Once a feel-good, do-good investment from National Basketball Association stars, Dallas-based Roots Food Group now faces a murky future.
The jeopardy comes in the form of fraud allegations in lawsuits against the company’s CEO Robert T. Jones, who has been accused of misleading investors and a “deliberate failure to disclose material facts.” The plaintiff in the case, which will be heard at a Dallas courthouse in January, is HMC RFG Investors, which is seeking $1 million in compensation on top of $200,000 in punitive damages.
Jones has also sued fellow executive Bhavin Shah, Chief Financial Officer Taylor Carvajal and strategic planning director Bryan Dorsey for transferring more than $1 million in assets away from company bank accounts without his permission. Shah, Carvajal and Dorsey have been implicated in HMC’s amended complaint for misrepresenting RFG’s finances.
Neither Stephanie Curtis nor Charles Kaplan, the attorneys for Jones and HMC, respectively, responded to requests for comment.
Shortly after the company’s 2020 move from California to Dallas, Jones undertook a robust fundraising campaign to help execute contracts it had with insurance and other healthcare providers and source additional inventory. HMC was one such investor, purchasing 250,000 shares of common stock and a further 200,000 option shares. But instead of coming through RFG directly, the sale was completed through an independent LLC owned and operated by Jones, according to court filings. HMC filed suit in November 2023, citing the “false and misleading” statements Jones and Roots Food Groups made to secure investment.
The Wall Street Journal additionally revealed Monday that two of the contracts Roots needed to fulfill — Aetna and parent company CVS Health — were never inked and the companies had never collaborated.
The recent legal issues are a change of fortunes for Roots, which saw a wave of favorable press after investment by the Golden State Warriors’ Chris Paul and Miami Heat’s Kevin Love, two of the NBA’s premier talents in the 2010s. The company’s philanthropic branch, Roots Food Foundation, even linked with the Chris Paul Family Foundation in 2021 to donate meals to underserved families “in need of healthy, unprocessed food.”
Paul has long been outspoken about his diet and the importance of access to fresh food. He is a noted vegetarian, regularly attributes his success to it and frequently invests in vegan companies like Beyond Meat and his own snack brand Good Eat’n. Love has also been public about his low-sugar eating habits full of plants and fish.
RFG and its offshoot RfoodX deliver medically tailored, heat-and-eat meals to treat chronic health issues such as hypertension, high cholesterol and both kidney and heart disease directly to a customer’s door. The company’s meals can be prescribed by doctors and covered by insurance as a health benefit.
