Echo Fox co-owner sues team partners over fraud claims

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Noah Smith/For The Washington Post via Getty Images

The tumult at Echo Fox isn't subsiding any time soon. The esports team's co-owner Rick Fox has sued business partners Amit Raizada and Stratton Sclavos over allegations of both fraud as well as defamation stemming from the earlier racism claims. According to Fox, Raizada and Sclavos illegally profited off his name. Raizada supposedly misused Echo Fox's venture capital funds to both reward Sclavos for raising money and give himself both a $350,000 salary and cover the lease of his $20,000 per month Beverly Hills home. They also made it possible to oust general partners through a shareholder vote (albeit a supermajority) instead of a court order, which led to Rick Fox getting the boot in an August vote that will see him depart October 21st.

Fox also asserted that Raizada has retaliated against him for bringing up Raizada's use of racist language against ex-CEO Jace Hall. Riot Games cut Echo Fox from its League of Legends Championship Series after it argued that the team hadn't addressed Raizada's behavior, with Echo Fox eventually selling to Kroenke for just over $30 million.

Not surprisingly, the lawsuit isn't getting a warm reception. The attorney for Sclavos and the venture firm, Linda McFee, claimed the lawsuit was a “senseless diatribe” and denied that either Raizada or Sclavos abused company funds. Instead, she characterized it as an attempt to “deflect blame” for Fox's management troubles. Raizada had previously sued Fox for allegedly failing to make a $2.5 million loan payment, although that was settled in June.

Whoever's right, the lawsuit illustrates the growing complexity of esports. Now that some teams are big businesses, there are fierce fights over everything from ownership to players' revenue shares. Those involved don't want to lose control or risk missing big payouts.

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