Keith Brackpool, a former executive with The Stronach Group, is suing the organization for $40 million plus damages according to court documents filed in the Superior Court of California, County of Los Angeles April 11.
Brackpool, who only parted with The Stronach Group recently, says he is owed the sum of money because of an agreement he entered with the organization when he was hired in 2012. Brackpool's title at The Stronach Group was chairman of West Coast operations.
According to that agreement, the complaint says, Brackpool was offered the opportunity to purchase a 5% stake in "Racing Gaming Group" and did so through a "purchase loan." At the time, the complaint says, Racing Gaming Group was valued at $993 million, so Brackpool's stake cost $49.65 million.
"(Brackpool) told Stronach that his time was extremely valuable and that he was not interested in making himself available for an employment position," the complaint says. "As a result, Stronach offered to make (Brackpool) an equity partner ... and sell him the 5% interest—an identical ownership interest that the then-CEO held."
Part of the agreement, the complaint contends, included "repurchase" stipulations depending on the timing and nature of Brackpool's exit from the company.
"Contractual repurchase provided that (Brackpool) would receive a premium on the repurchase of the 5% interest at 120% of its value (as defined in the agreement) if The Stronach Group chose to end the relationship prior to the end of the fifth year. ... If (Brackpool) chose to leave prior to five years or was terminated for cause, (he) would receive 80% of the 5% interest—which at one point defendants asserted was less than the balance of the purchase loan and would create liability for (Brackpool)," the complaint reads. "(Brackpool) would receive 100% of the value of the 5% interest if he exited after five years, either as a result of his own decision or the company's decision."
The current valuation of Racing Gaming Group, according to the complaint, is $1.7 billion, which would put Brackpool's 5% stake at $85 million.
The Stronach Group's CEO, Tim Ritvo, declined to comment on the lawsuit but said Brackpool "resigned" from the organization recently. Ritvo did not indicate the exact date Brackpool left the company.
"We have no comment, but it is being reviewed by our legal team," Ritvo said.
It's unclear, based on the complaint, whether Brackpool has been compensated at all for his share in the company or if, because he hasn't been compensated, he still has a 5% stake.
The complaint does allege, however, The Stronach group has "attempted to disavow the existence" of the ownership agreement. A request for comment and clarification from Brackpool's lawyers who filed the complaint, Michael Eisner and Jeremiah Reynolds, was unanswered as of the afternoon of April 13.
"In October 2017, (Brackpool and The Stronach Group) decided that (Brackpool) would exit (the company) on his fifth anniversary," the complaint said. "(The) defendants have now refused to honor their representations and contractual commitments to (Brackpool), and have wrongfully attempted to disavow the existence of the agreement altogether after (Brackpool) has fully performed his end of the bargain. ... (The) defendants have refused to purchase (Brackpool's) 5% interest according to the valuation methods set forth in the agreement. ... The day before (Brackpool) was to exit ... (the) defendants suddenly changed course, and claimed there was never an agreement."
The complaint also added, to provide evidence of his ownership stake, that Brackpool was "never entitled to a salary" and that "the agreement provided for (Brackpool) to receive an advance on annual profit distributions based on the 5% interest that he purchased."
"It is reprehensible that The Stronach Group has now decided to claim ignorance of the agreement at the 11th hour, when the parties met to finalize (Brackpool's) exit," the complaint said.
Before Brackpool's time with The Stronach Group, he served as chairman of the California Horse Racing Board. He is also a horse owner and breeder.