Football, Rock and Roll and Alleged Fraud

photo - fraud & football by 401(K) 2012

Potential wrongdoing by business partners can happen in companies large and small, in industries you’ve never heard of and the well known world of profession sports. One such dispute became known when a lawsuit was filed in federal court for the Central District of California Southern Division in early December. It involves alleged double dealing, hidden debts, rock and roll and football.

The managing partner of the LA KISS Arena Football League team, Brett Bouchy, is accused of mismanaging the arena football team he previously owned, the Orlando Predators, and diverted funds from the business.

Bouchy sold his majority interest in the Predators to co-owner David Pearsall, then started the LA KISS team with Gene Simmons and Paul Stanley of the Rock and Roll Hall of Fame rock group KISS along with the band’s manager, Doc McGhee.

The suit filed by Pearsall Holdings, was reported in the Orange County Register. It contends Bouchy,

  • Defrauded the business by profiting from tickets sold by scalpers, and
  • Failed to disclose all of the team’s debts when he sold his majority ownership to Pearsall.

Pearsall Holdings alleges in the complaint that,

  • Bouchy regularly made money from Predators tickets sold by scalpers, taking funds from the team. An extra 3,000 tickets would be printed and sent to a broker, who would relay them to scalpers. Money from the sale of scalped tickets were allegedly split among scalpers, the broker and Bouchy.
  • Bouchy’s share of the Predators was sold to Pearsall for $247,583. Bouchy allegedly told Pearsall he could recoup at least $500,000 through hosting both a KISS concert and the 2013 Arena Bowl. Such events weren’t such a financial success, grossing only $200,000.
  • After the Predators were sold, Bouchy provided Pearsall a balance sheet with $88,044 in liabilities. It failed to disclose at least $450,000 in outstanding loans and expenses related to hosting the Arena Bowl.

Bouchy denies the claims, but the complaint paints a picture that’s all too common in many businesses. One partner abuses his position, pocketing money that should go the company. A partner or majority shareholder plays games with debts and liabilities, inflating a sales price, leaving the purchaser holding the bag and in charge of a business worth far less than it appeared.

If you feel a partner may be defrauding your business, you’re in the process of buying a business or feel you’ve been the victim of fraud in the purchase of a business, we can help. We can help determine if your partner is living up to his or her fiduciary duties, help you with the due diligence required when buying a business interests and defend your rights if your purchase of a business has gone wrong. Contact our office today so we can discuss what’s going on and your legal options.