Nylon co-founders Marvin Scott Jarrett and his wife, Jaclynn, were denied a temporary injunction that would have halted the sale of the magazine to an investment group headed by Marc Luzzatto and his investment group, Santa Monica-based Diversis Capital.
The husband-wife, furious that Nylon was sold out from under them earlier this year, did get a California judge to rule that their 50-50 holding in a smaller joint venture, Nylon Licensing, could entitle them to a cash settlement down the line.
Years ago, to help with a cash flow problem, the Jarretts sold majority control of Nylon Holdings to a group of investors that turned out to have a shady past — and future.
Earlier this year those investors sold the magazine and the Jarretts, who started the title in 1999, learned they were out of a job.
Ex-CEO Donald Hellinger was sentenced to 36 months and now reside in a federal prison for laundering others’ offshore gambling winnings unrelated to his nine-year stewardship of the magazine. Ex-chief financial officer Jami Pearlman was sentenced to five years probation and fined $30,000 in connnection with the money laundering scheme and avoided jail time.
Judge Joanne O’Donnell ruled that Hellinger & Co. could not sell Nylon Holdings, where they had 51 percent control, without including Nylon Licensing, which includes Nylon Korea, Nylon TV and a clothing line deal with Urban Outfitters.
O’Donnell ruled that a breach of contract claim by the Jarretts is a “likely meritorious claim” but said she did not think an injunction was the way to go.
Luzzatto wasn’t upset at the result of the courtroom contest.
“The only purpose of the hearing was to determine whether an injunction should be issued and the court determined that it should not,” said Luzzatto. “We’re very pleased with the outcome.”