10
Jan
2019

Lawsuit alleges Gearbox CEO Randy Pitchford improperly siphoned $12M for personal gain

A lawsuit filed in a Texas civil court alleges that Randy Pitchford, co-founder and CEO of Gearbox Software, improperly siphoned $12 million from that company for personal gain. The story was first reported by Kotaku, and is based on public court documents filed on Dec. 21, 2018.

The suit was filed by Wade Callender, former general counsel and vice president of legal affairs at Gearbox, and is made against Pitchford and Gearbox itself. In a remarkable 27-page complaint, Callender alleges that in 2016, at the same time that Gearbox was denying raises companywide, Pitchford secretly arranged a large payout for personal gain.

“It was Randy Pitchford himself who breached his fiduciary duties by exploiting Gearbox employees and property to fund Pitchford’s private cravings,” court documents state. “For example, while Randy was denying employee raises predicated on low cash reserves, Randy secretly saddled Gearbox’s employees with the burden of repaying a private, personal $12M ‘bonus’ that Randy Pitchford rerouted from Gearbox’s publisher directly to Randy’s side entity, ‘Pitchford Entertainment Media & Magic.’ Unbeknownst to Gearbox employees, Randy Pitchford arranged to shift the burden of Randy’s long-standing, multi-million dollar ‘bonus’ to the very same employees from whom he hid the arrangement.”

The lawsuit is part of a back-and-forth legal battle, with Gearbox and Pitchford on one side and Callender on the other. Callender’s suit was filed roughly one month after Gearbox itself filed suit against him in Collin County, Texas.

In a copy of the suit posted online, Gearbox alleges multiple improprieties by Callender. Allegations include the non-payment of a personal home loan, breach of contract related to tuition reimbursement, and the misuse of Gearbox’s credit card to purchase “family vacations, gun club memberships and firearms accessories, and trying to get six-pack abs.”

In civil suits such as these, it’s common for both parties to flesh out their case with damaging information on the other side. Both suits are peppered with personal attacks, but perhaps the most jaw-dropping aspect of Callender’s suit are his allegations that Pitchford left a USB drive containing “‘underage’ pornography” behind at a company event.

“On information and belief, Randy Pitchford’s USB drive contained much more than the sensitive corporate documents of Gearbox and business partners like Take-Two Interactive, 2K Games, Sega, Microsoft, Sony, etc.” states Callender’s legal team. “Upon information and belief, Randy Pitchford’s USB drive also contained Randy Pitchford’ s personal collection of ‘underage’ pornography.”

The complaint also alleges “Peacock Parties” thrown by Pitchford where “adult men have reportedly exposed themselves to minors, to the amusement of Randy Pitchford.”

Peacock is also the name of a small theater that Randy Pitchford maintains out of his private Frisco, Texas home. According to Guide Live, the entertainment website from The Dallas Morning News, it’s part of Pitchford’s effort to “cultivate a local variety arts scene.”

Both cases are ongoing. Polygon has reached out to both parties for comment. In a statement provided to Kotaku, a Gearbox spokesperson called the allegations against Pitchford “absurd, with no basis in reality or law” and the lawsuit “meritless.” Callender’s lawyer, in a statement provided to Polygon, would say only the following: “You’ll have to ask Mr. Pitchford what he did with his USB drive and the copy that he instructed others to destroy.”

The dueling suits come just a few months after Pitchford went public with accusations that his former assistant, John Wright Martin, had grifted the Gearbox founder and his wife out of some $3 million.

Update: As Ars Technica reports, Randy Pitchford appeared on a magic-themed podcast one day after the lawsuit against him was filed by Wade Callender. On that program he corroborates some of the story about the lost USB stick. His explanation? The pornography was saved as research for a magic trick. From Ars Technica:

Pitchford talks at length about porn that he enjoys watching, including “camgirl” pornography, in which a host exposes themself to a live feed and takes requests and financial tips from consumers. Pitchford explained that he was “a consumer of this content.” He confirmed that he copied a specific video “to this memory stick” to, as he describes it, “work out the method” of how a camgirl host faked the act of female ejaculation.

Pitchford also went to Twitter, refuting the claims made by Callender and calling them an attempt at extortion.

The attacks made by my former friend and colleague have no basis in reality or law. 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.

— Randy Pitchford (@DuvalMagic) January 11, 2019

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.

— Randy Pitchford (@DuvalMagic) January 11, 2019

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.

— Randy Pitchford (@DuvalMagic) January 11, 2019

“As a father,” Pitchford said in a tweet, “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.”

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