Why has the chief of Criterion Capital Partners bought Poolworks, as the firm is known these days? Good question. And the whole story of why it’s taken this long to confirm the identity of the new owner is just plain weird.

Let’s take a deep breath…

Back in June, VZ Networks – the ailing proprietor of Facebook clone StudiVZ and other networks aimed at various demographics – rebranded as Poolworks and announced it would be focusing on its school-age system SchülerVZ, also rebranded as IDPool. (That new site is still only a ‘coming-soon’ affair.)

Then, in September, Poolworks owner Holtzbrinck Ventures surprised everyone by selling the company to the ‘international investment organization’ Vert Capital. You know, Vert? No, me neither. Anyway, Poolworks CEO Stefanie Waehlert was out and almost everything went to Vert, with Holtzbrinck retaining the option of ‘using’ SchülerVZ/IDPool.

Bebo was rumored to be behind Vert, but no-one would confirm it. Meanwhile, nailing down an online presence for Vert – or indeed any references to the company – proved to be very tricky. Then Der Spiegel reported that Levin was the mystery buyer, saying he had kept his identity secret because of an ongoing lawsuit against Bebo by Walker Digital over in the U.S.

That would be the same lawsuit (PDF) in which two patents, supposedly covering functionality such as privacy settings, were asserted against co-defendants Facebook, Google, LinkedIn and MySpace. If this really was a factor, Levin presumably thought Walker Digital would try pulling his new property into the suit if it found out he’d bought it.

All of which brings us to today. Walker Digital must have ended its suit, or be about to, because Levin has finally gone public, in a way. As the eagle-eyed folks over at Deutsche Startups have spotted, the Poolworks properties now list as their authorized representatives Adam Levin, Joseph Nejman and Mike Pope.

At least two of these guys are Criterion Capital men – Levin’s the MD and Pope’s the CFO. So what the heck is going on?

“Vert Capital is its own entity and Criterion is a separate entity,” the spokesman who handled the original announcement of the Poolworks takeover told me on Friday. “People were saying Bebo bought this, but Bebo did not purchase VZ Networks. There’s overlap in terms of personnel, but there are two different capital structures, two different sets of investors.”

“Now, will they look at any kind of synergies based on the fact that Adam owns stakes in both? Perhaps, but at the time it was very much overblown.”

So, does Vert Capital have any other activities, apart from running Poolworks/VZ Networks? “A few”, apparently, and we should look out for announcements of those “shortly”.

I have a feeling we’ve not heard the last of this tale. Here are my outstanding questions:

• Was the patent suit really the reason for all this secrecy?
• Are the Poolworks properties going to be merged with Bebo?
• And last but not least, what on earth is happening with Bebo anyway? Seriously, the last thing coming out of Bebo that I can find is a post thanking fans for generating 100,000 likes on, um, the site’s Facebook page.

Original co-founders Michael and Xochi Birch’s MXB Holdings, Ron Conway’s SV Angel investment vehicle, TV executive Michael Jackson and entrepreneur Richard Hecker have filed suit against Criterion Capital Partners (CCP), which took Bebo off AOL’s hands in June 2010, and its CEO Adam Levin.

The quartet, which invested in Criterion’s Bebo six months after it was dumped by AOL, is seeking $5 million in damages. Their filing in San Francisco alleges:

• Criterion has “exploited” Bebo and has been “fraudulent” by “using its operating capital to pay the salaries of Criterion’s staff”, including $14,000 per month to Levin.
• Criterion has “withheld” Bebo financial operation details from shareholders.
• Bebo has “operated for 20 months and has failed to hold a single board meeting or shareholder meeting”, including one to discuss “a decision to pass on opportunities to sell the company and realise shareholder value”.
• Bebo’s reputation is being hurt by racking up defaults for failing to respond to lawsuits. Bebo defaulted on its San Francisco lease and moved to Criterion’s Los Angeles HQ without board or shareholder approval.

Criterion has not yet filed a response through the court, but CEO Adam Levin told paidContent: “We believe this to be a baseless claim and amounts to a fishing expedition.” A pre-trial hearing is scheduled to take place in San Francisco on August 8.

The dispute is the latest twist in the tale of the teen-focused social network, which the Birches founded in 2005 and which AOL bought from the couple and other original investors in 2008 for a stratospheric $850 million.

AOL off-loaded Bebo to Criterion in June 2010. Six months later, Criterion recapitalised the site by tapping the Birches and the others for new investment. Michael Birch returned as strategic advisor. The plaintiffs are amongst r minority shareholders.

New suitors for Bebo, including a media company, knocked on Criterion’s door within weeks, GigaOM reported at the time. But no sale happened.

In addition to damages, the plaintiffs now want a receiver to be appointed to run the social network - a move which could let them benefit from a subsequent re-sale. That would mean a fourth owner for Bebo in seven years.

The business relationships have gone spectacularly sour. In their filing, the four plaintiffs complain Criterion’s Levin “has not dedicated sufficient time and energy to the operation” and “would almost never show up at Bebo’s office”.

And they say “gross mismanagement” was to blame for Bebo going offline for two days this January – an outage which caused even Michael Birch, at the time, to suppose the site had disappeared for good.

Criterion has not arrested Bebo’s traffic decline, but has previously claimed to have made Bebo profitable by cutting costs and bringing in engineering talent to refresh the technology under Xbox co-creator Kevin Bachus as chief product officer.

Criterion director Tristan Lazareff is also named as a defendant. Criterion buys and tries to turn around troubled companies. More company background:

• After acquiring Bebo, it salvaged video technology from a UK broadcasters’ joint venture to build TV show aggregator SeeSaw. But the service collapsed last year after money Criterion said it had been promised by an investor failed to materialise.
• On the same day Criterion acquired SeeSaw, its CEO Levin and an associate, Hollywood veteran Dan Adler, also bought the troubled Beitar Jerusalem football club. But that deal was aborted after a dispute with the club’s conservative owner.
• Last year, Criterion acquired 10 Fatburger fast food restaurants in California, to go with a franchise of Papa John’s pizzeria it also owned.

You might usually expect a turnaround specialist to cut costs and lay off staff. But, in Bebo’s case, the cutting had already been done by AOL (NYSE: AOL) — the site now has only 25 to 30 staff, and now Criterion will need to re-invest, particularly on engineers, Levin tells paidContent:UK.

“AOL left Bebo somewhat dormant, so we will be staffing up, we’ll be announcing several new key hires in the coming weeks.”

Bebo will be moving its San Francisco global HQ from AOL’s Folsom Street office to new premises at the Embarcadero this weekend, a switch Levin says will provide existing staff with “a new start”. “Outside of the US, we will still have staff – we wont be shutting offices – we’ll just be moving (UK) offices from the AOL office.”

So what’s the future for Bebo run by a merchant bank?

Levin points to Facebook’s blossoming from an Ivy League sideline in to a mainstream network. “AOL looked to replicate much of that (in Bebo) and have a similar strategy. But we have really strong niche user groups that allow us, from an advertising perspective, to reach a specific targeted group.”

Levin rejects the suggestion that the social networking game is over, won by Facebook, pointing to Bebo’s differentiator: “Tween is our core demographic. It allows a tween or user an opportunity to create a customisable experience, as opposed to a Facebook, where they can interact with their friends. A 14-year-old may not have the opportunity to customise their house or buy the car that they want, but they can select their Bebo layout in the way they want to see it.

“Advertising will be the main revenue driver. There are also other opportunities that Bebo, under AOL, didn’t look at. We’re looking at increasing gaming, doing social currency.” And Levin brushes aside the suggestion that advertising on social networks is proving too difficult, saying “CPMs are lower than many expected across the board” and expecting that demographic targeting can inflate those prices.”

Levin won’t say how much Criterion paid for Bebo, just: “All of the needs of my investors in Criterion were met, as well as the needs of AOL — it was a win-win.”

“The new ownership structure gives us the ability to be aggressive in innovation and create a platform that’s going to be engaging to users,” says Levin, who was previously CEO of mobile video distributor CinemaElectric.

“We’re striking a bunch of deals out of the gates. Several different partnerships to enhance the functionality. Based on my background in mobile, we have been able to sign several deals that will enhance the footprint that Bebo has today dramatically over the next 60 to 90 days.”

Mobile sounds like a big focus now. “AOL had no mobile advertising (on Bebo), yet was seeing 200 million impressions on mobile monthly. There are some low-hanging fruit on the monetisation side.” We expect a deal with a big mobile advertising network, as well as amping up in-house mobile ad sales.

“We’re actively looking and talking to people about other properties that could add strategic benefit to Bebo.”

Bebo under Criterion is keen to stress a long list of numbers it says remain high – 1.2 million daily users, 52.4 million people have created a profile or visited in the last year, a quarter of whom are in the US. But Bebo’s traffic, along with MySpace’s, has been falling over the last year and Levin acknowledges some effort must be made to bring those users back. The site will run a “Free Love Day” in the UK next week as some kind of embrace for users there.

“Bebo’s a great platform today – we have an incredible user base,” Levin says. “There are lots of naysayers who say it has declined, but it allows users to have a tremendous amount of self-expression.”

Criterion’s portfolio numbers a startup charter school, a commodity goods manufacturer and a specialty jewelry chain but it’s media and tech background is limited beyond Levin, so he’s brought aboard online ad industry veteran Richard Hecker and partner Paul Abramowitz, who once helped sort out Enron’s post-collapse debt.

And if Criterion does manage to get Bebo back on course, what then? On his own role, the company’s manager says he’s the best man for the job right now but acknowledges: “There may come a time when someone more qualified or has certain attributes that I can’t contribute – so we’re open to anything and not ruling a change out at any time.”

And, naturally, Bebo may yet be sold again in future: “We are a merchant bank, a private equity fund – so we do look for deals that will return money to our investors at the end of the day. So we will be looking for a liquidity event at some point, but not for now.”