Saturday, December 27, 2014

Class Action Lawsuits Against Zuffa Set the Stage For an Interesting New Year

By: Rich Bergeron

Before you read this story, listen to Comedian Jim Gaffigan's take on legal documents for a good laugh:





Recently-filed class action cases brought by former and current UFC fighters against Zuffa, LLC are generating controversy and discussion from all corners of the MMA media. The first of these California-based cases hit the docket just as press releases went out to announce the filing. There was also a full-blown press conference celebrating the start of this intriguing course of litigation against the parent company of the Ultimate Fighting Championship, the undisputed world leader of the sport of mixed martial arts.



At first, Cung Le, Jon Fitch, and Nate Quarry (L-R above) were the three faces of the legal action. Another filing naming plaintiffs Javier Vasquez and Dennis Hallman hit the California docket Tuesday with language that is reportedly nearly identical to the other case. A third filing appeared on Christmas Eve, another lump of coal in Zuffa's stocking. This time it was Pablo Garza and Brian Vera as plaintiffs. Duplication of proceedings can be a nice way of forcing the other side to spend more money than usual defending the first salvo. If there is good reason for the cases to go on separately without quick consolidation, it will be three times the hearings the opposing lawyers need to attend, three times the paperwork, and three times the aggravation.

An initial  statement from the UFC indicated that they had not even been served the documents yet after the first round of stories emerged on the subject. Lawsuits traditionally begin with prompt service of documents, which involves someone called a process server, or in some cases a deputy sheriff or even a U.S. Marshall actually handing the lawsuit documents to the company representative. This is serious legal business, since you can't win if the opposition isn't even aware you're suing them. Some defendants try to play games to refuse or avoid service, but once they are served, the case is official. If the UFC persists in saying they have not seen the documents, the plaintiffs can also argue that service is already accomplished through publication, which is sometimes a last resort.

Examining the crux of the legal arguments in the initial filing, I can only conclude that the case makes a ton of legal sense to me. I would even say it does not go far enough. As a person who can say I've done legal battle with the attorneys for Fertitta Enterprises (a holdings and investment company owned by the same Fertitta family that owns the UFC), I'm also convinced the UFC's parent company will attack this with a relentless army of specialized attorneys. They won't be the ones who charge $500 an hour that Gaffigan mentions above. Some of them will charge  much more than that for a phone call or a short consultation. The Fertitta-owned Station Casinos chain paid some of their bankruptcy lawyers as much as $900 per hour or more to carry that case through the court process.

These firms backing these fighters will have to be ready for all out war, and in many ways it was a crafty and cunning move to publicize this effort before it even became an official legal action. It also makes sense to duplicate the proceedings on the off chance that the cases end up before two, three, or even dozens of different judges as multiple stand-alone litigation streams instead of being consolidated at some point. Legal battles often hinge on the paperwork, and well-heeled firms aren't afraid to kill a few trees to overwhelm their opponents with copious amounts of reading material. Responses to everything in all cases would also have to be filed, each of those detailed legal documents requiring different content and unique defenses. It's actually more like what Zuffa does when pursuing their own worst enemies in the courts. They are used to being the big bully who always gets what he wants. This time, they might be facing an army of Davids against one Goliath.

Unfortunately, much of the mainstream combat sports media wants to remain in the UFC's good graces and will not publish a crooked word about the company. Most of the "news" sites that support the UFC no matter what will dismiss these legal proceedings as worthless and hopeless. That's really too bad, since the UFC's objectionable and corrupt business practices are laid bare in these legal documents. If you really count yourself as a fan or supporter of this promotion you should read this whole case despite the difficulty of the language and the dozens of pages involved. To access the full case document from the opening action, click here.

Trying as hard as I can to look at this case objectively, I do have some important questions to raise.

The first question is where are the financial figures coming from in these documents? There are claims like, "On information and belief, UFC Fighters are paid approximately 10-17% of total UFC revenues generated from bouts." Yet, there is no exhibit or affidavit this statement points to for proof. This is not to say I do not believe this could be possible. I just want to see where these financial estimations are coming from.

The second major question is why are these lawyers only pursuing this action on behalf of such a narrow group of the larger spectrum of victims that their described monopsony/monopoly scheme impacts?  The reality of conditions exposed in these documents cries out for other promotions, individual promoters, managers, agents, burned sponsors, trainers and other supporting staff to be included as plaintiffs. Perhaps I should just wait and see on this front. These firms filed three detailed lawsuits in a single week, so by next month there could be dozens. Like Gremlins, these furry little legal creatures could multiply and turn into monsters.

Finally, what is the average fighter's costs for a year of full time training? There ought to be a reflection of this somewhere in this suit. I would love to see a poll of UFC fighters asking this question. Also, what is the average yearly income of a mid-level UFC fighter, and what percentage does he or she keep after taxes and expenses? Some of this information could come out of the discovery process if the case goes that far. A Median Income Level would be an excellent baseline for these attorneys to show that the fighters were not getting their just due out of this raw deal they had to make with the UFC in order to compete at the "elite" level of the sport.

I am certain there are still fighters out there who literally wind up in the negative after each fight with their purses and bonuses going directly to paying off expenses. Travel and lodging, passports, training staff, management, medicals, and the countless other costs associated with a typical training camp can bring a fighter from $60,000 to zero in a heartbeat. I think this is the harshest reality that will be exposed in these litigation streams. Yes, the UFC has medical insurance, but fighters bear the costs of medical testing required for every fight. To get to the level where you are attracting huge show, win and bonus purses, you need to treat mixed martial arts training like a full time job. Fighters don't just drop out of the womb as seasoned experts at every discipline. It takes dedication, heart, patience, and in many cases copious amounts of money to get you and your entourage to the promised land. Sponsors can only chip in so much after they pay the UFC just for the privilege to be associated with you. Purses can dissolve before the fighter sees a penny.  

This case tackles a plethora of actions the UFC took to lock down the MMA marketplace as the dominant, controlling force. The Federal Trade Commission investigated many of the same circumstances and found no evidence that would lead to any formal action. The fact that the FTC was even looking into the fight promotion at all was headline news, but their lack of action made the UFC look as if it was vindicated of all monopoly and monospony claims. The reality is there are just too many obstacles to a government entity bringing such an action against such well-funded and well-positioned opponents. These agencies have to deal with red tape, politics, and influence peddling on top of trying to build a rock solid case while fighting against highly skilled corporate attorneys. It doesn't help that the Abu Dhabi government is in bed with the promotion by way of their 10 percent ownership of the UFC through Flash Entertainment. Talk about an unbreakable piggy bank!

The Fertittas are notorious wheel greasers, and they promote and support powerful politicians like Harry Reid with frequent donations and endorsements that Reid repays when he can. They are also traditionally very supportive of the Republican Party. Just because all their direct Mafia ties are long gone does not mean they forgot the art of maintaining "connected" status. This is why the FTC's refusal to bring charges does not really mean there was nothing concrete behind their concerns. The Fertittas are also responsible for a large chunk of taxes paid in the state of Nevada and California, and wherever else they do business across the country. Being an average Joe taxpayer isn't going to get you out of many major jams, but things change when you pay the kind of epic tax bills the Fertittas foot every year.

At the same time, a civil law firm does not have the same constraints to worry about. They're not playing with taxpayer money. They listen to their clients, not constituents or powerful politicians. They don't have to fear a backlash. Still, the court system can also be influenced through political channels. It's an uphill battle either way. So, even when there's plenty of smoke, there's no guarantee any of it will catch fire unless conditions are absolutely perfect. This may just be that time when the blaze finally erupts, but I would be more inclined to expect a quiet settlement once the first flicker of flame becomes visible here.

Reading this suit reminded me of so many cases of fighter favoritism, payment complaints, and the UFC's many moves made to squash the competition. I am reminded first of the IFL's demise and their longtime feud with the UFC. The creators of the IFL allegedly took the UFC's proprietary information when they left the company's employ to start their new team-based fight league. The resulting lawsuit revealed that Dana White personally threatened company employees at the time with termination if they did not all immediately sign a formal non-compete agreement.

I also served as an informal consultant to one of the lawyers handling the PRIDE suit against the UFC after promises to keep the top-tier MMA promotion viable were quickly broken. The money to purchase PRIDE actually came from something called a "senior secured credit facility" that is due next year. This complex loan and credit package totaled around $400 million, and even Billionaire Mark Cuban invested in the debt. This is ironic, especially since I actually received correspondence from Cuban during the time when he was battling the UFC in court to retain the services of Randy Couture in his own fledgling fight league (HDNet Fights) that never quite got off the ground. Cuban was trying to put together a Couture vs. Emelianenko fight, but the bout fans were screaming for would never happen due to the whole ugly legal debacle. 

Cuban told me in a personal email that he was keeping an eye on my case against the Fertittas, and it came as a bit of a shock. A true financial genius, he eventually figured out how to make money off the UFC with or without Randy on his payroll. I later questioned Cuban on the Fertittas owning Xyience, which at the same time was sponsoring the UFC. Cuban wrote back and explained that there is nothing inherently wrong with them doing that from a business ethics standpoint and the arrangement was perfectly above board. Still, I thought it was strange that the Fertittas seemed to go out of their way to obscure their ownership of their own sponsor.

The recent class action lawsuit takes time to further explain Couture's issues with the UFC, including his refusal to sign over his lifetime rights. At the time Couture took a stand against his former bosses, it was a move that was unheard of. Most fighters knew if they wanted to get anywhere in the industry, they had to maintain a friendly relationship with the UFC bosses and toe the company line. Couture was one of the promotion's success stories and could claim a healthy fan base and a huge part of the UFC's history. He didn't want to short change his legacy and struggled with the UFC over their demand for lifetime rights and other concessions. The feud would grow to be a bitter one. It's actually still simmering quietly in the wake of Couture being excluded from even being able to corner his own son when Ryan Couture was a UFC fighter for a brief stint.

I interviewed Ryan Couture personally in Las Vegas a few years ago, and he told me off camera that his father encouraged him to join Strikeforce because, "The UFC likes to keep you under their thumb." The UFC's buyout of Strikeforce eventually led to Ryan having to take the best offer that came along, which happened to be the UFC's. Losses to Ross Pearson and Al Iaquinta were enough to force the organization to part ways with Ryan, and he now fights for Bellator.

So, I have intimate knowledge of how this climate of dominance developed and how fighters have been conditioned to think that you can't fight the UFC, even if you have a legitimate beef. UFC fighters are taught from their earliest involvement with the company that you're better off being blindly loyal, staying perpetually quiet about any grievances you might harbor. Typically, fighters who do speak out are those who are above reprisal (i.e. Jose Aldo or Jon Jones) or obscure enough to dismiss as disgruntled nuts (i.e. Jacob Volkmann and John Cholish). The bulk of the UFC masses want to remain employed and on the rise, hoping for brighter days and bigger paychecks. Criticizing the company leadership is a great way to earn a demotion or guarantee that you'll never get a fight bonus again.

The case also highlights Quinton "Rampage" Jackson's past run-ins with the promotion he just recently re-joined after referring to his old bosses as "the devil you know" in a Twitter post. The complaint, which Jackson is not a party to but could still actually benefit from, describes how Jackson secured individual deals with a figurine company called Round 5 and sneaker giant Reebok before the UFC moved in and blocked these moves in favor of arranging their own longtime agreements with these companies.

Jackson and Tito Ortiz both departed the UFC for Bellator amid very public disputes regarding how their careers progressed under their UFC contracts. They both once had plenty to say about how much they were mistreated, but now they are singing what sounds like the same tune and avoiding run ins with this all-powerful force in the industry. Business is business, explains Jackson. Ortiz officially turned down the opportunity to join this round of lawsuits, citing his ongoing responsibilities as a manager and agent for fighters. In other words, he doesn't want to burn down the bridge he just began to rebuild after burning down the first one.

The basic gist behind Ortiz's motivation for opting out of the court battle is actually explained on page 47-48 of the initial complaint by Le, Quarry and Fitch:

 "Professional MMA Fighters who compete at the highest level of the sport cannot 'opt out' of UFC because the UFC’s anticompetitive conduct has made it impossible to maintain a successful MMA fighting career outside of the UFC."

So, if that statement is indeed correct, it's highly likely that Ortiz will bite his tongue and wind up following Jackson back to the UFC in the near future. Still, where some fighters are convinced the UFC will have their backs in the long run, others are buoyed by the suit and want in. One such fighter is Sean Sherk, who retired with a 36-4-1 record that included a long stint in the UFC. Like many fighters who are no longer in the inner circle of the company as fighting superstars or honorary executives, Sherk can't help but look back and feel cheated. What he put in seems to be exponentially greater than what he was able to reap in return as far as purses, profits and residual income. Sherk is the first fighter I've heard of supporting this case who actually owned a UFC belt at one time, so if he gets formally involved it will certainly be monumental.

Though many experts might think most current UFC fighters will refuse to sign up as plaintiffs for fear of reprisals or retaliation, it might also be hard for some to explain why they signed a petition that was reportedly circulated to UFC fighters in 2012 (as described by Pablo Garza). The petition reportedly asked fighters to confirm the promotion was not a monopoly and that all its fighters were treated fairly. The signatories of this petition might be used against the plaintiffs in these class action cases as proof that the UFC is running a reputable and upstanding operation with no hint of monopoly involved.
   
The reality is, there really are "company" fighters who get all the breaks while their lesser or equal counterparts continue to get the short end of the stick. This group of pampered active and retired insiders includes Chuck Liddell, Dominic Cruz, Gilbert Melendez, Daniel Cormier, Brian Stann, Dan Hardy and Kenny Florian (among others). Other than Liddell, they all have lucrative television gigs. Liddell has commercials instead with Duralast and Bud Light. I have never personally heard any of these guys present an argument that the UFC is in any way corrupt, greedy, or worthy of any significant criticism. You often find the same level of intense blind loyalty with whoever gets picked as a coach for The Ultimate Fighter. The lone exception may be Jason "Mayhem" Miller, who was hired more for comic relief than being a yes man. Sticking to the old company line is obviously being rewarded for most of the fighters who bite their tongues when it comes to lashing out against the company's management.

Jon Jones and Ronda Rousey are stars who are really almost bigger than the promotion, but they still wind up being sponsored by who the company wants to highlight most. I suppose they are fighters who still get treated like they can do or say no wrong, but they still have to stand by the main causes the company champions. They are spokespeople by default, shilling whatever they have to in order to remain loyal to their bosses. Both Rousey and Jones were sponsored by Xyience when the Fertittas owned it. Ronda is also the "prettiest" face involved in the UFC's frequently-airing commercials for a major cell phone network. Cain Velasquez is also featured in the same commercials. Jon Jones is also the first MMA athlete to sign on with DraftKings.Com as they assemble their very first Fantasy MMA offerings in time for his upcoming bout with Daniel Cormier.

The only hint of any major animosity shown toward the promotion by any of the above-named "company" fighters in my recollection was when Brian Stann retired and cited concerns regarding PED usage in the sport, the same sentiment Longtime UFC Welterweight Champion George St. Pierre pointed to as the main reason for his departure from the sport.

Stann also recently made a telling remark during last Saturday's UFC broadcast. During one fight that didn't live up to expectations, Stann stated that as a fighter, "You have to take risks if you want to make a name for yourself in the UFC." If anyone should know, it's Stann.

If you end up washed up or not making enough money, so many fans and UFC supporters (often called nuthuggers on MMA forums) will condemn you for not trying hard enough. It's your fault, no matter what, even if you spent half your own life savings trying to make it in the sport. Yet, the UFC is not a powerhouse because it has only successful and dynamic fighters. It takes some fighters who are not so dynamic and amazing to actually show how good the best fighters really are. Having these lower-tier fighters on board is essential, but their lack of extraordinary talent also makes it easier for the UFC brass to abuse these folks. The very design of the bonus system and the fighter pay structure encourages fighters to take risks in every fight in order to achieve success in the UFC. You can't just win by split decision on a smart, boring strategy and expect to get all the spoils of fame and fortune that fighters who always win by knockout get. It's no longer a case of winning being enough. You also have to put on a show to get anywhere in this organization. 

Even though he's not a perfect poster child for fighters who did everything right and still got shafted, Cody McKenzie's recent retirement is worth noting here. He recently expressed some major issues he had with working for the UFC and trying to survive on the outer fringes of the sport and failing. Though it would be easy to argue Cody and other complainers like the Diaz brothers just don't work hard enough, you could also make the claim that they were maybe convinced at some point along the line that working harder just wouldn't matter. Some people just either don't have that natural talent or simply have no chance of getting to the elite level of the sport. The cards really are stacked against some fighters, even though some of them possess all the talent in the world.

Whatever the reason a particular contender has for lacking supreme ass-kicking ability, being a halfway decent fighter also takes a tremendous amount of work and sacrifice in this sport. The effort put in by these less than superior combatants in the UFC is just as tremendous at times as those fighters who hold championship belts. Yet, the same effort rarely earns the same return under the UFC umbrella. It's all about popularity, positioning and performance in the UFC. You can't just work hard. You also have to suck up to the brass, align yourself with the right people, and just be a good soldier in general. Even if you get booted from the UFC at some stage of your career, you still have to keep quiet about your bad experiences if you ever want to make it back into the fold.

The UFC taught Cody McKenzie a hard life lesson. They basically told him to "go fish," which is actually a career the Alaskan native would have  been better off pursuing. After all, everything on the boat is paid for. There's no on-the-job travel expenses, trainer and management fees, or dependence on extra bonus money for superior performance. You show up, you work hard, you get paid, and you go home if you don't wind up in the hospital or on the bottom of the ocean due to some kind of tragic accident.

The Ultimate Fighting Championship has a serious problem with the way they treat fighters, plain and simple. Does this lawsuit do enough to put a stop to it? I doubt it, personally. I envision this whole situation fading away quietly with each fighter getting a few million and the lawyers getting all their fees paid. All it will take is one or two bigger names coming out in support of or actually joining one of these classes of plaintiffs. There will be a point when the bad publicity and mounting sense of revolution will become too much for the UFC brass to bear, and they will pay a settlement. Nothing will actually change for the better in the long run if that happens.

For sweeping change to come out of any of this litigation, it will have to go to trial. People will have to testify, damning documents will have to be exposed in discovery, and fighters will have to tell the sordid details of their awful personal experiences with this all-powerful promoter for the record. No matter how dedicated the plaintiffs and their attorneys are, I doubt California's political climate and the possible favoritism of the Fertittas due to their casino and property interests in the state will allow this case to get to trial.

So, it makes for a good story and promotes healthy debate on the monopoly subject, but if any changes do eventually come out of this court battle, it will take years for them to take effect. The worst case scenario would be a climate where the lawsuit is actually killed before it gets off the ground, which is entirely possible if the UFC has that much behind-the-scenes influence in California.  

Nevertheless, this is a fantastic start in the quest to bring this organization to task for the way their overbearing actions negatively impact the sport of MMA as a whole. It is one thing to build something great while focusing only on your own business model and building it up from the initial concept into a worldwide force to be reckoned with. It is something else entirely to focus on destroying and/or minimizing everyone else in your niche to get to the top. Honesty is hardly ever the best policy in our capitalist way of doing business, though. Sometimes keeping secrets is actually crucial to a company's survival.

Consider the case of a guy named Ken Pavia who used to be a big player in the MMA industry and is now a bit more removed from the sport. Pavia shared some UFC contracts with Bellator and wound up on the business end of a Zuffa lawsuit against him. The debacle eventually led to Pavia leaving the country to work for an overseas fight promotion. Pavia told me during this period that Dana White personally threatened him over the situation, telling him that the company would do everything in its power to get revenge. He even claimed White told him he would not be happy until Pavia's fiance left him and he committed suicide. A countersuit filed on behalf of Bellator and Pavia helped initiate a settlement in the case that is not allowed to be discussed by either party. So, now the outcome of a case about company secrets is itself a company secret.

The point is, the UFC is constantly building up their power base, and they have tremendous pull when it comes to making or breaking a fighter under their employ. They can also make life difficult for anyone who may rely on their support to do business in the industry.

Often the courtroom can be the last place to look for any semblance of real justice, but the tide has to turn somewhere. Maybe it will turn here, but my outlook on the situation is colored by skepticism and personal experience with the type of lawyers the Fertittas hire and how they operate. I'm more inclined to think more publication and less legalese would be a better way to inspire change. A blockbuster documentary exposing fighter complaints, maybe with a few blurred faces and distorted voices, might go a lot further in blowing the lid off this corruption.

Unfortunately, there's also a chance that this behemoth is just too big already and nothing will be able to keep it in line. As these class action cases outline, the UFC has been at this monopoly building thing for a long time, and they're very adept at avoiding culpability for their worst transgressions. Still, all it will take is one honest judge in California who is willing to hear the case out and let it continue to a final conclusion. And it would certainly help to have a few more high caliber fighters coming out of the woodwork to join the cause and levy their own personalized complaints and grievances.

I have been harping on the possibility of a legal action like this against the UFC for a long time, ever since Dana White started saying he wanted the UFC to be as popular and powerful as the NFL someday. I predicted years ago that a class action lawsuit could be the only way to stop the rampant abuse many fighters under UFC contract face in trying to earn a respectable and comfortable living. Even the highest paid UFC athletes no doubt make a huge chunk of their income from sponsors and endorsements. The most famous fighters also get movie roles on top of all that, so there's not much to complain about. Yet, what does it say about the sport and the owners of the biggest promotion in the sport when even their top athletes aren't making a luxurious living off the actual wages they're paid? Why should they need to depend on all this outside income when the profits of the promotion make it possible for them to be compensated much better without all that hoopla?

The answer to those questions may be more simple than you think. It all amounts to one short word, just five letters long: GREED. And the UFC brass is so downright greedy that I can't imagine them spending more on a settlement than they would be willing to shell out on the army of legal bulldogs it will take for them to crush their opposition here. When you are as corrupt and conniving as the Fertittas and Dana White, lawyers can be the most important piece of the puzzle. Some of the sleaziest attorneys are just as likely to advise you on how to break the law through sophisticated maneuvering as they are to help you make sure to follow it to the letter. The kind of lawyers employed by these folks are the ones all the lawyer jokes are really made for. Many of them already sold their souls to the highest bidder, and they have no scruples or morals remaining to stop them from taking these valid fighter complaints and turning them into a puff of smoke.

I, for one, will be rooting for the fighters to score a key victory here that finally exposes the UFC for taking advantage of the very people who made the organization what it is today. The publication of the suit itself goes a long way in doing just that, but results are what will really matter in this case. This legal team has the personnel and the persistence to make things interesting, but what they really need is to secure a final judgment or at the very least get to trial.

Stay tuned as we follow this case to see if any of this legal wrangling will pan out for the plaintiffs in the long run. I know one of the folks behind this case is interested in starting a fighters union at some point, so even if the case settles it might lead to some financing for that future endeavor. This development might not represent a perfect plan to revolutionize the way the UFC does business, but it's a damn good start as far as attempting to root out some of the corruption and mistreatment some of the promotion's fighters endure. I will keep a sharp eye on these cases as they play out and pass on new documents and developments as I acquire them.

Tuesday, September 2, 2014

Fertittas Walk Away From Xyience & Xenergy With Big Red Buyout

By: Rich Bergeron

Inside sources at Xyience, Incorporated broke the news to me last week that the company would soon be sold off to Big Red, based in Austin, Texas. Employees will apparently not be receiving severance packages, and early indications are that the beverage company buying out the brand will not seek to enter into the supplement business. This means only the Xenergy line of energy drinks will remain under the Xyience label. I held off on publishing the news immediately due to a promise of more intelligence if I let it go a few days. Then, the Las Vegas Review Journal forced my hand today with THIS REPORT.

The sudden washing of their hands of the former supplement giant known for sponsoring Chuck Liddell in happier days is par for the Fertitta course. It comes as no surprise that Lorenzo and Frank would bail on the company in this fashion. It certainly is ironic, though. It was actually disgraced Xyience Founder Russell Pike who originally came up with the idea to hype up the Xenergy line in the hopes of selling it to a major bottling outfit. Pike wanted Pepsi or Coke to come in with a multi-million dollar offer to take over Xenergy and transform it into a wholly unique company. The Fertittas obviously fell short of that lofty goal (maybe it had something to do with something Dana White once said), possibly banking on their Galveston, Texas roots and other family connections in Texas to ink the new deal that allows them to walk away from this boondoggle.

Other whispers from the final days of the Fertitta-run Xyience indicate that marketing studies showed Xenergy is being sold to more mainstream non-UFC-fans than ever. This reality also means the end of UFC sponsorship deals with Xyience and Xenergy.

One thing the company managed to do well over the last few years is in the realm of building distribution agreements for their sugar-free energy drink. Since the heady "Monica" days at Xyience, Xenergy's always been easier for the company to market than the supplement lines. Insiders who are aware of the Fertitta walkout point to profitability, or lack thereof, as an issue for the whole conglomerate. Lorenzo Fertitta in particular, one of the principles at Fertitta Enterprises (which holds the official, albeit obscured, ownership position over Xyience), is reportedly growing tired of losing $5 million a year.

This is the end of another monumental scam for the Fertittas, who just barely escaped serious liability in a lawsuit brought against them by the U.S. Trustee in bankruptcy court. The scheme that drove Xyience just far enough into the ground for the billionaire casino barons to take the whole thing over is now officially in the rear view mirror of their Rolls Royce. The roadmap's been painfully obvious to people like me from the very beginning, but somehow the local boys made good managed to avoid culpability and accountability for the mess they ultimately left behind by their selfish actions throughout the whole process. Let's not forget the hundreds of innocent shareholders who saw their investments turn to dust thanks to the way the Fertittas swept in and turned the whole operation into another sad example of vulture capitalism.

Though I took some small consolation from Fertitta Attorney Greg Garman telling a judge at my final hearing that my reporting has caused his clients multiple headaches with the gaming authorities in Nevada, it is even more comforting to know the Fertittas never could get Xyience buzzing again under their leadership. Maybe they will finally come to realize they would have been better off doing everything above board. I know, fat chance on the "Come to Jesus" moment ever happening for these scum-of-the-Earth con artists.

The bottom line is there won't be any former Xyience investors waiting for the final closing of this deal to cash in on what they put their life savings behind so many years ago. The Fertittas will be another couple of fat cats getting fatter when they deposit the final checks that bail them out from this disaster they constructed and created out of sheer, callous greed. Perhaps it will all go to pay for another yacht, another private jet, or another summer getaway they can jet off to when everyday life gets too real. Whatever the final sale price is, it is a crying shame that none of it will go to the honest folks who actually put the brand on the map with their hard-earned money from decades of the kind of hard work the Fertittas themselves will never be able to relate to. Whoever said liars and cheaters never win probably never met Lorenzo and Frank Fertitta III.

We'll have more details as they come to light on this blockbuster transaction.  


Saturday, June 28, 2014

Convenient Accident or Cold-Blooded Murder?

"You wanna pull off a brilliant murder, you gotta act like it's an accident. If you do it right, you ain't even gotta be there when it goes down." Jamie Foxx as Dean Jones in Horrible Bosses (2011)

EDITOR'S NOTE: It may be helpful for readers to review a few of our prior reports herehere, and here in order to better understand the history leading up to the events described in this article. 

By: Rich Bergeron

      More than 20 years ago, on the afternoon of November 4th, 1993, Carl Wesley Thomas died after his 1992 Suburban crashed on a gravel-lined stretch of Plush road in Frenchglen, Oregon. According to the official police report (for the full document click on these links to pages 1, 2, and 3), the investigation of the scene indicated the vehicle swerved to the left first, with the two left-side tires leaving the road briefly. 

     Upon swerving back onto the road, Thomas apparently paid dearly for not wearing his seat belt. He was ejected from the vehicle as it rolled over, crushing him underneath it. The report goes on to state that the vehicle rolled again and wound up in a ditch at the side of the road. Thomas was discovered face-down on the road, some 36 feet from where the Suburban ultimately came to rest. 

     The Harney County Sherriff's Office dispatched Officer F.H. Hickey, Jr. to the scene. His report of the accident explained, "The victim received multiple fractures of the right leg, a flailed chest, and head injuries and was pronounced dead at the scene at 6:15 PM." 

     Whatever Hickey observed that did not end up in the report may forever remain a mystery, because the officer died of a heart attack in 1995. 

      The Sheriff at the time was Dave Glerup, who still holds the position today. I spoke to Glerup last October, just a few weeks shy of the 20th anniversary of the fateful crash. He explained that the scene of the rollover was a rural, remote road which experienced "lots of accidents of this type." He added that the conditions were "kind of treacherous," especially for anyone who was driving while intoxicated. 

     Officer Hickey's report also indicated that a half-ounce of cocaine was found on Thomas along with an empty baggie and a short straw, discovered in his pocket only after the body went to a local funeral home. The records Sheriff Glerup sent me included a Blood Alcohol Report on Thomas from the State Medical Examiner, which came back negative for alcohol. To the sheriff's knowledge, there was never any testing done to determine whether Thomas had any other drugs in his system at the time of the crash.  

    Despite inferences of foul play suggested to him over the years, Sheriff Glerup remains convinced that the cause of death should be classified as accidental. "It's hard to believe this could be anything but an accident," he explained. "I can't picture a homicide where the vehicle actually rolls over him like that." 

   Throughout the decades since the incident, rampant speculation still points to the case as a possible homicide. Adding to the suspicious circumstances involved in the crash is the fact that, just prior to his death, Thomas agreed to provide testimony at a very important meeting with Missouri Gaming officials regarding their inquiry into whether or not they should grant a gaming license to Station Casinos. Just before his death Thomas also reportedly met with Station Casinos officials to discuss his summons to Missouri, and that meeting most likely included Frank Fertitta, Jr. offering counsel to his longtime friend and associate. The crash happened on his trip back to Oregon from the Vegas sitdown, and it guaranteed Thomas would never testify in Missouri. The Fertittas were able to get their Station Casinos license after all with the dead man telling no tales. 

     There was only one condition put on the final approval: Frank Junior could not be part of the Missouri operations of the company. Frank's eldest son Frank Fertitta III, AKA "Frankie Three Sticks," ended up having to hold the reins there in Missouri until the state implicated the company in multiple scandalous incidents detailed further here. Missouri revoked their license and forced Station Casinos to sell their Missouri properties and go back to Vegas where Frank III also eventually had to take over due to his father's questionable past.  

    It's a long story, but it's safe to say Station Casinos would benefit tremendously from the death of Carl Thomas. Though that doesn't make it a sure thing that the crash was somehow orchestrated or caused by an unknown suspect connected to the Fertittas, the family collected a unique type of figurative "insurance" after the "accident."  

     To put things in perspective, Thomas earned a permanent ban from all Nevada casinos in 1990 after being implicated in the massive skimming operation popularized in the 1995 movie Casino, starring Robert DeNiro and Joe Pesci. Frank Junior himself was on the fringe of that scandal, and the prevailing Las Vegas legend has Frank taking over Thomas' co-ownership of what later became the first Station Casino property for a lump sum of one single dollar. The forfeiture of his ownership interest reportedly came just before Thomas went to prison for what was supposed to be a 15-year stretch. Thomas served only two of those years according to a report of his death published in the Orlando Sentinel, thanks only to his willingness to cooperate with authorities.

     Frank Junior had connections to multiple casinos in Las Vegas during the heydey of Mafia skimming there. Between his departure from Texas in 1960 and his purchase of "The Casino" with Carl Thomas in 1976, Fertitta went from bellboy to dealer to pit boss to Baccarat manager to general manager at properties including: The Stardust, The Tropicana, The Sahara, Circus Circus, and ultimately The Fremont. "The Casino" later became "The Bingo Palace" which would morph further into Palace Station in 1983, launching what would become a vast "locals casino" empire rivaled only by the Boyd Corporation founded by Sam Boyd. To this day, Station Casinos and Boyd compete as the leaders of this market catering to local Las Vegas residents and casino workers.  

     The jury is still out on how Frank Junior avoided prosecution in the skimming investigations, especially since FBI wiretaps caught him on tape talking about "excess cash" and other veiled references to the skimming repeatedly. A security agent named Harry McBride, who worked under Thomas at the time, also told authorities that there was a "Frank" involved in perpetrating the skimming operation at the Fremont Hotel and Casino. McBride also cooperated with investigators who ultimately turned Thomas as well. McBride testified in a U.S. District Court Case against five members of the skimming ring in 1985. 

      There are no official records I know of regarding any testimony or cooperation on the case offered by Fertitta himself, but I did find one court document in which a name of a witness was redacted, and the person described sounded like Fertitta. My personal theory is that Frank was a secret witness in exchange for immunity from prosecution. Rather than testify in open court, he could have provided background information that helped further the investigation. After all, that might explain why David Helfrey, the chief prosecutor in the 1985 trial cited above, later went to work for Station Casinos in Missouri. If Frank Junior being a snitch sounds too far fetched, consider the fact that Frank "Lefty" Rosenthal (played by Robert DeNiro in Casino) died before the fact that he was a government informant leaked out. 

      Another possibility is that Carl Thomas himself could have requested Fertitta be left alone in exchange for his cooperation. Thomas switched sides during the same 1985 trial in which McBride testified. He obviously had some very incriminating and useful evidence for federal prosecutors about all the players, but he certainly could have left Fertitta out of any information he volunteered. The only other alternative explanation for Fertitta avoiding jail time is that he was an extremely lucky man. 

     For more on the investigations into Mob-influenced Vegas skimming at the time, check out this Dennis Griffin blog, which is the first of three chapters on the whole operation. Like most organized crime schemes, the whole enterprise turned out to be very sophisticated. The movie based on the true events is a bit loose with the facts, and it's really only half the story. 

    Harry McBride would later resurface during a 4-year probe of Frank Junior by the Nevada State Gaming Control Board in the lat 80s. If McBride agreed to testify before the Control Board, it could prove that Fertitta lied about his role in the Argent skimming operation when he applied for his gaming license. Thanks in part to McBride's outright animosity toward a commission member, the vast political connections cultivated by Frank Junior, and also possibly the lack of any criminal penalty for not taking the stand, McBride declined to cooperate with the board. He reportedly also did not think any good would come of him testifying. 




     The final decision on the matter came down to a 2-1 vote to take no action against Frank Junior. Just a few years later, in 1993 (the same year Carl Thomas died), Frank Junior passed the empire to his sons Frank III and Lorenzo. Despite Frank Junior giving up official control of Station Casinos, he spent a great deal of time at the very same property he named "The Casino" when he bought it with Carl Thomas in 1976. Though he was no longer officially in charge, workers at Palace Station would often run into Frank Junior making his rounds or eating lunch there right up until his tragic death on the operating table during a heart procedure in late August of 2009.

      Carl Thomas died a tragic, yet convenient death for a Las Vegas family that later saw their power and influence grow exponentially. Even a pre-planned bankruptcy of the whole Station Casinos chain didn't stop the Fertittas from reigning supreme in the locals market and taking a once little known fight league from barbaric side-show to mainstream attraction. Through it all, Lorenzo and Frank III heeded the example of their dearly departed father. Like Frank Junior--who was a prolific political donor in his day--they always grease the wheels whenever and wherever possible. Both Democrats and Republicans benefit from that family tradition, and if paying off the politicos isn't enough to keep their corrupt actions from being shut down, they also continue to keep up their father's habit of buying a ton of advertising in the local papers to keep mainstream reporters from writing too much about their worst transgressions.       

     Beyond Las Vegas, the Fertittas also have contracts with various Indian-run casinos to manage casino complexes across the country. The Fertittas also do consulting work for casinos and stand at the forefront of the online gaming movement. This quiet expansion is nothing new, which is likely why the Harney County Sheriff's Office received requests for the records of the Carl Thomas crash from the Missouri Gaming Commission and the Indiana State Police Gaming Enforcement Section in 1994. Oddly enough, Nevada gaming officials have never requested accident report copies according to Sheriff Glerup.  

    My own investigation of the records leaves more questions than answers. The first question, and perhaps the most important one is: what caused Thomas to swerve when the crash initiated? Even the most comprehensive forensic examination with all the technology we have even today might run into a dead end trying to answer that one. The fact that the crash happened on a gravel road might mean that any tracks of another vehicle that was possibly involved might not be detected by investigators. Another unanswered question is why was there no testing for drugs when Thomas had cocaine in his pocket at the time of his death? Also, how often are passengers ejected from a vehicle that then rolls over them? Though Sheriff Glerup concludes the ejection and rollover makes it most likely the cause of death was accidental, I really don't understand that reasoning. 

     If the straw and the cocaine were both in his pocket at the time of the crash, it seems obvious to me that Thomas wasn't doing the cocaine at the moment of the initial swerve. So, that can't be the cause. If there was any amount of cocaine in his system, it also seems highly unlikely he fell asleep at the wheel. The only valid explanation in my humble opinion is that he was trying not to hit an animal crossing the road (accident), or another person and/or vehicle was responsible (murder or vehicular manslaughter). Since the area was so remote, there would be no witnesses, and law enforcement would take considerable time to arrive on the scene. 

     Rather than pin this down as an accident, I consider this a cold case that should be classified as unsolved with the official cause of death deemed undetermined. Unfortunately for all who wish to know the full truth, this is one case that will never be re-opened. There's absolutely no possible way of finding out exactly what happened, which makes Jamie Foxx's line at the top of this story so relevant to the situation. If it was murder, it was executed flawlessly. If it was actually an accident, there's still not enough evidence to conclude what really caused the rollover. It's a perfect storm of suspicious, but easily explained away facts that could support either side of the debate. Regardless of how he died, though, without Carl Thomas helping Frank Junior get his start, the Fertitta empire might not exist today. In the same breath, it must be said the death of Thomas also helped guarantee the continuation of that empire that might have been stopped in its tracks if Thomas told the truth in front of those Missouri gaming officials. 

      Those who dismiss the conspiracy theories would point to Thomas not implicating Fertitta when it counted back in 1985. Why would he bother to throw Frank Junior under the bus in front of a gaming commission that didn't have the power to throw him in jail for a long time if he didn't cooperate? Doubters would also point out that Fertitta wouldn't have a formal meeting with Thomas if he knew he was going to have him killed on the trip home. The very fact that at least two gaming authorities wanted to see the crash report proves that even the slightest possible inference of a criminal deed sheds a bad light on any gaming license candidate. Why would Frank Junior risk the suspicion that would surely fall on him? I can only surmise that if it was murder, Frank Junior might not be the one who ordered it. If he was running the Fremont skim for the Kansas City mob as the evidence shows, he could have also expanded to Missouri to appease the next generation of the same Kansas City outfit after the original skim bosses went down. 

      A murder for hire operation of this scope and magnitude, leaving no trace of evidence of a homicide, seems more like the work of a trained and experienced killer used to working in the shadows of the underworld. The hit could have been ordered by someone else deep within the organization who stood to benefit from Station Casinos getting a Missouri license, if indeed it was a sophisticated hit. Then again, who had more to gain than Frank and his family? Therefore, you can't forget the words of another "Lefty" from another movie based on a true story. I'm talking about Al Pacino's character in Donnie Brasco. "When they send for you," Lefty said, "You go in alive, you come out dead, and it's your best friend that does it."

     Regardless of the true circumstances surrounding the Carl Thomas crash, it is a mystery that will follow the Fertitta family for eternity. The ghost of Carl Thomas will haunt the family legacy as long as the facts as we know them are passed down from one generation to the next. The cloud of suspicion will never go away even if speculation of any current mob connections to the Fertittas is unfounded. The fact is, the physical Mafia ties may be long gone, but the organized crime mentality still exists thanks to what Frank Junior passed down to his sons. Everything they do may technically be "legal," but there's a good chunk of activity that could be labeled very close to crossing the line into criminal behavior. Even if you can't call it criminal, you can certainly call it corrupt and underhanded. Go back through their history, and you will find one deftly avoided major scandal after another. From Argent to USA Capital to the orchestrated Station Casinos and Xyience bankruptcies to the dirty dealings of Zuffa over the years, it's all a matter of complicating and obfuscating things just enough to avoid serious lawsuits and/or criminal prosecution. It may not be the textbook definition of "crime," but it's definitely organized. 

Monday, October 7, 2013

Smoking Gun Evidence that Bergeron Case Was Unfounded in Law or Fact




The above email chain dates back to the beginning of the $25 million Xyience lawsuit filed against me in Las Vegas District Court back in 2007 by Attorney Jamie Cogburn. These exchanges came from an email recently sent to me by the brother of Xyience Founder Russell Pike, who is currently incarcerated due to a conviction for tax evasion. I will be publishing a large cache of other insider emails in the near future.

At the time these emails originated, Pike was working feverishly to get more investors to come in to keep Xyience viable. My reports were making those efforts nearly impossible. The lawsuit described investors willing to enter into financing with Xyience, but only if my articles were removed from the Internet. As soon as the case resulted in a preliminary injunction against me, Russell Pike sent a representative out to deliver copies of the injunction order to local investors. This rep wrote the following statement in an affidavit I filed in my counterclaim:


The Fertittas always denied through their attorneys that they had anything to do with the suit against me, but it's obvious from this testimony that they forced Xyience's hand. Dana White didn't end up investing anything, but before Fertitta Enterprises went through with their loan package they did get White's approval.

This email chain will be the main exhibit in a new case against Attorney Cogburn in Nevada. There will be much more to come on this front in the days and weeks ahead. Stay Tuned. 

Saturday, October 5, 2013

Xyience Dismisses Claims Against Rich Bergeron; Accepts Summary Judgment on Counterclaim

orderdismissingcaseacceptingclaimxyience


By: Rich Bergeron

It's been a long time, but even a six-year legal battle did not deter me from continuing to report the truth about the history and current operations of Xyience. Today I can look back knowing I finally managed to get the claims against me completely dismissed. Four different judges oversaw the case over those six years, and multiple law firms and attorneys for the opposition.
The above order also allows for a summary judgment request on my counterclaim against Xyience to go unopposed, so it marks the first major judgment on my behalf in any legal action I've ever been involved in. It's all the more impressive since the opposing lawyer admitted the now-dissolved $25 million case against me had no merits.  
Though this order officially releases me from any liability and confirms my efforts to expose the truth, it does not end the litigation entirely. I still have an extensive sanctions motion in play with multiple affidavits supporting that motion. My own affidavit and evidence files explain the whole situation, but after a September 19th, 2013 hearing I can honestly say I don't think that presiding Judge Lloyd King bothered to read any of that content. 
Judge King certainly did not even consider the fact that the judge prior to him (Judge Mike Nakagawa) allowed me to amend the motion for the record. Judge Nakagawa would not allow me to amend a motion which had already been decided, which was the contention of the Fertitta lawyers going into this hearing.
The hearing resulted in an indefensible decision I will appeal to the 9th Circuit. That hastily-made ruling proved Judge King is biased against me to the point of believing everything the opposing lawyers contend, even if it happens to be a lie. Judge King actually made the effort to locate and read out loud an order on the motion before him, and that moment will be a major basis for my appeal. If it was a "senior moment" for the aging federal judge, his capacity to continue in such an important judicial role should be seriously questioned at this stage of his career. 
Now, I'm no law school graduate, but the last time I checked a summary judgment denial is not in the same legal ballpark as a complete claim dismissal. How could any acting federal judge get as far as Judge King has without knowing the difference between those two distinctions? 
Judge King read the decision on a 2008 summary judgment request in my case like it was a smoking gun for the Fertitta lawyers during the September 19th hearing. The motion he referred to is actually the most viewed document I currently have on Docstoc.com and can be accessed HERE. The Fertitta lawyers also tried to represent at the September 19th hearing that the same motion was dismissed on the merits, but the actual dismissal order concludes the dismissal is mandated by technicality, because I did not properly serve the motion on all creditors involved in the bankruptcy. I would have had to file my own bankruptcy petition in order to pay the postage alone on such notifications. I don't have the kind of budget most lawyers and law firms typically bring to the legal process. Everything I do is fueled by extremely minimal financial resources. 
So, Judge King read this order denying summary judgment on my sanctions claims. He read it right out loud in court for the record right after trying to explain that it meant the whole issue had already been litigated and dealt with. Why even have a hearing in the first place if his conclusions were true? If he reviewed the record and came to the decision that the Fertitta lawyers were correct in their false representation of the record, there would not even be any basis for holding the hearing where he made this huge mistake. I immediately corrected him at the hearing, but that only made things worse for me. He continued to betray an overwhelming bias against me along with a willingness to praise and commend the opposing lawyers. He even rejected a legally feasible and logically sound request for a default judgment against all parties who did not answer the claims and did not have any representation at the hearing. 
I gave Judge King multiple chances to hold a more comprehensive hearing when I could physically attend, asking for the hearing on September 19th to be considered a scheduling conference. Instead, he allowed the telephonic appearance to be my final say in the matter, and I had a great deal of issues with the court hanging up on me and not being able to hear me clearly. Judge King couldn't even be bothered to come up with any official legal background for his denial of my claims. He left that up to the main opposing attorney and his law firm. 
Gordon Silver is a high-class Las Vegas law firm, and the main guy they put on this case is a managing partner named Greg Garman. This shark is a well-trained and experienced lawyer with a very esteemed position at his firm and in the legal community. So, how could he really confuse the record himself to the point that he put such incredible misrepresentations in print and then repeated them in open court after I corrected him in my reply brief? The most logical answer is that he was never confused at all and just purposely painted the record in a false light to make his case look like it could be easily dispatched on a technicality instead of actually being examined on the merits. Lawyers seem to love winning legal battles on technicalities. It saves them the trouble of actually defending against or pressing claims based on actual facts and evidence. 
This time, the basis for giving Garman the win on a technicality was completely fabricated. His argument that a technicality existed at all made Judge King look like a fish out of water when he tried to take the bait. 
Once again, the September 19th hearing proved to me that justice is an evil bitch. The judicial system in this country is hopelessly bogged down by patronage, abuse, waste, and incompetence. People like me were not intended to be able to even make it this far into the legal process. I jumped through every hoop my opposition put in front of me, and by some miracle I remain standing more than six years into this extensive litigation that went from an obscure district court claim to a major bankruptcy adversary proceeding. I simply could not make it to this point if I did not have the truth on my side. 
Over time I learned to realize that pointing out serious flaws in the opposition's arguments and legal citations did not mean those points would even register with a judge who came into the process as a biased party. I came to appreciate how twisted the system is when it comes to pro-se (self-represented) parties. I knew at some point only an appeal examined by competent and unbiased federal judges would set the record straight. At this point, Mr. Garman hasn't even filed any order to appeal, but I'm eagerly awaiting the moment when I can actually see what the court's official decision will use for a basis in law. 
Perhaps the most interesting aspect of the hearing came in the response to my opening comments (which went largely unheard due to a bad connection). Mr. Garman began his statement by confessing that the Fertitta brothers are already suffering due to my work. He did not get into specifics, but he claimed I was responsible for their recent issues with the Nevada Gaming Control Board. If their trouble with the gaming authorities is my doing, I wonder what else about the Fertittas gaming officials might need to know. I haven't even really investigated Station Casinos as much as I have researched the Fertitta involvement in Xyience.  
Garman's remarks proved to me what I've always known in the back of my mind: courts are far too slow at delivering justice. Real justice comes from the court of public opinion. Exposure of inherent evil is often fatal to its ability to fester and grow out of control. Station Casinos has a history of leaving victims behind as the Fertitta brothers continue to hoard their billions in personal assets. As a gaming licensee in Nevada, these casino barons ought to have a much cleaner background than they currently do. The fact that the Fertittas brought Ultimate Poker into legal status as the first official online poker outfit in the state of Nevada is disturbing when you look at what Fertitta Enterprises is really capable of when it comes to fraud. Their connections to the illegal Full Tilt Poker operation through their ownership of Strikeforce is also egregious considering they should have known the illegal status of online poker when they made decisions to retain their sponsorship agreement with the company when it came under Zuffa control. Even worse, US prosecutors labeled Full Tilt Poker a Ponzi Scheme since the outfit's owners were allegedly pocketing player funds
The Station Casinos expansion as a management firm into California casinos governed by Native American tribes is even more troubling under the circumstances. Their indirect financial connections to California senators are telling. Senate Majority Leader Harry Reid also has a son named Key Reid who is on the board of directors for the Fertitta-run Meadows Bank
It makes sense that even a federal judge would be afraid to rule against people with this kind of power and access. They are virtually untouchable. Still, Judge King also refused to sanction me despite saying in open court that he actually felt I was the one who deserved sanctions. So, basically he admits he is not willing to even rule in favor of what he feels is actually justified. 
The appeal process should be intriguing, but I also plan to report Judge King to the state bar for displaying a complete lack of ability to do even minimal research into the claims he decided so hastily. The most important development at this stage is regarding my long break from working on this site. The litigation process leading up to my departure from Las Vegas was draining and stressful, and I needed a break from all of it. The hearing designation and dismissal of all claims against me opened new doors and brought me back to the heart of the story and the need to expose the real truth here. 
With no legal obstacles, I can now pursue a non-fiction book project on the case. I can also begin to plan out a documentary. At the rate I'm going, such projects will have a better potential to benefit burned Xyience shareholders than any legal action I could possibly undertake. I am also compiling an extensive report to deliver to Nevada, California, and Native American gaming authorities, which could do more to bring the Fertittas to justice than any judge in any court in this land. Someone must show these ruthless robber barons that there is a price to pay for screwing over innocent people and destroying their investments needlessly and thoughtlessly. 
Although I should be disappointed upon losing the decision on the most important motion in my case thus far, I am actually thrilled. My passion for this story is renewed. My prospects for a successful appeal are promising. Judge King's bias was more pronounced than ever at this latest hearing. Over the next few weeks I will be working to revamp this site to include all the relevant information and documentation detailing the irresponsible and corrupt history behind the Fertitta family facade. Stay Tuned for more frequent updates in the days and weeks to come.
EDITOR'S NOTE:
All stories on this site are now free to read with no subscription fee required. I will be spending some time updating broken links on the site in the next few days. This is mostly due to an unfortunate issue with the loss of all customer files hosted on fileden.com. We had a ton of material hosted there that now needs to be relocated to another public server. Some of these files are now hosted HERE. We will make a formal announcement when all bugs are fixed. 

Saturday, February 16, 2013

The Choice of a NOS Generation

By: Rich Bergeron


It's only fitting that Xyience's star is falling and the brand is collapsing into debt just as Coca Cola's NOS brand of energy drinks cements a spot as the top sponsor of The Ultimate Fighter. TUF is the show that put Xyience on the map in the first place, so it's a strange coincidence.

News is trickling in lately surrounding the stable of fighters Xyience once sponsored, and it sounds like Xyience and Xenergy are at DEFCON X. Virtually all of the current UFC fighters on "Team Xyience" were cut from their sponsorship deals in recent days and weeks, and inside sources say the company owes at least 1.5 million dollars to Cott, the beverage giant responsible for creating and canning Xenergy. Without a bailout from the same Fertitta Family that owns the majority of the UFC, the company could be headed for a second bankruptcy or a fire sale. Fertitta Enterprises still owns and operates the brand, but a recent ultimatum from Frank Fertitta III and Lorenzo Fertitta forced the brand to make attempts to stand on its own without further financing from the billionaire brothers.

Inside sources also report that the Fertittas and UFC President and Part-Owner Dana White recently tried to convince Coca Cola's NOS brand to replace Xenergy as an official UFC sponsor. Right now NOS does not appear in any other octagon outside of the one on the TUF series. It's a relationship that the company fostered more with the Fox network than with the UFC itself. Yet, Dana is always drinking from his can of NOS whenever the show's camera crew catches him with one in hand. That's pretty interesting considering in past years fighters were sometimes caught "drinking" from closed Xyience cans. Dana's can is always open, much like his mouth.

What makes the NOS connection even more interesting is the fact that only a little less than six years ago, Dana White was telling NBC Sports that the UFC didn't need Coke's sponsorship:

“I’m cool with Mickey’s and Toyo Tires, man, believe me, you’ll never hear me bitch. The way that we’ve run this business and the way we have come up, think about it… we didn’t have any mainstream press, we didn’t have any mainstream sponsors, and look at how huge we are. I don’t ******* need Coke to keep doing what we’re doing, man. Believe me, the big time sponsors if they come on, of course that’d be fantastic. I don’t need ‘em. 18-to-34 year old males, they’re here hanging out with me. If Coke wants them, Coke needs to come to us.”

Suddenly it seems that White's words have come back to haunt the UFC, and apparently Coke still holds a grudge and won't bite on the league's multi-million dollar price tag to move their branding beyond the reality show. They don't need actual UFC fighters to flaunt their brand, either. The same tired commercial featuring a flashy, overconfident MMA fighter getting dropped with one punch is the new standard for NOS when it comes to marketing to the TUF fan base. And you can tell the winner of the fight in the commercial is really drinking from the can in the TV spot. He chugs it so fast, much of it ends up dripping down his face. Another jab at the UFC, although it seems unintentional, is the fact that the whole made-for-TV fight happens inside a ring, not a cage.

The Fertitta-run Xyience is in crisis mode these days, recently laying off multiple sales personnel and leaving the rest of the staff in fear of an imminent implosion. The company the Fertittas surreptitiously acquired by stealing it out from under hundreds of earnest investors is now a money pit. The Fertittas don't seem to want to spend the capital to keep the operation going despite getting a hold of the company for a song. It's the ultimate payback for all those shareholders who didn't get a dime out of the deal when the Fertittas purposely bankrupted the company and then retained ownership through a scandalous scheme involving former Cott executives pretending to enter into a serious purchase agreement only to later default on that deal.



For a little while the Fertittas made all the right moves to make the brand appear stable and ready to X-pand. Sponsorship deals with top-notch fighters like Jon Jones and Anthony Pettis appeared to be signs of the brand's resurgence as a key UFC sponsor. None of the fighters pictured above represent the brand any longer according to inside sources at the floundering supplement company. For Matt Serra, this marks the second time he's getting screwed for associating with Xyience. His prize for winning The Ultimate Fighter ended up getting wiped out by the company's bankruptcy, and he was the only fighter from that Xyience stable to come back to the brand before Chuck Liddell came out of Xyience retirement in recent months. Since Liddell's sponsorship agreement came with a pre-paid setup, he is among the last of the Mohicans still repping the brand. That's also fitting seeing as his initial Xyience sponsorship was one of the most lucrative deals in the history of the sport at the time of his first signing with the company.

The operation of Xyience once the Fertittas had control of it certainly betrays their attitude toward the fighters they employ in the UFC. It shows these silver-spoon billionaires just don't give a damn about the people who line their pockets. These recent developments illustrate an underlying selfishness on the part of the UFC's royal family that pervades everything they do. Xyience only mattered to them when it was a way to get a HUGE LOAN or a way to pay the UFC with the same money they used to get the chief lien position over the company just before they rigged the bankruptcy process to work in their favor.

At the moment my own legal battle with Xyience and the Fertittas is in limbo. I've been waiting for the right moment to ask for a final hearing on my remaining claim asking for millions of dollars in sanctions against the Fertittas and their associates who made the whole fraudulent bankruptcy possible by silencing my reporting. Should Xyience and Xenergy fold due to the Fertittas failing to put their own money up to bail their UFC sponsor out, it will be the perfect cap stone for the case I've built brick by brick and year by year to prove that Frank and Lorenzo Fertitta only wanted Xyience to be a going concern if it operated as a personal piggy bank. Without any way to siphon money off the brand or use the brand to make the UFC look better than it actually is, the Fertittas just don't need it. Sadly, this has been the trend as long as Xyience has been in business. It's been passed from one abusive management and ownership crew to the next. Everyone seems to find a way to smack it around and treat it like another red headed stepchild with no real identity or meaningful purpose for living and thriving.

What seems to get lost in translation to most of the fans who stumble onto this story is that there are real victims behind this ongoing scandal. As the saga continues to unfold the people who suffered most are only reminded of the savings they invested into the fledgling Xyience. They saw all their hard-earned dollars put into the company get wiped out by a couple of scumbag brothers who have way too much money to begin with. Some of the children of these victims had to forego college. For many, their retirement plans were catastrophically altered. The money some of them spent their entire lives putting away for a rainy day is just gone, flushed down the drain by the careless and ruthless actions of a couple of casino barons who had all their wealth passed down to them from Daddy Dearest. They will never know what it is to truly earn a paycheck, but those they victimized over the years to keep themselves healthy and wealthy will always know what it's like to lose everything and have to start over.  

Let it be known that the Fertittas just don't care about real people with real struggles. They don't have any genuine concern for their own fighters, and they don't get bent out of shape in ruining families just to make themselves a little richer. Making things right for every individual they burned in the Xyience bankruptcy would be a drop in the bucket for these two billionaires with their ever-growing business empires, but they choose to ignore the suffering and act like it never happened.

While I never rooted for Xyience to fail in the past, it seems to be sweet justice to see it failing now. I seriously doubt my fledgling BOYCOTT XYIENCE campaign made a dent, but I'm at least proud that I never really gave up the struggle to educate the public about who the Fertittas really are and where their motivations really lie. I will never forget the people who really put Xyience in position to be successful in the first place, and I will cherish the day I am allowed to put Frank and Lorenzo on the witness stand to answer some real hard hitting questions about the damage they've done and the lives they've destroyed in the name of pure greed.

In all honesty, I hope Xyience doesn't fail just yet. I hope that the Fertittas actually sink a few more million into trying to make it work. I hope they invest just enough so they wind up losing as much as the people they've screwed over the years have lost for believing the brand would be taken care of by the UFC owners. Now that would be real justice. Here's to hoping Karma catches up to these corrupt and spineless scamsters, so even if the burned Xyience shareholders don't get any financial relief they can at least get a little revenge...served with a cold can of Xenergy.   

Wednesday, June 13, 2012

BOYCOTT XYIENCE: SIGN OUR PLEDGE