The estate of a late Russian billionaire who invested more than $164M into a since-dissolved California cannabis firm has joined with other defendants in asking a federal judge to force one of the firm’s ex-employees to resolve his employment dispute through arbitration, rather than the courts.
The late Dmitry Bosov was among executives of the crumbled Genius Fund, a Los Angeles-based private equity company for cannabis enterprises, named as defendants in a lawsuit filed by Francis Racioppi Jr., a former Genius Fund executive who claims the company owes him more than $1M in withheld salary.
Racioppi, who initially filed his suit in April, filed a motion this month asking a U.S. District judge in California to impose sanctions against the defendants, whom he accused of selling or moving more than $3M in assets that had been ordered frozen by the court in August. Bosov was found dead of an apparent gunshot wound, possibly self-inflicted, in his Moscow apartment in May.
In response to that filing, an Oct. 21 motion filed by the defendants accuses Racioppi of portraying himself as a “naïve employee who was tricked into relinquishing his rights to litigate in court” when he is actually a “sophisticated executive” who had explicitly agreed to settle employment disputes through arbitration in exchange for a chance to earn a seven-figure salary.
“Plaintiff is not fooling anyone,” the motion reads.
It later adds: “The court should require plaintiff to live up to the bargain he struck.”
Attorney Thomas O’Brien, who is representing Racioppi through the Browne George Ross firm, said Tuesday that he wasn’t shocked by the defendants’ filing.
“Given the allegations in our complaint, as well as the recent contempt issues we brought to the court’s attention, we are not surprised that the various defendants continue to try and prevent public scrutiny of this case by forcing it into arbitration,” he said. “We do not believe that our client’s claims are subject to arbitration, and we intend to vigorously oppose their latest bid to seek arbitration, just as we did previously.”
Among the defendants included in the latest motion are Katerina Bosov, representing the estate of the late Dmitry Bosov, and companies Alltech Investments and Goldhawk Investments. They join Gary Shinder and several companies allegedly controlled by Dmitry Bosov and Shinder as defendants in Racioppi’s initial suit that are now calling for the court to compel arbitration.
Racioppi, a veteran of the U.S. Army Special Forces, alleges in his suit that he was forced out as CEO of the Genius Fund in March only after raising concerns about “gross mismanagement” of the company. He is suing for wrongful termination and accuses the company of illegally withholding more than $1.3M in compensation he says he is due.
The motion for sanctions that was filed this month by Racioppi said the defendants “willfully and brazenly” violated the August court order to freeze assets, and by doing so undermined Racioppi’s suit and the court’s authority.
The latest motion filed by the defendants, though, says Racioppi had agreed to an arbitration clause in his previous roles as COO and chief security officer with the company and was well aware of the impacts of that clause.
“By signing his Employment Agreement, Plaintiff expressly and unequivocally agreed to arbitrate his dispute with Defendants,” it reads.
The Genius Fund, which was established for the purpose of developing a foothold in the California cannabis market, dissolved after just two years. At its peak, the business had more than 50 corporate entities and employed more than 300 employees and contractors, according to dot.la, which reported that several employees described widespread problems within the organization.
In his suit, Racioppi claims the company’s executives spent millions of dollars on investments “with virtually nonexistent oversight or accountability, and the company lacked any coherent business plan to generate either short- or long-term profit.”
A hearing regarding Racioppi’s motion for sanctions is reportedly on track for mid-November.
The Bosov estate, Alltech and Goldhawk are represented by attorneys with Skadden, Arps, Slate, Meagher & Flom. They did not immediately respond Tuesday to messages for comment.
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