Root sues former CMO BC Silver
Last month, Root Insurance disclosed in an SEC filing that it has engaged outside counsel to conduct an internal investigation with respect to a series of marketing services transactions that a former senior marketing employee entered into in 2022.
Last week, Root filed a lawsuit against Brinson Caleb “BC” Silver, who served as the company’s chief marketing officer between November 2021 and November 2022. In the lawsuit, which includes other defendants, Root claims that Silver used the money he took – nearly $10 million – to buy three luxury properties in Miami and Venice, California.
According to the suit, within two weeks of signing his employment agreement, Silver sent William Campbell, the CEO of marketing agency Quantasy (also a defendant in the lawsuit), a series of text messages about retaining Quantasy as a marketing vendor. In February 2022, Root signed an agreement to pay Quantasy nearly $1.2 million for client partnerships, brand strategy and creative services/development support, according to the suit. After that, Silver and Campbell worked together to transfer money from Quantasy to Collateral Damage, which was owned and controlled by Silver, the suit stated. In April, Silver had Root enter into a second agreement with Quantasy for work valued at $14.7 million. Of that money, Collateral Damage received $9.1 million.
In late July 2022, Root initiated an internal audit to fully investigate and determine the cause of the suspiciously high marketing spend. On August 22 and August 23, 2022, Silver sent Campbell WhatsApp messages containing screenshots of Root’s confidential communications and internal audit findings, which did not uncover Silver and Campbell’s “carefully concealed fraud.” Silver wrote, “we literally are good. I just need for you to trust me and hold the line.”
The suit seeks an unnamed amount in damages and preliminary orders barring the defendants from taking any major financial moves with the properties Silver bought while the case is pending. Root also wants temporary restraining orders and preliminary injunctions to bar the defendants from disposing of their assets except as used in “normal day-to-day transactions.”
Bottom Line: Root is a company that’s shrinking and suing.