Rick Fox sues business partners alleging fraud, conspiracy and breach of contract

Rick Fox watching League of Legends. Provided by Riot Games

Three-time NBA champion Rick Fox sued his business partners, Amit Raizada and Stratton Sclavos, on Monday, alleging that the two committed fraud, conspiracy and breach of contract against Fox and their esports team, Echo Fox, in order to enrich themselves, according to documents filed in California Superior Court in Los Angeles.

In the 162-page complaint, which included 15 causes of action, Fox alleges that Raizada defrauded him around Fox's and partner Khalid Jones' acquisition of controlling stake in Echo Fox in October 2018. Fox is seeking 10s of millions of dollars in damages and a jury trial.

Fox also accuses Raizada of defaming him in the media since the two became locked in a dispute in April after Raizada's use of racist language toward former Echo Fox CEO Jace Hall was reported publicly. Raizada's lawyer, David W. Swift, issued a statement Wednesday denying Fox's claims.

"Rick Fox's lawsuit is a transparent attempt to divert attention from the train wreck he left behind at Echo Fox, where a supermajority of the Limited Partners in Echo Fox filed a lawsuit to remove Rick Fox and his company from the general partner role based on his self-dealing and grossly inept management," Swift said. "Even worse, the lawsuit is littered with categorically false allegations about Amit Raizada, Stratton Sclavos, and others. If Rick Fox wants to blame someone for Echo Fox's failures, he should start by looking in the mirror."

Fox claims in the lawsuit that Raizada and Sclavos have used his name -- as the public face of Echo Fox and their venture firm Vision Venture Partners -- to illegally enrich themselves.

Fox states that, after Sclavos raised money for the company, Raizada authorized a $2 million personal loan to Sclavos from Vision's funds and that Raizada used company funds to give himself a $350,000 annual salary and pay the lease of Raizada's Beverly Hills home, which is estimated to have been rented for more than $20,000 per month at the time.

Fox also claims that Raizada, with the help of Sclavos, altered the company's operating agreement after Fox and Jones took over Echo Fox in October to make the removal of general partners -- in this case, Fox and Jones -- require a supermajority vote from the company's shareholders, rather than a court order. Those shareholders exercised that right on Aug. 21 when over 80% of their cap table, including Jones and his entity SourceRock Ventures, notified Fox that they would oust him from his leadership position in Echo Fox on Oct. 21.

Sclavos, through his attorney, denied all of Fox's claims in a statement sent to ESPN by email on Thursday.

"Rick Fox's lawsuit is a senseless diatribe replete with false and wholly unsupported accusations about Stratton Sclavos and Amit Raizada," AIM Law Group attorney Linda McFee, who represents Sclavos and Vision Venture Partners, told ESPN. "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. 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."

Fox's suit serves as a rebuttal to a legal filing in August by Sclavos who asked and was denied by the California court system for a temporary restraining order against Fox on Aug. 23.

Raizada had also previously sued Fox in Florida in June for a $2.5 million loan payment Fox failed to pay him for the equity he acquired in October. The June suit was settled after Jones' entity, SourceRock Ventures, agreed to acquire the note Fox owed from Raizada.

In May, Riot Games notified Echo Fox that it would have 60 days to remove Raizada from its cap table as a result of his use of racist language or face the consequence of losing its League of Legends Championship Series slot. Riot extended that deadline in July by eight days, concluded by Echo Fox agreeing to sell to Kroenke Sports & Entertainment for $30.25 million.

Echo Fox's deal with the Kroenke group fell through though after Sentinels CEO Rob Moore sued the Kroenkes for the alleged violation of a verbal joint venture agreement that would see Moore privy to all of the Kroenkes' esports ventures. Moore and Sentinels have operated Overwatch League team Los Angeles Gladiators for the Kroenke group since that team was founded in late 2017.

Riot Games then seized the slot after Fox and his partners could not agree to sell it on their own. Riot agreed to sell the slot to Evil Geniuses for a total of $33 million -- $30.5 million paid to Echo Fox and another $2.5 million paid directly to Riot Games -- on Sept. 26, as reported by ESPN.