The deal, which was a $580 million sale of a highflying technology firm, Dragon Systems, had just received the approval from its board and the congratulations had just begun to flow. But even then , there was a general sense that something was amiss.
The Chief Executive from Dragon had been receiving congratulations and greetings from everywhere but he didn’t hear from the own bankers, Goldman Sachs. In his email to the other bank, he wrote that he hadn’t received anything from the side of Goldman and wondered whether they knew something he didn’t.
Even after a decade of this, questions are still reverberating through a legal battle between Goldman Sachs and the founders of Dragon Systems. Also there are a herd lot of questions about how the financial giants like Goldman operate and what they owe to their clients.
Dragon, the voice technology firm which was turned into a multimillion dollar enterprise by its founders made a decision in 1999 to turn to Goldman, when questions regarding its buy out began to roll out.
This was much before the sub prime era and much before the occupy Wall Street and complaints about the bankers. Goldman had then become synonymous with the Wall Street Greed.
The takeover for Dragon had gone horribly wrong. Goldman had charged millions of dollars in fee and the founders of Dragon were left with nothing when the buying firm Lernout and Hauspie turned out be nothing but a spectacular fraud. Bakers, the founders of Dragon later learnt that Goldman had once considered investing into L&H before they dug into the actuals and cancelled it.
Bakers are still fighting in Boston for damages worth $1 billion which is much more than Goldman paid as damages after misleading investors during the subprime mortgage era.