Echo Fox co-founder Rick Fox has filed a lawsuit against his business partners in the organization, alleging that defendants including Amit Raizada, the investor whose use of a racial slur sparked the dispute, and Fox's Vision Ventures partner Stratton Sclavos, engaged repeatedly in fraudulent behavior aimed at enriching themselves to the detriment of the company. Raizada and Sclavos strongly deny the allegations, saying that the filing is an attempt to "deflect blame" for Echo Fox's failures ahead of their efforts to remove him.
The suit claims that the defendants "duped" Fox into a purported friendship, which eventually led them to go into business together. That resulted in the creation of private equity firm Vision Ventures Partners, and the esports organization Echo Fox.
"It took time to peel away the layers of lies and deception, but Fox eventually realized that he had gotten into business with two very bad guys—Raizada and Sclavos," the lawsuit—available on Scribd via Kotaku—says.
"As is now evident, Raizada began manipulating numbers behind the scenes to his benefit while Fox engaged publicly as the face of esports, spreading the gospel of esports on panels, while Sclavos and Raizada were running the business. Raizada's fraudulent activity included self-dealing where he and Sclavos put Echo Fox into a tailspin by controlling the company's debt. And in another example, Sclavos and Raizada changed the company's cash waterfall by altering the partnership agreement to reduce proceeds to certain investors and position Raizada and Sclavos with options for personal gain by removing the general partner."
The lawsuit comes just a week after ESPN reported that Echo Fox owners were taking steps to remove Rick Fox from the organization, after a filing for restraining order against him was denied in August. Raizada's attorney told Kotaku that Fox's lawsuit is "a transparent attempt to divert attention from the train wreck he left behind at Echo Fox," and that the filing itself is "littered with categorically false allegations … If Rick Fox wants to blame someone for Echo Fox's failures, he should start by looking in the mirror."
Sclavos' lawyer expressed similar sentiments in a statement reported by AP, describing the lawsuit as "a senseless diatribe replete with false and wholly unsupported accusations."
"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," attorney Linda McFee said.
"Contrary to Fox’s propaganda, neither Sclavos nor Raizada misappropriated or misused any company funds. No monies paid to or for Raizada for his services were paid by Echo Fox or depleted any Echo Fox resources. Rather, Sclavos, Raizada, and their affiliates infused millions of dollars into Echo Fox over several years just so it could survive. Fox cannot say the same."
The lengthy filing also elaborates on Fox's accusations of threats and the use of racial slurs by co-owner Amit Raizada, which sparked the dispute earlier this year. The dispute ultimately led to an investigation by Riot Games and, after it was concluded, a demand that Echo Fox part ways with Raizada. When Raizada refused to step down, Riot ordered that Echo Fox's LCS slot be sold, which deepened the division between Fox and his partners: Despite the advice of investment bankers and shareholders, Fox rejected an offer of $30.5 million for the slot from Evil Geniuses. It ended up going to Evil Geniuses anyway, for a reported $33 million.
"I am calling on regulators and law enforcement to immediately look into Amit Raizada and his illegal, deceptive business practices. I want to make sure I’m the last victim," Fox said in his own press release. "I cannot let Amit Raizada continue to hide behind fake SEO articles and outrageous lies. I hope that this lawsuit and the facts it reveals will serve as a warning to others about the dangers of doing business with him."
The lawsuit says that damages will be proven at trial, but amount to "at least $10 million."