Rick Fox sues business partners for fraud and misappropriation
The months-long saga reaches a boiling point as Fox prepares to take Raizada and Sclavos to court.
Sam Desatoff,Mon, 07 Oct 2019 19:58:00
Rick Fox, the embattled founder of esports organization Echo Fox, is suing his business partners over alleged fraud and misappropriation of funds. The suit seeks tens of millions of dollars in damages, and targets Echo Fox partners Amit Raizada and Stratton Sclavos.
Fox’s spat with Raizada has been an ongoing affair throughout 2019, but it reached new heights in August when Echo Fox was forced to give up its LCS slot. According to the Associated Press, Riot Games ordered Echo Fox to part ways with Raizada after it was found that he used racial slurs in emails and text messages to business partners. Raizada refused, resulting in the sale of the organization’s place in the LCS.
Echo Fox’s slot in the LCS has since been sold to esports organization, Evil Geniuses. Echo Fox stands to make roughly $30 million from the sale, $15 million to $20 million of which will go to Raizada, according to Fox. This, he alleges, is in addition to $10 million in misappropriated money Raizada acquired while misleading the ex-NBA star about the company’s financial state.
“He’s threatened my family, he threatened my friends, he’s proven to be despicable,” Fox told the Associated Press. “Most people are afraid to deal with that. They’re afraid to speak up. My hope is that my shining a light on this situation with myself, others will not fall prey to his actions and his deception.”
“Rick Fox’s lawsuit is a senseless diatribe replete with false and wholly unsupported accusations about Stratton Sclavos and Amit Raizada,” Linda McFee, Stratton Sclavos’ attorney said. “Unfortunately, in the face of his impending removal as General Partner of Echo Fox for flagrant breaches of his duties to the company and its partners, this appears to be yet another attempt to deflect blame for Echo Fox’s failure from himself. Contrary to Fox’s propaganda, neither Sclavos nor Raizada misappropriated or misused any company funds.”
McFee’s statement refers to news broken by ESPN that Echo Fox shareholders seek to remove Fox as a partner on October 21.
“When you are in business with Amit Raizada, a man who has repeatedly been accused of dishonest and fraudulent behavior and who has a long track record of business disputes ending in litigation, then this is unfortunately what you should expect,” Fox told Dot Esports. “I founded Echo Fox with great hopes that were dashed by racism, deception and greed. On behalf of the Echo Fox General Partnership, I wish to congratulate Evil Geniuses on acquiring the LCS spot, and look forward to moving forward with high hopes for the future.”
According to Brandon Huffman, a partner at Odin Law, Fox will need to lean on some heavy-duty forensic accounting in order to prove his allegations of fund misappropriation.
“Basically, the plaintiff will pay an expert to look through the records and identify potentially problematic transactions--things like withdrawals of cash, strange purchases or transfers--or things booked inappropriately,” Huffman told GameDaily. “Then, through the discovery process, depositions and the like, the plaintiff will try to get more explanation on those problematic items. They'll look for information about how purchases were actually used--there may be valid reasons for expenses like travel or vehicles, but those could also be misappropriation. To be misappropriation, it would have to be use of the company's money for personal gain or benefit.”
Huffman said that records of Raizada’s use of racist language in texts and emails could potentially give Fox some good PR leverage as legal proceedings ramp up, depending, of course, on if they are admissible in trial.
“If they were admissible, they would not be perceived well by a judge or a jury,” he explained.
While Fox is optimistic about his future in esports, the immediate road ahead is certainly very rocky. His suit against Raizada and Sclavos is the culmination of months of tension and headbutting, and is sure to be watched closely by the esports community. GameDaily will also be keeping an eye on this developing story.