Ric Flair, Mike Tyson and more have filed a federal lawsuit alleging former executives of cannabis company Carma of fraud and more. PWInsider reports that Tyson, Flair, Carma and fellow cannabis company LGNDS filed a 76-page lawsuit against the executives in U.S. District Court for the Northern District of Illinois.
The lawsuit alleges 21 counts of wrongdoing by Chad Bronstein, Adam Wilks, Nicole Cosby, and James Case. Bronstein is the co-funder of Real American Freestyle and was previously the president and chairman of Carma. Wilks is the former CEO, and Cosby is the former chief legal and licensing officer. Case is a shareholder in the company.
The lawsuit accuses the defendants of “a brazen RICO conspiracy involving criminal wire fraud, embezzlement, money laundering, and extortion, as well as securities fraud and shameless self-dealing that enriched the Defendants to the tune of tens of millions of dollars.”
Carma and LGNDS partnered to distribute Flair and Tyson’s cannabis brands, Ric Flair Drip and Tyson 2.0. According to the lawsuit, the defendants were selling licensing rights related to the Flair and Tyson that they didn’t have authorization to sell and had a kickback agreement with vape company DomPen. The kickback agreement saw DomPen hide payments in order to get the defendants to ignore that it used IP from Carma that they didn’t have authorization to use. It goes on to allege that Bronstein and Wilks “treated CARMA as their own personal piggy bank” and used over $1 million to pay for personal items and services including unauthorized private jet travel, renovations to Bronstein’s home, a mortgage payment for Wilks, and entertainment expenditures “as well as excessive and unapproved compensation and bonuses.”
It goes on to allege that Bronstein made agreements without Carma’s knowledge that included a sponsorship for Flair’s Woo Energy Drink with AEW. It claims that Bronstein made the sponsorship agreement to build a relationship with the Khan family for his own “personal interests.” It says that Bronstein did not “initially disclose” to CARMA and LGNDS that he had entered them into the deal, noting:
“Instead, several months after Bronstein entered the agreement, CARMA and LGNDS received a draft complaint on behalf of AEW, stating that CARMA and LGNDS would be sued if they did not pay the $1.5 million owed for AEW’s performance of the contract. CARMA and LGNDS, despite never having authorized Bronstein to enter into the agreement in the first place, paid the $1.5 million to AEW.”
It goes onto claim that Bronstein negotiated the sponsorship “by falsely holding himself out as Flair’s agent. Flair had never agreed to the terms of the sponsorship agreement.” Flair, of course, made appearances on AEW TV and the sponsorship was publicly touted, including in press releases and on AEW TV.
Accordi8ng to the suit, Bronstein met Flair in Tampa and struck up a relationship with him in order to get into business with him. That was how Ric Flair Drip, Inc. got created. The company was assigned Flair’s IP, but Flair did not know he was not “the full, or even majority owner.” Ric Flair Drip, Inc. was eventually sold to Carma in Sep[tember 2022 and Bronstein and Wilks allegedly “functionally reassigned themselves an extra interest in CARMA through instructing this purchase, without Board approval or disclosure to any authority, including Flair.” Flair was allegedly “robbed of any proceeds” of the initial purchase of Ric Flair Dip, Inc. and was “shorted a significantly higher stake in CARMA than he was entitled to” once the acquisition was completed. It then says that Bronstein began selling Flair’s IP rights.
An tttorney for the Bronstein and Cosby told Front Office Sports in a statement:
“The complaint is fiction dressed up as a lawsuit. Before filing, the plaintiffs tried to intimidate my clients with settlement demands that read more like a shakedown than a legal claim — demanding millions of dollars and attempting to force others to surrender their Carma shares. My clients won’t be bullied and are prepared to knock out this meritless lawsuit in court.”
Wilks’s attorney added:
“These claims are as credible as the people they come from — in short, the allegations are without substance. This is nothing more than an attempt to spit out an earful of salacious headlines and attempt to coerce my client into paying money to them when he did nothing wrong. We will fight these meritless allegations — both the facts and the law are squarely on our side.”
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