By On the occasion of our 20th anniversary
By Gustavo Arellano
By R. Scott Moxley
By Alfonso Delgado
By Courtney Hamilton
By Joel Beers
By Peter Maguire
By Charles Lam
Diaz alleges that Kreiner routinely caused Fight Industries vendors to give him lavish gifts, including a new Mercedes and Rolex watches, in exchange for contracts at costs well more than market rates. According to Diaz, Kreiner ensured that Fight Industries and TapouT paid inflated prices to vendors for items such as T-shirts; it might pay the vendor hundreds of thousands of dollars as a "kickback." Diaz says he was killed, financially, as the alleged kickback schemes were designed to line Kreiner's pockets at the expense of TapouT and Fight Industries.
According to Diaz's lawsuit, Kreiner also developed phony invoices for TapouT and Hitman gear, which, he says, he used to misappropriate money borrowed from Private Equity Management Group, which was run by Orange County financier Danny Pang, who died in 2009 of an apparent suicide while facing charges of defrauding investors out of hundreds of millions of dollars.
Aaron Crecy, a friend and business associate of MMA legend Dan Henderson, put a deal together with TapouT for the fighter's signature shirt. Crecy said when a printer produces "a lot more shirts than you get paid for, it makes you wonder." Now a senior-level marketing consultant, Crecy claims that over the course of a 12-month deal, he saw just one three-month statement from TapouT. "I have no idea of the veracity of any of the reports they gave us," he says.
Diaz says Kreiner also devised, engineered and engaged in customs fraud in order to appropriate millions of dollars from TapouT and Hitman for his own personal use. Allegedly, Kreiner paid exorbitant sums to friends and associates of his for services purportedly rendered to Fight Industries and TapouT, and then received kickbacks, including hundreds of thousands of dollars on "design services" for his personal office and Caldwell's office at TapouT, as well as kickbacks from business associates after forking over more than $1.8 million in "consulting fees" and "bonuses."
Caldwell knew of Kreiner's alleged schemes, Diaz claims, including skimming cash and inventory from TapouT and Fight Industries after "warehouse sales" at the companies' locations and that Caldwell took a cut from the thefts.
When Diaz protested Kreiner's actions, he claims, he was promptly told not to interfere or he would be fired. Still, Diaz alleges, he was fired without cause in October 2010 and told he couldn't be paid for outstanding business expenses because Fight Industries didn't have the money and would "go under" if the company paid him. He says he's also owed wages and accrued vacation and sick days.
Frances O'Meara, an attorney for TapouT, says she doesn't want to try the case in the press. "Either the court system or the jury will decide," she says. "But I remind everybody that there is a stipulation and confidentiality order in the case."
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Diaz leans back in his booth inside the Fling. "It's tough in the clothing industry," he says. According to his lawsuit, Kreiner depleted Fight Industries and TapouT of their assets, refused to reimburse Diaz for his business expenses, and joined with Caldwell in looking to sell the companies' assets to Authentic Brands Group in exchange for the payment of some of the debt they stacked up through their alleged schemes, plus future cash payments, pending the resolution of remaining creditor claims.
Authentic Brands Group discovered Kreiner's alleged illegal conduct and knew that an asset sale would strip TapouT and Fight Industries of their assets while leaving creditors with nothing to recover against, Diaz claims, adding that he believes Authentic Brands Group used that information as leverage in negotiating with Kreiner, driving down the price to be paid for the assets.
All parties were mum on the price, but a letter of intent obtained by the Weekly shows TapouT getting rid of its assets for $12.5 million. "A company purported to do $200 million retail in 2009, [Authentic Brands Group is] able to buy it for $12 million?" Diaz says. "If you have any $200 million companies for sale for $12 million, let me know because I can put together deals to pick those up all day." (Attorneys for Authentic Brands Group could not be reached for comment.)
Diaz says that during negotiations, Authentic Brands Group tried to shut him up regarding Kreiner's alleged illegal activity through a new employment agreement with a newly formed company, ABG TapouT. When Diaz refused, he alleges, Authentic Brands Group told him it would "go around" him and complete the sale. In doing so, he claims, Kreiner and Authentic Brands Group allocated zero value to Fight Industries assets, essentially making it a gift to the buyer. Meanwhile, Authentic Brands Group is selling Hitman products through the likes of K-Mart.
"They flushed it down the toilet," Diaz says. "They put it in K-Mart, which is where you put brands at the end. They put it out to pasture. It's a natural cycle that I'm not going to speak out against. But it was far too soon. The horse was still a good horse; it could still win races. You didn't need to make it a plow horse."
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Sitting at the dining table in his cramped apartment, Diaz wears a camouflage tank top, black athletic shorts and flip-flops. He's golden brown, and it's 100 degrees outside. The man raised on a horse property is surrounded by pets: the Maltese Chi Tzu mix named Charm, Dolly Parton the Maine Coon cat, Hippo the hamster, Bandit the striped gecko. Peaches the parrot lands on his left shoulder.