* Suit provides new details of self-dealing and diversion of assets,
       claims establishment of partnerships and LLCs to benefit insiders,
       charges violation of federal securities laws, and adds claims of
       'improper distribution' that makes defendants personally liable.
       More shareholders join suit.

    LOS ANGELES, March 1 /PRNewswire/ -- Citing new information which came to
their attention in financials and redacted board minutes received after
repeated requests, the preferred shareholders of Idealab, Inc. late yesterday
filed an amended lawsuit against the technology "incubator" and its top
officers, directors and controlling shareholders with new details of
allegations of self-dealing and diversion of corporate assets, the
establishment of partnerships and LLCs which benefit insiders, and charges of
violations of federal securities laws.  The amended complaint also makes a new
claim of "improper distribution" that makes defendants personally liable and
adds more shareholders as plaintiffs.
    The suit, which alleges abuse of authority, self-dealing, usurpation and
diversion of corporate assets to the harm and detriment of minority
shareholders and improper distribution of corporate assets, seeks, among other
things, in excess of $1 billion in damages, dissolution and liquidation of
Idealab and removal of all directors.
    Besides Idealab, the lawsuit names as defendants its Chairman and Chief
Executive Officer Bill Gross; his fiancee Marcia Goodstein whom he appointed
as Idealab's President and Chief Operating Officer; Chief Financial Officer
Bradley Ramberg; other Idealab officers and directors Robert Kavner, Howard
Morgan, Benjamin M. Rosen and Lawrence Gross (Bill Gross' brother); as well as
Douglas McPherson.

      - Allegations of Self-dealing and Diversion of Corporate Assets -

    The suit notes that, while Idealab racked up losses of more than
$600 million from fiscal 2000 to fiscal 2002, the combined salaries and
bonuses of Gross and Goodstein, who are engaged to be married, more than
tripled from $440,000 to $1.4 million per year.
    Those figures do not include the value of the use of Idealab's corporate
jet and life insurance premiums paid by the corporation, which added $47,000
to Gross' compensation and approximately $107,000 to Goodstein's, the lawsuit
said.
    The lawsuit goes on to say, "The more money Idealab loses, the greater the
benefits the defendants dole out to enrich themselves and ... the greater the
compensation for Gross and Goodstein.".
    The lawsuit also says that on a single day, March 15, 2000, soon after the
$1 billion was invested by the shareholders, the defendants:

    *  Spent more than $600 million in cash and gave away more than
       $250 million in Idealab preferred stock, investing in 26 speculative
       companies, including some in which the defendants personally owned
       stock.

    *  Went on a personal spending spree with corporate money in which they
       ratified personal loans to eight Idealab directors and officers
       totaling $35.7 million and granted themselves and others $46 million
       worth of stock options for $40 million.

    Months later, the suit says, the Board members "took a number of actions
to enrich themselves," including:

    *  Forgiving a full-recourse loan of $618,800 from Idealab to Bill Gross'
       brother, Lawrence Gross;

    *  Awarding Kavner annual compensation of $60,000, applied retroactively
       for six months;

    *  Giving Bill Gross a $250,000 bonus;

    *  Giving Goodstein a $250,000 bonus;

    *  Increasing Morgan's base salary from $220,833 to $350,000;

    *  Increasing Ramberg's base salary from $139,583 to $225,000 per year;

    *  Giving Gross, Goodstein, Ramberg and Morgan 2,500, 2,500, 1,000 and
       850 shares, respectively, in a limited liability company that Idealab
       established ... to acquire equity stakes in Idealab's operating
       companies;

    *  Approving a tender offer and stock repurchases to directly benefit the
       defendants as common stock holders.

    The lawsuit adds, "Defendants' usurpation of Idealab's assets and
self-dealing is not limited to the millions in loans, rising salaries (and)
bonuses  ... .  There is additional major self-dealing."  Examples listed in
the lawsuit include:

    *  Allowing Gross and others, including Rosen and Morgan, to personally
       receive millions of shares from Idealab subsidiaries and affiliate
       companies for nominal consideration, including, most recently,
       Gross receiving options at minimal cost for 1 million shares of
       Evolution Robotics;

    *  Repurchasing, for no valid business purpose, $1.87 million of worthless
       common stock held by former Idealab director John F. Welch Jr. at the
       stock's full original purchase price;

    *  Giving Ramberg a gift of $387,340;

    *  Giving McPherson a gift of $394,970;

    *  Creating and using limited partnerships and limited liability companies
       to siphon money from Idealab and related companies to personally enrich
       Gross and other insiders;

    *  Causing Idealab to invest at least $57 million in high-risk,
       money-losing ventures in which Gross and Rosen held personal stakes;

    *  Repricing company stock options to give windfalls valued at
       $6.76 million to Goodstein and $2.43 million to Morgan;

    *  Causing Idealab to fund Gross' divorce by having Idealab replace
       150 million shares and/or options that Gross surrendered to his ex-wife
       in their divorce settlement.

               - Allegations of Violation of Securities Laws -

    With respect to allegations of violation of securities laws, the lawsuit
states, "With willful intent to conceal and deceive, the individual defendants
suppressed and hid from plaintiffs, and the SEC, that Idealab was subject to
the Securities Exchange Act of 1934 ... .  Defendants also concealed that
Idealab is subject to regulation under the Investment Company Act of 1940,
thereby concealing the precipitous and dramatic decline in the values of
Idealab's 'incubated' or operating companies."
    Idealab had obtained an exemption from the Investment Company Act, but
concealed that it was not in compliance with it, the lawsuit says, adding,
"If Idealab had complied with the law and made the required disclosures, the
SEC and the plaintiffs would have been aware of material facts demonstrating
that Idealab is not qualified for its ... exemption and is, therefore, subject
to registration as an 'investment company,' i.e., a mutual fund."
    "Defendants concealed these material facts because the loss of this
exemption would be fatal to Idealab," the lawsuit says.  "Idealab ... would be
forced to cease operations, dissolve and refund plaintiffs' investment.  The
defendants, in turn, would lose their jobs and corporate benefits and could
not continue their self-dealing ...  Gross would be forced into personal
bankruptcy."
    Because Idealab is operating as an unregistered "investment company,"
plaintiffs are entitled, among other things, to redemption of their
investments, the suit says.

       - Allegation of Lack of Independence by Officers and Directors -

    Idealab's officers and directors "have abdicated their independence and
objectivity in blind obedience to Gross and Goodstein and in exchange for
personal benefits from Idealab," the suit says, adding, "There are no
independent, disinterested members of Idealab's Board of Directors."
    "Despite its massive losses and lack of future prospects, "the lawsuit
adds, "defendants have boasted they will use Idealab to continue funding
Gross' 'ideas' for at least eight more years, the effect of which will be to
deplete the remaining assets of Idealab to perpetuate defendants' salaries,
perks, loans and other self-dealing and keep Gross afloat to preserve the
extravagant lifestyle to which he and Goodstein are living and have become
accustomed."
    "In this post-Enron era, this case is all about a company that flouts
federal securities laws and state laws," said Louis (Skip) Miller, a partner
in the law firm of Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro
and attorney for the preferred shareholders.

                                - Plaintiffs -

    Plaintiffs in the case include Kline Hawkes California SBIC, L.P.;
Moore Global Investments, Ltd.; Moore Overseas Technology Venture Fund, LDC;
Moore Technology Venture Fund LLC; MS II, LLC; T. Rowe Price Science &
Technology Fund; Dell USA, L.P.; Investor (Guernsey) II Ltd;
Remington Investment Strategies, L.P.; Investor Group L.P.; Ignition, L.L.C.;
Spectrum Equity Investors III, L.P.; Spectrum III Investment Managers' Fund,
L.P.; SEI Entrepreneurs' Fund, L.P.; Technology Partners I, L.P.; HLHZ/Tower
Investments, LLC; Essex Private Placement Fund II, L.P.; UTA Holdings;
Petersen Properties; William Morris Agency, Inc; W. Investment Partners,
L.L.C.; XL Ventures Fund III, L.L.C.; and individuals Brad Silverberg,
John Ludwig, Jon Roberts, Chris Peters, John Anderson, Cam Myrhvold,
Richard Tong, Oliver McBryan, Jeffery Berg, Guy Oseary, Guy Starkman,
Cindy Margolis, Joel Rosenman L.L.C., Brad Senet, Alan Markowitz,
Stanley B. and Cathy Alexis Crair, Jim and Maryann Maloney, Mike and
Lynn Maloney, and Scott and Beth Greenbaum, as well as the Monroe A. Greenbaum
Revocable Trust UDA and Ruth Greenbaum Revocable Trust UDA.

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