Key Takeaways:
- Mike Tyson and Ric Flair have filed a federal lawsuit against four former executives and shareholders of Carma, a Chicago-based branding company, alleging a conspiracy involving criminal wire fraud, embezzlement, and money laundering.
- The lawsuit seeks damages, legal fees, and costs in excess of $50 million.
- The defendants allegedly made unauthorized side deals selling the celebrities’ likenesses, resulting in financial losses to Carma but lining their own pockets.
- The lawsuit also mentions musician Future, who allegedly had his licensing rights sold without his consent.
- Celebrity cannabis brands have had mixed success in the industry, with some outselling traditional brands but others struggling with authenticity and quality concerns.
Introduction to the Lawsuit
The world of celebrity cannabis brands has been marred by controversy, with legendary boxer Mike Tyson and professional wrestling icon Ric Flair’s attempts to launch their own brands resulting in a federal lawsuit. The lawsuit, filed in December 2022, alleges a brazen conspiracy involving criminal wire fraud, embezzlement, and money laundering. The suit names four former executives and shareholders of Carma, a Chicago-based branding company, as defendants. The lawsuit seeks damages, legal fees, and costs in excess of $50 million, and alleges that the defendants defrauded the celebrities and used the firm as their own personal piggy bank.
The Defendants and Their Alleged Misconduct
The defendants named in the lawsuit include Chad Bronstein, Carma’s former chairman and president, Adam Wilks, Carma’s former CEO, Nicole Cosby, a former board member and chief legal and licensing officer, and James Case, a Carma shareholder. The lawsuit alleges that the defendants made unauthorized side deals selling the celebrities’ likenesses, including with a vape manufacturer and a licensed California cannabis cultivator, resulting in financial losses to Carma but lining their own pockets. The defendants are also accused of soliciting personal gifts, including $50,000 Rolex watches, from Carma business partners instead of the normal licensing fees for using the celebrity likenesses.
The Alleged Scheme
The lawsuit alleges a broad pattern of misconduct, including securities fraud and unapproved sponsorships with the Cleveland Cavaliers NBA franchise. The defendants allegedly told investors that Carma, valued at $80 million, was worth $120 million, and sold their own shares in the company for profits in excess of $1 million. The lawsuit also accuses Bronstein of forming a new company to market Flair’s likeness, called Ric Flair Drip Inc., in which Flair was tricked into unknowingly signing away his intellectual property. Bronstein then sold a significant portion of the company to Carma but cut Flair out of the deal, the suit states.
Northern California Cannabis Connection
The lawsuit also alleges that Wilks, who served as the CEO at Captor Capital, a cannabis investment firm, used his position to secure a deal between Carma and Northern Emeralds, an upscale cannabis brand based in Northern California. The deal would see Northern Emeralds market and produce Tyson 2.0-branded cannabis flower and pre-rolls partially in exchange for royalties. However, the lawsuit alleges that Northern Emeralds failed to pay Carma more than $1.25 million pursuant to the agreement, and that Wilks received equity in Northern Emeralds in exchange for waiving the payments for his role at Carma.
The Success of Celebrity Cannabis Brands
The lawsuit raises questions about the success of celebrity cannabis brands in the industry. While some celebrity brands have outsold traditional brands, others have struggled with authenticity and quality concerns. Flair’s products, for example, commanded less at retail than average brands, according to Headset data. However, Tyson seems to have poured more effort into marketing a diverse line of cannabis products, including appearances at MJBizCon. The success of celebrity cannabis brands ultimately depends on various factors, including product quality, cost, and authenticity.
Conclusion
In conclusion, the lawsuit filed by Mike Tyson and Ric Flair against the four former executives and shareholders of Carma alleges a brazen conspiracy involving criminal wire fraud, embezzlement, and money laundering. The lawsuit seeks damages, legal fees, and costs in excess of $50 million and highlights the risks and challenges associated with celebrity cannabis brands. As the cannabis industry continues to grow and evolve, it is essential to ensure that all parties involved operate with integrity and transparency to maintain the trust and confidence of consumers and investors.
