The thing I don't get about this whole situation is in order to get milestone cheques you have to deliver milestone builds. This is how the publisher evaluates what a developer is doing and how the project is going. Sega might've initially been unaware of Gearbox shifting employees away from A:CM to Borderlands but Gearbox had milestones to deliver and agreed upon goals to reach with each milestone build. Sega would have known something was going horribly awry when the milestone goals were continually not met, goals kept slipping, getting pushed back and the progress shown in the milestone builds was worrisome or unsatisfying. If Sega cancelled the game back in 2008, they knew what was up, the question is why did they throw good money after bad. Borderlands success? Betting on Gearbox's new found e-cred?
Everyone in this situation is an asshole, Sega, Gearbox and Timegate. It's just that Gearbox are the biggest ones because they're at the epicenter of it all. Randy Pitchford may have been the one sitting there, pimping the game at press events, lying to consumers with a vertical slice that is in no way indicative of the final product...but all parties involved knew. Sega knew. They're all complicit. This is such a shit show.