[Follow-up: Ballmer's lawyer says the former Microsoft CEO's signature was forged on the agency agreement at the center of this case, and that Ballmer wasn't aware of or involved in any agreement cited in the lawsuit.]
A new lawsuit claims that former Microsoft CEO Steve Ballmer owes more than $5 million to an investment advisor who was hired to manage his billion-dollar basketball acquisition fund years before his current $2 billion bid for the L.A. Clippers.
Documents filed along with the suit detail Ballmer’s efforts to acquire an NBA team as far back as December 2009, relying heavily on a longtime friend, Steve Gordon, as his representative.
It’s the second case in recent weeks against Ballmer and Gordon, a former Seattle Sonics basketball trainer known as “Hat Man” in NBA circles. In the first suit, scientist Thomas Bukowski filed a lawsuit claiming that he’s owed $10 million by Gordon, and alleging that Ballmer is on the hook for $3 million of that debt.
That earlier suit alleged that Ballmer promised to cover Gordon’s millions of dollars in debt if the former Sonics trainer checked himself into a psychiatric hospital.
The new suit was filed last week in King County Superior Court by Seattle-based investment advisor Cambrea Ezell, a former Goldman Sachs vice president. The suit says that her firm, Reign Capital Management, was retained in early 2010 by Gordon to create a “family office” for Ballmer that would manage a $1 billion investment fund for the future purchase of a professional sports franchise. The suit alleges that Ballmer and Gordon have failed to pay more than $5 million in consulting fees under the agreement.
Documents filed with the suit include an “agency agreement” dated Dec. 9, 2009, in which Ballmer and Gordon formed a company called “Samaris Group” for the purpose of acquiring an NBA team. That agreement made Gordon managing director of the company, with the authority to act on Ballmer’s behalf in pursuit of an NBA team.
The partnership agreement also called for Ballmer to commit a minimum of $1 billion to acquire the team. A month later, the suit alleges, Gordon struck the agreement with Reign Capital to manage the funds. However, the suit says, Ballmer and Gordon have failed to pay the related consulting fees. Gordon also later signed a promissory note for the amount due, plus interest, according to the suit.
The suit also cites a separate $4 million letter of intent for Ballmer and Gordon to buy shares in Reign Capital.
“For almost the past four years, Gordon has provided a myriad of excuses for his and Ballmer’s failure to pay under the agreements,” the suit alleges.
GeekWire has contacted a lawyer for Ballmer seeking comment on the latest case. The key contracts in the latest suit are signed not by Ballmer but instead by Gordon, who’s described as a “trusted advisor” and agent for Ballmer as a result of their December 2009 agreement.
Ezell is seeking compensation for damages “in an amount to be determined at trial,” in addition to attorney’s fees. The spouses of Ballmer and Gordon are listed as defendants in the suit, along with Samaris Group. See a copy of the suit below.
Ballmer has expressed interest in owning an NBA team ever since he was part of an ownership group that tried to keep the Sonics in Seattle in 2008 before the franchise moved to Oklahoma City.
Last May, Ballmer and hedge fund manager Chris Hansen were on the verge of moving the Sacramento Kings to Seattle with plans to build a new sports arena. But the Kings ultimately stayed in California after an NBA committee blocked a deal that would have cost Ballmer and Hansen nearly $1 billion.
Last month Ballmer finally got his team, outbidding two other investor groups and agreed to pay $2 billion to the Donald Sterling family for the rights to own the Clippers. The purchase price, which is 10 percent of Ballmer’s net worth, is the second-largest sum ever paid for a North American sports team.
Ballmer’s relationship with Gordon dates back a couple decades. The Bukowski lawsuit notes that back in the 1990s, Ballmer repaid approximately $560,000 in real estate debt for property Gordon owned in North Bend, Wash. Then, in the early 2000’s, Ballmer allegedly also “arranged for payment to discharge roughly $1.1 million in real estate debt and delinquent tax liabilities owed by Gordon.” The lawsuit notes that Gordon is also apparently a godfather to at least one of Ballmer’s children.
Gordon has also worked with Paul Allen and his NBA team, the Portland Trail Blazers.