Two Phoenix Suns minority owners have accused majority owner Mat Ishbia of fraud and using the team as his “personal piggy bank.”
Kisco WC Sports II and Kent Circle Investments claim Ishbia missed its own deadline to fund a June 2 capital call. They claim he tried to hide the missed deadline from other owners before partially financing his stake on June 9.
The minority owners claim that Ishbia converted a previous loan into equity to finance its contribution. They say he did not disclose the missed deadline because the operating agreement would have required him to offer minority owners the opportunity to buy unfinanced units, potentially diluting his stake.
“We believe the evidence will show that Mr. Ishbia has devised a scheme to threaten our clients with massive dilution of their stakes in the Suns if they fail to fund a capital call within 10 days, while simultaneously concealing his own inability to fund by the deadline,” said Michael Carlinsky, attorney for the minority owners.
An Ishbia spokesperson told Front Office Sports that the contribution was “timely” and that the minority owners’ argument “represents a nonsensical rejection of money he has contributed through an appropriate debt-to-equity conversion.”
The Suns called the lawsuit “a shameless shakedown dressed up as a legal process” in a statement. The team claims that Ishbia has invested hundreds of millions into the franchise and community.
The filing alleges multiple instances of self-dealing, including a loan to the team at above-market rates. It also cites the sale of arena naming rights to Ishbia’s company, United Wholesale Mortgage, without notifying minority owners.
The 10-year naming rights deal for the Mortgage Matchup Center was announced last month for nearly $115 million. The Suns defended the deal as “one of the largest in the NBA and no different than what other owners have done.”
The legal dispute began in August when the minority owners filed suit alleging mismanagement and lack of transparency. Ishbia filed a counterclaim in October.
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