Sandbox Financials Allegedly Inflated Before Private Equity Sale

Alaris Royalty Corp. was hit with a lawsuit in Delaware Chancery Court claiming it systematically inflated Sandbox Advertising’s financials through “extensive accounting fraud” before engineering its sale to MERGE, a competing ad agency backed by Keystone Capital Inc.

Despite knowing “full well” about the “pervasive and widespread” fraud, Alaris “went to great lengths to conceal it” and actively interfered with MERGE’s due diligence efforts by offering “blatantly false” representations “in an effort to hide the fraudulent practices” so the deal could close, the complaint says.

The partly redacted suit accuses Alaris of fabricating $6.1 million in Sandbox income before its ...