InVivo Therapeutics (OTC:NVIV) said it’s suing former CEO Frank Reynolds, who stepped down last year citing health reasons, alleging that he ran up $500,000 worth of "personal and/or exorbitant expenses."
Cambridge, Mass.-based InVivo said the lawsuit, filed in November 2013 in a Massachusetts state court, accuses Reynolds of "breaches of fiduciary duties, breach of contract, conversion, misappropriation of corporate assets, unjust enrichment, corporate waste."
"The lawsuit involves approximately $500,000 worth of personal and/or exorbitant expenses that the company alleges Mr. Reynolds inappropriately caused the company to pay while he was serving as the company’s chief executive officer, chief financial officer, president and chairman of the board of directors," InVivo said in a regulatory filing. InVivo is seeking damages and an accounting of the allegedly improper expenses, according to the filing.
Reynolds counter-sued in December 2013, according to the filing, alleging breach of contract, breach of the covenant of good faith and fair-dealing, and tortious interference with a contract. Reynolds wants monetary damages and a declaratory judgment, InVivo said.
"The counterclaims involve Mr. Reynolds’s allegations that the company and the board interfered with the performance of his duties under the terms of his employment agreement, and that Mr. Reynolds was entitled to additional shares upon the exercise of certain stock options," according to the filing.
InVivo said it filed its counter-claim in the Middlesex Superior Court Jan. 9 and expects discovery to begin soon.
InVivo, co-founded by Reynolds based on technology out of MIT professor Robert Langer’s lab, is developing a treatment for spinal cord injury. Reynolds left InVivo suddenly in August 2013, citing a "medical condition." Back in 2009 and 2010, Reynolds told MassDevice.com and Inc. magazine that he’d suffered spinal cord injury of his own in a 1992 car accident that left him partially paralyzed. The executive later retracted the story, saying instead that he injured his back loading a truck and suffered spinal problems after a 1992 surgery to treat the injury. Reynolds is now CEO of PixarBio, a startup that’s developing treatments for Parkinson’s disease and epilepsy.