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While it’s hardly unusual for seasoned entrepreneurs to become embroiled in the occasional lawsuit during the course of doing business, the cautionary tale of James N. Haltiwanger Jr. seems more like a plot line from a John Grisham novel than a true story. Indeed it might be only in today’s Internet economy that a South Carolina entrepreneur could end up wrangling with two legal disputes and an investigation by the FBI — all at the tender age of 21. Whether he ultimately is viewed as victim or culprit, Haltiwanger, who created HighSchoolAlumni.com three years ago as a senior at A.C. Flora High School in Columbia, S.C., has learned more hard lessons in his young career than most do in a lifetime. “He’s not in an enviable position,” says Robert Muckenfuss, an attorney with the McNair Law Firm in Columbia who represents Haltiwanger. “The FBI broke into his dorm room and confiscated his computer. He’s had to defend a civil lawsuit.” And his latest legal scuffle is a suit he filed earlier this month against Snowball.com, which bought his alumni networking site for $1 million and stock last year. According to Haltiwanger, Snowball agreed to pay him $4,167 a month to work 20 hours a week as an independent contractor on the site for one year. Haltiwanger’s suit charges Snowball with breach of contract, paying him for only three months. Snowball spokesman Scott Sowry said the San Francisco company has not yet received a complaint and therefore could not comment. Haltiwanger, who now has another job, says he was relying on his Snowball paycheck to cover his living expenses at Clemson University, where he is a third-year student studying business management with a minor in entrepreneurship. His father, a former stockbroker, told him to invest the money. “I bought a car and a few other things, but nothing extravagant,” Haltiwanger says. He also distributed nearly half of the money from the Snowball sale to friends and family who invested in his venture, as well as two former co-workers who helped him develop the site. Meanwhile, Haltiwanger is also on the receiving end of another lawsuit filed by two colleagues who worked with him on HighSchoolAlumni.com, George Baker and Melissa Hubbard. Earlier this year, Haltiwanger launched another site, GIBuddies.com, while Baker and Hubbard created a competing site, GIsearch.com. Both sides acknowledge that they knew of each other’s ventures, but beyond that, their stories diverge. At the end of March, shortly after HighSchoolAlumni.com launched, Baker said he discovered an “indication of unlawful access” to his servers. He notified his lawyers, who called the FBI. The FBI is now investigating whether Haltiwanger violated federal anti-hacking rules, but no charges have been filed, Muckenfuss says. Baker and his contingent also filed a civil suit against Haltiwanger, who countersued in return. “When this started, I was shocked and thought, ‘This was our friend,’ ” Baker recalls. “I thought they were friends,” echoes Haltiwanger. “It’s probably the most disheartening thing that ever happened to me.” The civil case is on hold until the criminal investigation is resolved, although settlement negotiations are under way, Muckenfuss says. The U.S. Attorney’s Office and FBI agents in Columbia did not return calls for comment. The seed for HighSchoolAlumni.com — Haltiwanger’s Net debut — was planted while he was a senior in high school playing pool one night with friends. As they wondered how they would keep in touch after moving away to different colleges, one friend suggested that Haltiwanger, the “computer guy” in the group, create an online address book, Haltiwanger recalls. Then Haltiwanger, already in charge of his high school’s Web site, was asked to create an alumni site. “It clicked,” he says. He realized he could create a single site to track alumni at all schools. HighSchoolAlumni.com went on to become one of the top 500 addresses on the Web. Since selling it to Snowball, Haltiwanger has watched a competing high school alumni site, ClassMates.com, receive $11 million in funding and plaster banner ads all over the Internet. “In my mind, we should have been there first,” he says, noting that part of the reason he sold his brainchild to Snowball was because he had expected to have a role in developing HighSchoolAlumni further. But given the FBI investigation and the other lawsuits involving the GI sites, the Snowball situation has turned out to be the straw that broke that camel’s back, Haltiwanger says. He insists that he has no regrets about selling his creation, but he sounds much older than his 21 years when he concludes: “One of the things that I’ve learned is you can’t really look back at your decisions.” Related articles from The Industry Standard: Snowball.com Caught in Layoff Storm Snowball.com Piles Up Traffic Snowball.com Rolls on Copyright (c)2000 The Industry Standard

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