Hitman Dan Diaz, founder of Hitman Fight Gear has filed a lawsuit against TapouT clothing in the Superior Court of California in Orange County. Diaz alleges a whole slew of wrongdoing from TapouT and specifically Dan Caldwell aka Punkass of the TapouT crew. The official complaint is very long and written in legalize, and you can read it here: Dan Diaz Official Complaint.
To sum up (thanks to Rob Maysey for putting it in simple terms), the gist of the lawsuit is this:
TapOut execs artificially reduced the true sales price of TapOut by taking disguised payments to themselves personally that weren't included in the purchase price for TapOut;
TapOut artificially increased the costs of goods sold--for 2 reasons:
1. To reduce the amount of royalties payable to third party licensees (i.e. fighters); and
2. To obtain "kickback" payments from vendors to themselves personally, in the form of expensive gifts, cash payments, and the like.
This would serve the purpose of showing TapOut on the "books" as much less profitable than it actually was, since a select few were diverting TapOut revenues to themselves, personally.
The UFC principles, Dana, Lorenzo and Frank--had/have an ownership interest in Tapout--allegedly at least 11%.
The UFC principles were instrumental in TapOut obtaining a TV show.
Interestingly, this lawsuit has gotten almost no attention from the MMA media, probably because of the possible ownership of the TapouT by the UFC. But if these allegations are true, the bottom line is that TapouT basically stole money from fighters, because those fighters did not get all the money they'd earned due to machinations by TapouT. That's pretty pathetic, and the story deserves far more attention that it has received.
I'll be keeping on eye on this developing story and will keep you all updated.