Olivia R. August 14, 2019
Echo Fox investor Amit Raizada has recently been in the spotlight amidst an ongoing controversy in and around esports organization Echo Fox. The heat of that spotlight intensified when Echo Fox namesake Rick Fox spoke to esports journalist Richard Lewis and revealed explicit details about the ongoing debacle.
In the hour-long interview, Fox discussed how the organization was forced to sell its LCS slot when they were unable to oust investor Raizada following dramatics including racial slurs, personal threats, and Raizada’s alleged self-dealing. Lewis would go on to propose that Raizada was tanking the company with his behavior.
Raizada immediately reached out to reporting outlet Kotaku with a statement telling them that Fox was “crying wolf.”
More reports were soon published in response to Raizada's statement. Dot Esports called Raizada's words a “lash out” at Fox.
WIN.gg spoke with Amit Raizada in an attempt to ferret out the truth in the matter.
Addressing Rick Fox's allegations
“Rick has been blatantly lying about anything he can come up with to get any kind of camera attention,” Raizada told WIN.gg. “He knew he’s a celebrity and he could get in front of everyone and come up with a sad story about how the business guys screwed over the athlete. But that’s not the case. He screwed the investors over.”
Over the past six to seven months, Raizada says, investors have watched Rick Fox diminish the value of Echo Fox from $150 million last year to its latest selling price of $30.2 million. That change represents a steep drop and a disappointment for any investor, though the ultimate reasons for the drop in value have become a point of contention.
According to confidential emails Raizada shared with WIN.gg, other investors have also demanded answers and solutions from Rick Fox.
When asked for comment regarding Raizada's words in this interview, Rick Fox did not respond.
Who is truly at fault here? Who made Echo Fox’s value plummet so quickly? How did Echo Fox come to lose a coveted slot in the LCS?
The beginning of Echo Fox, as told by Amit Raizada
Rick Fox once gave a very different account of Raizada. In a piece published through the Players Tribune, Fox called Raizada someone he admired and spoke to his "incredibly hard work behind the scenes," as well as his willingness in "sacrificing much of his personal life for the benefit of the business."
Fox also credited Raizada with helping him personally in working on the business of Echo Fox.
"Most importantly, [Raizada] was willing to take the time to explain the aspects of building a solid foundation in business to me," Fox said.
In 2015, a semi-retired Raizada was approached by Fox about getting involved in an esports company. His response was that Fox should forget about that company, and that the two should instead go off and form their own esports team.
But that wasn’t the first time Fox and Raizada spoke. The two have been friends for over 20 years. According to Raizada, they would go on family vacations and spend holidays together. The pair traveled the globe. It seemed fitting those years ago that the two would work together to build a new esports organization.
“This situation is very personal to me,” Raizada told WIN.gg. “One chance of making money, [Rick] puts everything aside, including all ethics. I don’t have a relationship with him anymore.”
Raizada alleges that Fox was living by each paycheck at the time, but that his real value to Echo Fox would come from acting as the organization’s spokesperson. On Raizada’s end, he put up $500,000. Fellow investor Stratton Sclavos put up the other $500,000 and then volunteered to run and operate the company. Sclavos also got to work raising money through his own investment group.
But this didn’t last long, according Raizada. He alleged that Fox’s acting career was not going well and that he wanted more money as a result. Raizada claims that his former friend's financial woes came after TNT and the show Shameless declined to renew his contracts. He had also taken a second mortgage on his condo to support his ongoing lifestyle.
"From what he's told me, he has no savings and no assets," Raizada said.
Fox’s solution, Raizada recalled, was for Fox to take over operating Echo Fox. Fox emailed this proposal to Raizada, who called it a "bad idea." Over the coming months, the pair's relationship became increasingly rocky, and at times was downright hostile.
In the end, Raizada told Fox to just buy him out of the organization. And that’s where the troubles truly began.
Raizada's racist emails and threats to Fox's family
The two former friends negotiated. In the end, Fox found a partner to finance the buyout and put up $5 million. Raizada put up the other $5 million, closing the deal in October 2018.
“From then to now, he’s run the company to the ground, spent all the money. The company has nothing to show for it. No dollars in the bank account. They can’t meet payroll. Me and others have been keeping the company alive in hopes of selling it, since there’s no money,” Raizada claimed.
Meanwhile, another company Raizada had invested in, Twin Galaxies, lost $30 million in an 18-month period. That money, Raizada said, had gone towards failed content production, an H1Z1 pro league, and overpaid salaries to "Jace's buddies."
The Jace Riazada referred to was Twin Galaxies' acting CEO, Jace Hall. It was after this loss of funds that Raizada began attacking Hall in an email chain.
He asked Hall who was going to take responsibility for the $30 million loss. Hall said that it wouldn’t be him, since he didn’t have anything to do with the raising of money. Raizada then lashed out.
“I told him someone has to be accountable, and I was getting more and more irritated minute by minute,” Raizada said. “He tells me the conversation is over. That’s when I said the ‘n-word.’”
According to Raizada, Hall forwarded the email chain to Fox. Raizada claims that Fox chose to leak the emails specifically after Raizada refused to release Rick from the $5 million debt he owed, which would relenquish his partial ownership of Echo Fox.
“He then took the email and leaked it to Dexerto, who wrote a one-sided article about it. It’s been round and round since. Lawyers have asked me not to comment. I stayed out of the media. I don’t want to be on the front page,” Raizada said.
Raizada denies being a racist in spite of the racially charged language he used. He refers to his business dealings as evidence in his favor.
“Why would I have invested in a company with Jace or Rick Fox, why would I have put up millions of dollars and my name with people that were African-American or from various parts of the world, if I were racist? I have 200 partners and they’re from all different descents." Raizada said.
That said, another article posted to Dexerto showed texts in which Raizada was alleged to have insulted another individual's Jewish hertiage. Raizada declined to address this report, citing an ongoing legal case.
While Raizada does deny outright racism, he does admit to having problems managing his anger. But is that enough to also explain his email to Fox in which he threatened his business partner's family?
In another leak to Dexerto, Fox shared this line from a Raizada email: “[There will be] NO DEAL ON ANYTHING AND IF RICK DOES NOT DO HIS DUITIES ILL PERSONALLY FUCK HIM AND HIS FAMILY FOR THE REST OF MY LIFE IN ANY WAY POSSIBLE.”
Raizada shared the email in full with WIN.gg, which was originally sent to Fox’s lawyer, Greg Nelson. It can be read here:
“In the full copy of the email, I threatened his lawyer if he breached his fiduciary duties that he could go fuck himself,” Raizada said. “I’m insinuating that if Fox stops helping the investors and disappears off the face of the earth. He didn’t even put $1 into this business. His whole deal was that he would be the face. And he threatened he would walk away and screw all of us."
Raizada claims that the ensuing threats he made were not meant to imply physical violence. The threats, he says, were that he would attack Fox financially by suing him.
“He had borrowed money to try and buy my share of the $5 million, and they wanted me to repay it back. I was saying it makes no sense,” Raizada said.
Raizada stated that Fox threatened his own family by insinuating in emails that Raizada's brother-in-law was going to be "dragged through negative press" if Raizada didn't cooprate with Fox. According to Raizada, Fox called Raizada's brother "guilty by association."
Explaining the finances behind Echo Fox
So what was the $5 million debt Rick Fox owed to Raizada?
In December 2017, Twin Galaxies loaned $2.5 million to Echo Fox in order for the organization to purchase a League of Legends slot. Twin Galaxies then loaned Echo Fox another $2.5 million in 2018.
In the summer of 2018, Twin Galaxies ran out of operating funds. Raizada and other investors responded by loaning to Twin Galaxies more than $3 million, secured by the $5 million in notes that Echo Fox owed to Twin Galaxies, as well as by Echo Fox's newly acquired slot in the LCS.
Later that year, Fox is alleged to have requested full control of Echo Fox. Rick agreed to pay $5 million for his share, and "personally guaranteed payment," said Raizada. He ended up paying $2.5 million of that amount in January 2019. The remaining $2.5 million was due later in the year, by June 15.
In January, the loans went to equity since those loans breached the franchise agreement terms made with Riot Games and the LCS. Fox sent letters to all of Echo Fox's investors asking that they participate in the transaction. These letters were shared with WIN.gg.
To keep the company afloat, investors bought $3 million worth of senior preferred equity. In documents obtained by WIN.gg, Fox tells investors that this was the "best thing" for the company. He then signed the binding term sheet.
But while this debt conversion was taking place, Fox was allegedly "begging" Raizada to help him "get out of Echo Fox," despite his having asked for total control just a few months earlier. Since Fox couldn't repay his loans, he told Raizada he wanted to trade all of his Echo Fox shares for Twin Galaxies shares. Fox is also alleged to have said that if he didn't get paid, he would do nothing more for Echo Fox.
That's when Raizada got into the altercation with Fox's lawyer over email.
In June, Fox refused to pay the remaining money he owed for interest that month. This is where Fox's statements about Raizada "putting a gun to his head" come in, as referenced in Fox's interview given to Richard Lewis.
When WIN.gg asked about Fox's allegations that Raizada was "self-dealing" in this situation, Raizada retorted that Fox didn't know what he was talking about.
"I don’t even think he knows what the words mean," Raizada said.
Riot Games demands Echo Fox sell LCS slot
Even though Raizada made clear his belief that Rick Fox is the reason for Echo Fox suffering financially, Raizada does admit that his own actions and his email outbursts have also made things difficult for investors.
After Riot was informed of those emails, the company carried out an investigation into Echo Fox. Riot ended up finding four material breaches. One of them was Echo Fox not having more than $5 million in liquidity. Another was having more than $1 million in loans.
“I did not want to hurt the investors. I said family members could buy me out, current members could, or buy me out through the sale process. But they weren’t trying to solve that," Raizada said. "They had other material breaches that were far worse than the emails. Nobody was willing to give them $5 million, and that was the main issue and that’s why they had to sell.”
According to Raizada, the sale has cost him almost $7 million.
“Fox saying I had to do the fire sale [in an interview], it makes no sense. Why would the largest equity holder in Echo Fox want to sell it cheap? I had the most to benefit from a high value, not a low value,” Raizada said.
Despite the bad situation and its continued fallout, Raizada still plans on remaining in esports.
“It’s unfortunate that [my kids'] dad has been called a racist. But I made a mistake and I’m paying the price,” Raizada said. “I just want to be an investor and a supporter and backer of new and innovative ideas. That’s just what I do. I’m not going to go away because of Rick Fox.”