[UPDATED] Investors Sue Asics Over Alleged ‘Fraudulent Scheme’

 UPDATE Friday, Oct. 16:

In response to FN’s request for comment earlier in the week, a spokesperson for Asics America provided the following statement:

“Asics believes the recently filed legal action is baseless and without merit. We will vigorously dispute this matter, and we are confident the court will quickly agree with us. Until then, we will respect the process and have no plans to debate these baseless allegations publicly.”

What FN reported on Wednesday, Oct. 14:

In a lawsuit filed in Los Angeles Superior Court on Wednesday, two investors — Size It LLC and Mickey Segal — claim that Asics America Corp. duped them out of millions of dollars by failing to make good on plans to expand the Japan-based company’s U.S. presence.

Since June, Asics America has been involved in a public entanglement with Windsor Financial Group LLC, a company that owned and operated 13 Asics retail stores in North America since 2013, before Asics terminated the agreement on June 25.

In court documents, Segal and Size It LLC allege that they were persuaded to invest millions in Windsor — as part of a “fraudulent scheme” by the sportswear company — after Asics entered into the exclusive licensing agreement with the firm.

Asics America and Asics Japan, the investors said, promised to support Windsor by providing it with “wide-ranging, top-selling products and extensive brand marketing that Windsor’s success depended upon.”

“In reliance on these representations, [Segal and Size It LLC] invested in Windsor, giving it the substantial capital needed to create an impressive network of Asics-branded retail stores, including highly coveted locations such as Times Square… .” the suit claims.

Once the investments were made, the pair claims Asics reneged on promises and “set out to financially destroy Windsor.”

On Tuesday, the Asics Times Square flagship location reportedly became the 13th and final store of all Windsor-operated locations to close it doors.

A spokesperson for Asics would not confirm whether the Times Square location is shut down permanently, though calls to the location have gone unanswered Wednesday.

Asics had cited “material breaches of the agreement by Windsor” as the primary reason for terminating the contract in June, and said it had expected Windsor to close its 13 Asics stores as a result.

On July 9, Windsor told Footwear News that it was “disappointed,” “shocked” and “perplexed by Asics’ self-serving actions, including Asics’ breach of the parties’ agreements, its bad faith and ongoing misrepresentations.”

The suit names Asics’ former CEO and president, Kevin Wolff, who retired in September and was replaced by Gene McCarthy; Motoi Oyama, CEO and president of Asics America; Kenji Sakai, Asics America’s CFO; and Katsumi Kato, director and managing executive officer of global sales at Asics Japan as defendants.

FN has reached out to Asics America for comment on the litigation and is awaiting a response.

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