Sunday, July 15, 2012

Dragon Systems founders suing Goldman Sachs $1 billion

The Bakers, 1990, NYTimes
Dragon Systems was the voice recognition company in the 1980s and 1990s -- they brought speech recognition from the research lab to the PC. (Founders James and Janet Baker, shown here, came from MIT). I recall using and reviewing DragonDictate back in the day.

The Bakers sold Dragon to Lernout & Hauspie for $580 million in stock, which sounds good at first, but L & H turned out to be a fraud and collapsed, leaving the Bakers with nothing.

The Bakers are now suing Goldman Sachs for one billion dollars.

The sale to L&H was brokered by Goldman Sachs, which collected millions of dollars in fees, and, it turns out that Goldman Sachs had previously considered investing in L & H, but had walked away after some digging into the company.

Does that sound familiar? A Wall Street firm making a commission by selling something that they themselves would not buy? This story grosses me out.