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Gearbox CEO diverted $12m into his other company, new filing says

2K Games
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Gearbox's CEO Randy Pitchford has repeatedly dismissed the allegations by his former friend and employee Wade Callender, who claimed Pitchford diverted $12 million of Gearbox's cash into his own account, but a new filing proves otherwise.

Interestingly, Callender wasn't the first one to pull a legal punch here, Gearbox was. They sued him for not repaying the loan he was given and for abusing company credit cards, but it turns out this was just the beginning.

Callender countersued, insisting that "Randy Pitchford is a manipulative and morally bankrupt CEO who shamefully exploited his oldest friend, a Texas attorney and military veteran named Wade Callender".

His lawsuit included some serious albeit wild allegations, such as underage porn and lavish parties that sound like they've been taken out of Eyes Wide Shut, but the one about $12 million of Gearbox's money having been funnelled into Pitchford's other company account really struck a nerve.

Pitchford and Gearbox responded by saying that the allegations are absurd and how they look forward to facing this "meritless case" in court.

Callender's lawsuit mentions that Gearbox and Pitchford have since abandoned many of their retaliatory claims and says the following about the $12 million deal, "This deal - which Pitchford insisted upon concealing - afforded Pitchford a personal and secretive bonus of $12,000,000 to be paid directly to a Pitchford entity called 'Pitchford Entertainment Media & Magic, LLC.'".

It shows the legal documentation between publisher Take-Two Interactive and Gearbox, detailing the $12 million bonus, and the subsequent agreement on the money being paid to Pitchford's other company.

The funds are referred to as recoupable, whereby Gearbox are obliged to pay it back after the game has shipped, but the original money never reached a single employee. Unless, of course, you consider the CEO the employee.

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Having vehemently denied Callender's claims thus far, Gearbox offered no comment to the new evidence, but one thing is clear - the company will need to produce some real magic to save face here, and it's unfortunate that their biggest problem seems to be their CEO.

You can find Callender's full lawsuit text here.