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PROVO - Prosper Inc.'s legal problems have hit the national media and have been analyzed and mocked by bloggers.

Just typing the words "Prosper Inc." and "waterboarding" into Google's search engine generates 2,310 hits.

But Dave Ellis, president of the financial-coaching company based in this central Utah County community, said the unwanted publicity from the lawsuit filed by the former employee, Chad Hudgens, hasn't really hurt business.

Hudgens alleges that, during a company motivational exercise, an executive poured water over his face while colleagues held him down.

Said Ellis: "We agree a training meeting took place, but the witness accounts vary from the claims that Mr. Hudgens has made. As soon as we found out about it, we hired a labor-relations specialist who interviewed everyone involved.

"People understand that our business does not condone or endorse any kind of training that causes discomfort. We've had some inquiries, but as we have explained, it is not condoned."

He dismissed news accounts of the incident ''as media sensationalism.''

Hudgens, in court papers, said the incident left him physically and emotionally traumatized. He's suing the company and the supervisor, Joshua Christopherson, for assault and battery, intentional infliction of emotional distress, wrongful termination and intentional interference with contractual relations.

The last charge is directed solely at Christopherson, who supervised Hudgens' sales team.

Hudgens and his Salt Lake City attorney, Sean N. Egan, did not return messages by late Friday. Neither did Christopherson.

Hudgens alleges in the suit that Christopherson sought a volunteer for a motivational exercise last May 29. The court documents say Hudgens volunteered to demonstrate his loyalty. Christopherson then marched his sales group out to a hill next to the company's Riverbottoms headquarters and had Hudgens lie down, with his head downhill. While co-workers held the worker down, Christopherson poured water over Hudgens' mouth and nose, making it difficult for him to breathe.

The point of the lesson, according to the lawsuit, was that the sales team needed to work as hard to sell as Hudgens did to breathe while being doused.

The episode appears similar to the controversial torture method the Bush administration has used to interrogate terror suspects. In waterboarding, the victim is restrained in an inclined position and water is poured over the face, creating the sensation of drowning.

Ellis said Christopherson was suspended for two weeks during the investigation and was brought back after it was concluded. Ellis said Christopherson's unauthorized training activity was based on the legend that Socrates held a man's head underwater to illustrate how much effort was required to actually learn, not a torture method.

Denying that the procedure was waterboarding, Ellis said the investigation also showed that Hudgens was an "enthusiastic and energetic" participant, was not restrained and didn't complain until weeks later.

Ellis said the company offered to provide counseling for Hudgens after hearing he experienced discomfort, but he did not accept it.

"Instead, he hired an attorney."

Hudgens, in his lawsuit, said he reported the incident to the company's human resources department, but nothing was done until after he left the company.

In his suit, he said the waterboarding was not the only thing Christopherson did to humiliate subordinates. Christopherson allegedly took away underperforming employees' desk chairs, drew mustaches on their faces and hit their desks with a wooden paddle.

Ellis said he had heard of those incidents, but nobody had direct knowledge of them.

What's next

Prosper Inc.'s attorney has filed a motion to dismiss Chad Hudgens' lawsuit along with a motion for leave to file a lengthy memorandum. No hearing date has been set.