Ex-Gearbox lawyer, Wade Callender, has filed a lawsuit against CEO Randy Pitchford, accusing him of contract violations and fraud involving Gearbox, a separate real estate company that they both owned, and Callender’s contract of employment. The filing accuses Pitchford of being "a manipulative and morally bankrupt CEO who shamefully exploited his oldest friend".
The filing includes allegations that Pitchford received a "secret" $12 million "executive bonus" and lost a USB drive that contained sensitive corporate documents not just for Gearbox, but also 2K, Sega, Sony, Microsoft and others. It further alleges the USB stick also contained Pitchford’s "personal collections of underage pornography".
According to a report by Kotaku, the lawsuit alleges advance Borderlands royalties from publisher Take-Two went directly to Pitchford as a "personal" and "secretive" bonus via Pitchford Entertainment Media Magic, LLC when Callender believes it would have otherwise gone to Gearbox’s employees. "This is particularly tragic exploitation," the lawsuit states, "because these millions are being syphoned to Randy Pitchford’s personal accounts instead of funding the development of Borderlands."
Further accusations include allegations that Pitchford and his wife "syphoned Gearbox profits" to host "Peacock Parties" during which "adult men have reportedly exposed themselves to minors, to the amusement of Randy Pitchford".
Talking about the USB incident in a recent podcast broadcast on December 22nd, 2018 (thanks, Ars Technica), Pitchford said: "Some kid, an employee of the Medieval Times, discovered this memory stick, took it home, and accessed it because it was before we were password-protecting, and discovered secrets of my company and future games in development, and also discovered the pornography. And it was barely legal porn. This girl’s handle was ‘Only 18.’"
The lawsuit follows action taken by Gearbox in November 2018, which sued Callender for fraud and breach of fiduciary duty during the eight years the lawyer was employed by the developer. Among the accusations are claims Callender failed to repay a $300,000 cash loan given to him by Gearbox, as well as other various loans and payments such as MBA tuition. The suit also claims Callender abused his company credit card for personal expenses.
In response to the Kotaku report, Gearbox said via a formal statement: "Gearbox will be filing a grievance with the State Bar of Texas against our former general counsel Wade for disciplinary proceedings for filing a lawsuit that includes accusations that he knows to be untrue. The lawyer’s rules of professional conduct expressly prohibit the filing of documents that are knowingly false. The tell is within Wade’s claim itself – his use of hedged lawyer language and clever application of quotation marks betray that he knows that the impression he is trying to create is based in lies. We imagine that he used the quotation marks and lawyer language in hopes that will give him some angles of defense when we inevitably take action against him for false statements. Wade is engaged in a shakedown and he’s clearly using deceit and lies to try to cause damage by promoting a narrative that he knows is false."
"The attacks made by my former friend and colleague have no basis in reality or law," Pitchford said via Twitter. "He is simply trying to shake me down for money. We will win, but because lawsuits are pending I can’t comment as much as I’d like. I am shocked by his lies. Thanks for your love and support."
"As a father, I find crimes against children to be especially repugnant. It is very painful that a former friend and colleague would lie to try to associate me with such vile behavior in his own greedy pursuit of money," he added. "As the day progresses, I am discovering who my my friends are. Thank you for your love and support. I am just going to try to focus on my work and trust that truth and justice will prevail with the courts."