Yes so what happened is they converted, then had majority common, then voted to recapitalize and sell, after which recapitalization they made out with a profit but common got nothing. The problem with this legally was they didn't have the right to convert without a common vote beforehand, essentially they did it in reverse order. Their leverage was the company was not cash flow positive (in no small part because of the massive management fees the VC loaded on as part of funding), and so needed funding to continue. They also offered the existing board members a $1m bonus as part of post-sale consulting (essentially a legal bribe) as part of agreeing to the sale. It's all not technically legal, but you know the golden rule, he who has the gold makes the rules.
Because of the settlement terms I'm not able to name the VC, but I can tell you this kind of behavior is by no means unique to this VC, in fact it's rather de rigueur for the VC and PE worlds. It's even defensible in a way, they owe fiduciary duty to their limited partners, NOT to the common shareholders of the company they invest in.
I currently advise startups seeking financing to either a) only go the VC route if you think you're in megagrowth into the next dropbox et. all or b) you have enough self/family wealth to take VC investment on favorable terms ala stripe.
