A “once-in-a-lifetime” business venture between Shark Tank star Daymond John and a pair of entrepreneurs turned ugly after the duo allegedly absconded with “at least tens of millions of dollars” in commissions they owed the apparel-and-branding mogul, according to court filings obtained by The Independent.
In a lawsuit filed April 3, John, the FUBU founder, accuses product sourcing experts Lisa Kornman Avila and Rashmi Budhram of making off with his money after he cut them in on an opportunity to make vast sums by selling PPE to state governments during the early days of Covid.
John’s complaint says he set up contracts for his company, The Shark Group, to supply the California Department of General Services, the New York State Department of Health and Mental Hygiene, the State of Michigan and other entities with N95 masks, goggles, and isolation gowns when they were needed most but hardest to get. Once the deals were in place, Kornman and Budhram had the manufacturing contacts to obtain the gear, and brought in nearly $150 million for themselves on one transaction alone, the complaint says.
Shark’s agreed-upon referral fee for that sale amounted to roughly $30 million, according to the complaint. However, it contends, Kornman and Budhram, who had workspace in Shark’s New York City office and once appeared on television with John, began to ice him out shortly after the purchase was completed in the spring of 2020.
“To date, defendants have refused to pay any money to Shark, despite securing multiple orders worth hundreds of millions of dollars from [the California Department of General Services] and other entities due to Shark’s efforts,” John’s complaint states.
Reached by phone Sunday evening, attorney Matthew Blit, a high-profile employment lawyer who is representing John and The Shark Group, declined to speak on the record about the case.
“Our complaint speaks for itself and we do not feel the need to comment any further at this point,” Blit told The Independent.
Kornman and Budhram did not respond to requests for comment.
The Shark Group is a consultancy John founded in 2005 to provide companies with “branding, design, speaking, retail sales, sourcing and manufacturing, social media, and integrated marketing services,” but, perhaps most importantly, offers clients access to the veteran “shark” – a onetime server at Red Lobster who is now reportedly worth some $350 million – and his myriad connections.
Kornman and Budhram, via their Palm Beach, Florida-based design, development, and product management company Buko LLC, had been in business with John since 2014, according to the complaint. The arrangement was simple: John would bring Buko on as an “in-house partner/preferred partner” to source products for clients referred by Shark, which would then get a commission for the referral.
Buko also got to use John’s name and the Shark brand in its marketing materials, and John arranged for Kornman to appear on Beyond the Tank, a spinoff of Shark Tank, which the complaint says “provided Buko with market exposure and public validation on a national television show,” according to John’s complaint, which is now pending in New York County Supreme Court.
In early 2020, as the pandemic began to take hold, health care systems across the United States began reporting severe shortages of PPE, the complaint states. At the same time, it says “rampant PPE fraud… only magnified the difficulties experienced by state governments to adequately source PPE for their healthcare workers.”
“Due to this supply crisis, Mr. John and Shark, with a demonstrated ability to ‘get things done,’ were inundated with requests from various entities and state governments, asking Shark to use their vast network and business prowess to help obtain the PPE necessary to protect frontline healthcare workers,” the complaint goes on.
On March 20, 2020, it says Shark’s then-head of sales got in touch with a procurement official at California’s Department of General Services who had been assigned by Gov. Gavin Newsom to obtain PPE for the state, and pitched John as someone who could source masks, gloves, gowns, face shields, hand sanitizer and other equipment.
Buko, working behind the scenes, would actually obtain the items, then pay Shark 20 percent of total revenue and one-third of net profits as a commission, according to the complaint. This, it claims, was a “once-in-a-lifetime opportunity” for Buko.
In April 2020, the State of California signed a letter of intent to buy up to $2.825 billion in PPE from Shark, and issued an initial purchase order for $233.9 million worth of masks, gowns and goggles, the complaint states.
But there were issues on either side, with both sourcing and financing, and the transaction fell through. Shark then worked with California officials to “pivot solely towards isolation gowns,” and on April 17, 2020, the state ordered 20 million Level 2 isolation gowns at $8.95 each, the complaint says.
Buko was able to source the gowns, and Kornman told John that she and Budhram would forward his referral fee “as soon as funds were received,” according to the complaint.
Ten days after that, the State of California ordered another 100 million Level 2 gowns, which Buko said it could supply within eight weeks, the complaint says. Buko subsequently received payment in two installments of $133,467,257.60 and $12,966,413.30, the complaint contends.
The complaint says Buko also closed a deal with the State of Michigan for an unknown number of gowns, and one with New York for eight million gowns, thanks to John. Another connection John made for Buko with the Texas Division of Emergency Management resulted in a multimillion-dollar mask order, according to the complaint.
In addition, John introduced Buko to other entities seeking PPE, such as Emory University, the Geo Group, H-E-B, and the State of Florida (the latter of which earned John a series of negative headlines over allegations of price gouging; John pushed back against the claim, saying he had nothing to do with setting rates).
Then, beginning in early May 2020, just two months after their partnership began, Kornman and Budhram suddenly stopped returning Shark’s calls, the complaint alleges. Six years later, it says, John still hasn’t seen a dime.
“To date, defendants have refused to pay any money to Shark, despite securing multiple orders worth hundreds of millions of dollars from [the State of California] and other entities due to Shark’s efforts,” the complaint states.
The complaint claims Kornman and Budhram reorganized and restructured Buko under various names in order to hide “at least tens of millions of dollars” from John, while making themselves and Buko, now called 5 Time Zones LLC, “judgment-proof.”
John – who in 2023 got a restraining order against a onetime Shark Tank contestant in response to social media posts the man made calling his experience doing business with John a “nightmare” – is now seeking a money judgment and punitive damages in an amount to be determined by a jury, plus interest, as well as attorneys’ fees and court costs.
Buko LLC now has roughly three weeks to formally respond to John’s allegations.
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