(Updated: Aug. 8, 2011: AVT Inc.'s suit was dismissed with prejudice, which means that the company is forbidden from bringing such action again. Neither Randall Lane nor Penguin Books nor the Daily Beast had to file a response to the suit.)
An update to the Randall Lane-Lenny Dykstra pay-for-stock-plug scandal: AVT Inc., the company Lane – former owner and publisher of Doubledown Media — alleges in his new book paid former baseball star-turned-finance guru Dykstra to plug its stock, has filed a $100 million libel suit against Lane.
"We are simply not going to allow anyone to publicly defame AVT in this matter without taking action against them," the company’s founder, Shannon Illingworth, said in a statement. The suit was filed this week in Orange County Superior Court.
Lane was not immediately available for comment. His book publisher, Penguin, did not immediately return a request for comment.
In his book “The Zeroes,” Lane, who is now an editor-at-large for the Daily Beast, claims Dykstra was secretly paid $250,000 by AVT to plug its stock on TheStreet.com, the website owned and operated by CNBC “Mad Money” host Jim Cramer.
Lane admits that Cramer likely “had no knowledge of Dykstra's 'pay to plug' scheme — an arrangement that could well lead to a Securities & Exchange Commission investigation.” But his “relentless endorsements and promotion of the ballplayer's stock-picking over the years” elevated Dykstra to the point where he could pull off scams like this one.
On Monday, Cramer responded to TheWrap: "I haven't read the book but as the author, Randall Lane, points out I knew nothing about this issue. Of course it is terribly disappointing."
Lane claims Dykstra was introduced to Illingworth by Richard O'Connor, who is the source of Lane's allegations. But according to Hedgetracker.com (via Daily Finance) "O'Connor may have a serious ax to grind against AVT: the company had fired him 'for not delivering on his fundraising and marketing commitments' and then sued him — also for libel and false claims — in California State Court." AVT won that case.
