Former owners and executives of TapouT are being sued by an ex-employee and associate who claims he was cheated out of money by the MMA clothing giant.
Dan Diaz is the former owner of the Hitman Fight Gear clothing label, which was acquired by TapouT several years ago and subsequently saw its industry presence gradually decline in prominence. He has filed suit against Dan Caldwell (‘Punkass’), former TapouT executive Marc Kreiner and the new owners of Tapout, ABG, among others.
Diaz is asking for “not less than two million dollars ($2,000,000.00)” plus general damages “in an amount to be determined with precision at trial”, punitive damages “in an amount sufficient to deter and make an example of Defendants”, prejudgment interest, attorneys fees and “further relief as the court may deem just and proper.”
According to his case papers, filed with the court in Orange County, California in 2011, he claims he was induced to sell Hitman to the TapouT LLC corporation on the basis of representations made by Kreiner which subsequently turned out to be false.
Diaz believes that the buyout was really intended only to be a method of getting him to surrender his 10% interest in sales of TapouT gear, which stemmed from his work as a designer for the company over several years.
The claim states that “Diaz is now informed and believes that Defendants made the various representations… for the sole purpose of getting Diaz to relinquish his existing rights to a ten percent (10%) commission in the sale of TapouT gear through [their agreement]…Defendants made their fraudulent representations for the express purpose of defrauding Diaz out of his commission rights.”
Diaz is also accusing Kreiner and Caldwell of skimming profits from TapouT LLC via a variety of illegal means. He alleges that both of them submitted expenses for office decoration costs which were well in excess of a reasonable price, to enable them to receive a cahs kickback from the decorators engaged to the do the work.
Kreiner is accused of taking cash directly from revenues generated at TapouT ‘warehouse sales’, when old stock would be sold off to the public at reduced rates in order to make space for new stock to be stored, and is also alleged to have demanded and received gifts and bribes from manufacturers and suppliers who wanted to win TapouT apparel production contracts.
Diaz’s allegations against ABG – the company which bought TapouT and its various assets such as Hitman Fight Gear – include claims that ABG used knowledge of Kreiner’s alleged skimming to drive down the price it paid for the company, and that it ignored Diaz’s legal rights while doing so.
Attempts to reach Kreiner for comment were unsuccessful. We are currently awaiting a response from ABG regarding the lawsuit and Diaz’s allegations, which the company is strongly contesting.