WINDSOR — Amid his own legal troubles involving his Future Legends Sports Complex, owner Jeff Katofsky is now suing his former soccer league for fraud, claiming that the league failed to pay his team, the Colorado Hailstorm, their $100,000 prize money for winning an intra-league tournament.
The U.S Soccer League recently dropped the Hailstorm as a franchise organization after spending the last several months loaning Katofsky money to pay his players. Sources say that amount was well over $1 million.
United Soccer League would only release the following statement: “The United Soccer League has terminated Northern Colorado Hailstorm FC’s franchise agreement. This decision reflects our commitment to uphold the standards of our organization and protect the interests of our clubs’ ownership.”
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Katofsky, through Future Legends LLC, filed his lawsuit Tuesday in California State Court, claiming fraud, concealment and diversion from the leagues’ franchisees, and that the league used its lower leagues to fund marketing and advertising to fund its Championship League, leaving little for the lower tiers.
Also on Tuesday, Katofsky was in a bankruptcy court hearing in which he was being accused of misrepresenting and falsifying information in the case of one of his seven limited liability companies seeking Chapter 11 bankruptcy protection. In total, Future Legends and Katofsky are on the hook for more than $56 million in unpaid loans and unpaid work on his Future Legends Sports Complex in Windsor. He only filed for bankruptcy protection on one of the LLCs, for about $6 million. But that one LLC, he has stated, owns the only money-making portion of the complex, a massive dome that houses several fields and courts, and which provided an indoor practice area for the Hailstorm team.
In the California case, amid other claims of how he believes the soccer league misappropriates its income, Future Legends stated that the Northern Colorado Hailstorm did not receive $100,000 in prize money from winning the Jagermeister Cup with an undefeated record.
“Despite multiple requests, USL failed and refused to pay NoCo the prize money,” the lawsuit states. “During the 2024 season, NoCo and Legends suffered some additional financial setbacks. Legends kept USL abreast of its financial situation, including sharing its upcoming financing options. The parties then agreed upon a series of promissory notes, whereby USL would pay certain expenses for Legends related to NoCo’s operations with the borrowed money. NoCo continued to expend hundreds upon hundreds of thousands in expenses and additional debts to continue to operate during the 2024 season.”
Future Legends claims that league officers “induced” Katofsky to continue to play on at least six occasions, despite the team’s poor financial condition.
“USL officers Paul McDonough, who had been suspended by the MLS prior to joining USL, and/or Lee O’Neil were in constant contact, almost weekly, with Legends regarding the financial matters,” the lawsuit states. During those conversations, the lawsuit states, the officers mentioned that it would be a “disaster” or “embarrassment” if he left the league. The lawsuit states the league officers also used the following phrases to induce Katofky to stay in the league: “we will get through this season and fix everything after,” and “please confirm you are playing next year.”
“These, and other statements, were made in order to induce Legends to continue to incur and lose hundreds of thousands of dollars to continue the 2024 NoCo season under the promise that NoCo would continue to play in USL League One for the term of its agreement, and beyond and eventually receive all of the promised benefits of a professional soccer League,” the lawsuit stated.
The day the Hailstorm failed to advance in the playoffs on Nov. 4, 2024, the lawsuit states, the League terminated its agreement with the Hailstorm.
Future Legends signed a franchise agreement with USL League One in 2020, and the Hailstorm began playing during the 2022 season, “winning several high-profile national matches” since, the lawsuit stated.
“Like every team in USL League One, NoCo suffered substantial financial losses each season. On information and belief, no team, ever, in USL League One history, has made a profit in any season.”
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The Colorado Hailstorm soccer team owner is suing the league for fraud and failing to pay it $100,000 in prize money after the league loaned the team more than $1 million.
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