Cerebral sues former CEO over alleged unpaid loan

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Cerebral is suing its ousted cofounder Kyle Robertson, alleging he never repaid a loan received from the digital mental health company. 

According to a lawsuit filed last week in New York, Cerebral said Robertson defaulted on a nearly $50 million loan that he took out in January to buy 1.06 million shares of common stock in the company. Cerebral alleges Robertson is personally liable for more than half of the loan amount, plus interest and attorney’s fees. 

The suit said the cofounder of the digital mental health startup had the option to pay in cash or direct Cerebral to repurchase or cancel the pledged shares. Cerebral alleges Robertson “repeatedly asserted that he would not repay the loan despite his obligation to do so under the note within six months of his termination.”

Robertson was replaced as CEO of the company in May as Cerebral faced growing controversy over its prescribing practices, particularly for controlled substances like Adderall. He didn’t immediately respond to a request for comment from Bloomberg about the lawsuit. 

THE LARGER TREND

The embattled mental health company scooped up huge numbers of investor dollars last year, including a $300 million raise announced in December 2021. In April, a former Cerebral executive sued the company, alleging he was fired after he spoke up about unethical prescribing practices. Cerebral said it believed the complaints were “without merit.”

In May, the company confirmed it had received a grand jury subpoena from the U.S. Attorney’s Office for the Eastern District of New York over possible controlled substance violations. The Wall Street Journal has also reported Cerebral is under investigation by the Federal Trade Commission. The company has said it stopped prescribing most controlled substances. 

Earlier this month, Insider reported on a leaked letter from Robertson, arguing Cerebral unfairly placed blame on him for the company’s prescription policies that he faced homophobic remarks from Cerebral executives and board directors. The letter requested internal documents and records, which could be a sign of a possible upcoming lawsuit. 

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