Two Phoenix Suns minority owners have accused majority owner Mat Ishbia of fraud and using the team as his “personal piggy bank,” alleging he failed to meet a June capital call deadline in a court filing Monday.
Kisco WC Sports II and Kent Circle Investments claim Ishbia missed his own deadline to fund a June 2 capital call. They allege he attempted to conceal the missed deadline from other owners before partially funding his share on June 9.
The minority owners claim Ishbia converted a prior loan into equity to fund his contribution. They say he did not disclose the missed deadline because the operating agreement would have required him to offer minority owners the chance to buy unfunded units, potentially diluting his stake.
“We believe the evidence will show that Mr. Ishbia contrived a scheme to threaten our clients with massive dilution of their interests in the Suns if they failed to fund a capital call within ten days’ notice, while at the same time hiding his own failure to fund by the deadline,” said Michael Carlinsky, attorney for the minority owners.
An Ishbia spokesman told Front Office Sports the contribution was “timely” and that the minority owners’ argument represents “a nonsensical rejection of money that he contributed through an appropriate debt to equity conversion.”
The Suns called the lawsuit “a shameless shakedown dressed up as legal process” in a statement. The team maintains Ishbia has invested hundreds of millions into the franchise and community.
The filing alleges multiple instances of self-dealing, including a loan to the team at above-market rates. It also cites the sale of arena naming rights to Ishbia’s company, United Wholesale Mortgage, without informing minority owners.
The 10-year naming rights deal for the Mortgage Matchup Center was announced last month at nearly $115 million. The Suns defended the agreement as “one of the largest in the NBA and no different than what other owners have done.”
The legal dispute began in August when the minority owners filed suit alleging mismanagement and lack of transparency. Ishbia countersued in October.