MMAWC, LLC, the entity doing business as World Series of Fighting (WSOF), is having a hard time escaping its past. For the seventh time in a year and a half, WSOF is being sued for alleged bad business dealings. Claims in the previous six lawsuits ran the gamut from breach of contract, defamation, fraudulent inducement, breach of fiduciary duty, tortious interference with a contract, negligent and intentional misrepresentation, wrongful termination, to civil conspiracy.
The seventh, filed on Jan. 3 in Clark County District Court by former WSOF consultant Shawn Lampman, alleges a conspiracy between Bruce Deifik, who Bloody Elbow documented 14 months ago as WSOF’s majority owner, and NBC to “actively oust” Lampman from involvement in WSOF’s management.
According to Lampman’s complaint, MMAWC entered into a Management and Consulting Agreement with Lampman that he would “manage all of the business affairs and operation of MMAWC” in exchange for a monthly salary of $10,000, which was to increase to $20,000 per month after four years. He would also allegedly receive 15% of any gross revenue in which he was “instrumental” in bringing to the company.
Lampman claims to have been able to secure “numerous” investors and advertisers including a licensing agreement with NBC Sports in November 2011 to broadcast WSOF events. While the initial license fee appears to have been $0, Lampman claims a new deal struck in May 2014 called for NBC Sports to pay “an additional $1,600,000 per year” and to put one live event on the NBC network.
The meat of Lampman’s complaint begins with his 2013 legal trouble with the Internal Revenue Service (IRS). Accused of not filing tax returns from 2006-2008 while earning 8.7 million in income, Lampman pled guilty in April 2014 to a single misdemeanor count of failing to file a 2007 tax return and was sentenced to 10 months in federal prison on Jan. 5, 2015.
In his complaint, Lampman claims WSOF, Deifik, and NBC Sports were all aware of his situation with the IRS and further alleges Deifik used his legal troubles “as an opportunity to oust” Lampman from the promotion. According to Lampman, Deifik met with two NBC Sports executives in the first week of January 2015 and “aggressively pushed and prodded” them to turn against him.
Defendants NBC and Deifik’s improper actions and interference with the Consulting Agreement had dire results for [Lampman]. On or about January 6, 2015, NBC sent MMAWC a letter improperly invoking the change of circumstance provision in NBC’s licensing agreement with MMAWC. NBC said that it was invoking the provision because of [Lampman’s] legal troubles, and NBC sought to renegotiate terms, and demanded the termination of [Lampman’s] involvement and managing WSOF as a consultant or in any capacity. However there was no change in circumstance since all materials concerning the IRS case were in the public domain, and NBC was aware IRS [sic] prior to entering into the agreements with MMAWC.
Mr. Deifik then used the NBC Letter as a thinly veiled pretext to push for the termination of [Lampman]. At the time the Deifik Trust was one of the largest single shareholders in MMALLC [sic]. Deifik was able to coerce and or convince the other Board members to go along, and [Lampman] was terminated because of Deifik and NBC’s improper actions.
[Lampman] never received the gross revenue that was agreed to, nor his promised salary.
By Jan. 9, 2015, Lampman had been removed from his WSOF consulting position and Lampman’s mother, Sally Story, sold her 26% ownership interest in MMAWC to Deifik on May 6, 2015 for $2.2 million. In conjunction with two other purchases of member units, Deifik was then the majority owner of WSOF.
Change of circumstance provisions are often included in license agreements to protect broadcasters from a league materially changing its product in the middle of a deal (e.g., if the NBA were to suddenly announce that games would be two 12-minute quarters instead of four). While it might be considered unusual to invoke such a clause after a league consultant or principal is convicted of a tax misdemeanor, it’s certainly possible NBC took such an action.
For those keeping score at home, the seven recent lawsuits are:
- In October 2015, WSOF Asia sued WSOF and other principals for allegedly violating a Master Licensing Agreement for what would eventually become WSOF Global.
- In October 2015, former WSOF Treasurer Shawn Wright and other business entities countersued WSOF for allegedly defaulting on a loan and violating a security agreement over WSOF property as collateral.
- In October 2015, Michael Hesser sued WSOF and Deifik for alleged non-payment of rent.
- In June 2016, Shawn Lampman’s brother Ralph sued WSOF for allegedly violating the terms of a $321,000 bridge loan.
- In July 2016, Arthur LaFond sued WSOF and Deifik for allegedly violating an agreement involving domain name purchases and management.
- In August 2016, Shawn Lampman’s former girlfriend Aymet Roman-Perez sued WSOF and Deifik for fraudulent inducement and intentional infliction of emotional distress in the sale of her 1.5% ownership stake in the promotion.
- Shawn Lampman’s lawsuit for breach of contract, tortious interference with a contract, and unjust enrichment.
The first three lawsuits all appear to have been settled. The others are all currently ongoing, with Aymet Roman’s lawsuit having recently survived a motion to dismiss in December.
WSOF has not yet provided its version of events to Shawn Lampman’s claims.
Paul is Bloody Elbow’s analytics and business writer. Follow him @MMAanalytics.