been updated with comments from the companies. CNBC's Ari Levy contributed to this report.

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