LAS VEGAS (CN) – Motley Crue lead singer Vince Neil helped defrauded investors in the ill-fated Las Vegas Outlaws Arena Football League franchise, which folded in August, an investment group claims in court.
Outlaws Investment Group and Sohrob Farudi sued Rockstar Investment Group, two other Rockstar entities, Neil and two other men on Friday in Clark County Court.
Farudi claims the defendants told him the deal to take over the team was fully funded with $3 million, but he after he gave them $500,000 for shares in Rockstar Sports Group, which would own and operate the team, he learned they still owed the AFL $2.5 million.
Neil was chairman and CEO of RockStar Sports Group at the time, and defendants Mark Daniels its president and Robert Hewko, a former NFL quarterback, its treasurer and vice president, according to publicly available corporate information.
Farudi says he met with Daniels and Hewko on July 20, 2014 and they told him that they and Neil owned the Jacksonville Sharks AFL franchise in Florida – which was not true – and that they had been awarded an AFL franchise in Las Vegas, to be called the Outlaws.
“Daniels, Hewko and Neil falsely represented to S. Farudi that they had paid $3,000,000 cash up front for the Outlaws,” and asked if he wanted to buy a piece of the team, Farudi says in the complaint.
They sent him a series of emails that included documents stating that “based on their experience owning a team in Jacksonville, Florida,” revenue for the Outlaws was “conservatively projected to be $6,666,500 with a net operating income of $4,087,512,” according to the lawsuit.
So on Aug. 12, 2014, Farudi says, he gave them $500,000 for 150 of the 1,000 total shares in Florida-based RockStar Sports Group, which would own and operate the team.
Eight days later, on Aug. 20, Farudi says, he attended an AFL owners meeting in Cleveland, where he learned that Neil, Hewko and Daniels were not part owners of the Jacksonville Sharks AFL franchise, that they had paid only $500,000 of the $3 million owed for the Las Vegas franchise, and that the franchise still owed the AFL $2.5 million, which it agreed to recoup via deferred payments and future league revenue distributions.
On Aug. 21, Farudi says, he received an email from Daniels saying that the defendants had paid only $500,000 to the AFL and that the rest of the money was in an escrow account.
Two weeks after that, he says, the league informed him that the franchise hadn’t fully paid its membership fees, had not posted required letters of credit, and that its first payment to the league bounced.
Farudi repeatedly asked the defendants what had become of his $500,000, and on Jan. 7 wrote the AFL commissioner to express his concerns that Neil, Hewko and Daniels were mismanaging the franchise’s finances. The AFL suspended Daniels and Hewko from the team’s daily operations and took over the franchise on July 14, Farudi says.
In August this year, when the team’s collapse made news, Farudi says, Neil defamed him to print and broadcast media by “willfully, wantonly, outrageously, intentionally and falsely” accusing him of mismanaging the team.
Neil told the Las Vegas Sun newspaper, falsely: “The investor was the managing partner who paid the bills and ran the team, business dealings, sponsorships and finances. That wasn’t our responsibility,” the complaint states, citing an Aug. 10 article in the Sun published under the headline, “Vince Neil clears the air on team’s ouster.”
Farudi seeks punitive damages for fraud, conversion, unjust enrichment, conspiracy and defamation.
He is represented by Anthony Sgro, who was not immediately available for comment Monday.
Vince Neil’s talent agency, BiggTime Entertainment, did not respond to an email request for comment and could not be reached by telephone Monday evening.
The Las Vegas Outlaws finished its only AFL season with a 5-12-1 record, and the league folded it in August.
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