Michael Johnson has been accused of paying himself $500,000 (£372,000) eight days before his Grand Slam Track project collapsed before the final event in Los Angeles, leaving athletes and creditors owed millions. The claim is made by vendors in a legal filing in which they have also sought permission to sue individual leaders of GST, including Johnson and the main investor, Winners Alliance.
When GST was launched Johnson promised it would “bring fantasy to life” and transform athletics – with track’s biggest stars facing off regularly against each other for huge prize money. But the writing was on the wall after the first event in Jamaica last April was sparsely attended, and it collapsed shortly after its third event in Philadelphia on 1 June.
The filing, at the US bankruptcy court for the district of Delaware, also shows that Johnson was owed $2.2m but it is claimed he took out $500,000 on 4 June, when he knew Grand Slam Track was at risk of financial collapse as it could not cover its debts.
“Mr Johnson initiated a payment of $500,000 purportedly on account of an unsecured note,” lawyers for the unsecured creditors say in a court filing. “Shockingly, Mr Johnson elected to secretly prefer himself over the athletes and other, non-insider creditors, while at the same time feigning to the public that he was selflessly looking to advance the interests of the athletes.
“Moreover, at the same time, the debtor knew it was in precarious financial straits without sufficient cash to complete its contemplated season.”
GST filed for bankruptcy in December after revealing estimated liabilities between $10m and $50m to more than 200 creditors. Winners Alliance has said it does not control the track league and called the objections of the creditors committee “fundamentally false”.
GST, founded by Johnson, and Winners Alliance have been approached for comment.
In a previous statement, Winners Alliance said: “The public record makes clear that Winners Alliance invested more capital, assumed more risk, and ultimately suffered greater financial losses than anyone.
“Winners Alliance invested millions, loaned millions in good faith, and ultimately offered millions more to stabilise Grand Slam Track and maximise recoveries for all stakeholders, including athletes, vendors, and trade creditors alike.”