Jail threat looms for Edmonton man being sued by $50M lotto winner

$50-million lotto-winner Randall Rush believed he was about to hit the bigtime — again.

The Alberta man says he invested nearly 10 per cent of his winnings in Kult Labs — a company he says he was told would be the next Amazon.com, with Taylor Swift herself attending the launch party.

Instead, one year later, Rush is suing Kult Labs and its Edmonton owner Jeremy Crawford, who is now facing the threat of jail time.

• Jeremy Crawford and wife say lottery winner's lawsuit victimizes them
• Alberta $50M lottery winner scores victory against Jeremy Crawford in U.S. court
• $50M lottery winner Randall Rush sues Alberta company over investment

On Monday, U.S. judge Christopher Whitten gave Crawford until June 21 to pay $200,000 to the Superior Court in Maricopa County in Arizona. 

It's a fraction of what he owes in penalties, which could now be as high as $1.4-million after taking out an illegal loan for his company.  

If Crawford doesn't meet the deadline, a civil arrest warrant will be issued "to incarcerate him until he makes the $200,000 required deposit," states the judgement obtained by CBC News.

Accused of 'evil'

It's the latest win for Rush in a legal battle taking place on both sides of the border. In March, Rush launched a Canadian lawsuit against Crawford.

But his grievances are outlined in more detail in the U.S. complaint.

Rush launched a lawsuit in January, a year after taking a trip to a Lamont, Alta. grocery store to buy food for his cat Conway Kitty, where he discovered he had the winning ticket.

The complaint, which is the equivalent of a Canadian statement of claim, accuses Crawford of fraud, breach of contract, misrepresentation, unjust enrichment and acting "with an evil mind" — all of which Crawford denies.

The lawsuit lists 267 allegations to back up Rush's claim.

Vision from God

Among them, Rush says Crawford learned of his lotto win through his parents Dave and Shirley Crawford, who attended the same church.

After his win, he alleges Crawford called up to seven times a day and gained credibility by making "references to God and the vision he received from God for the future success of the Kult Companies."

Rush says he reluctantly paid for Crawford and his wife Amy to fly to Hawaii while continuing to resist pressure to make a multi-million-dollar investment. But a heated conversation in which Crawford claimed he could lose out to other investors changed that, Rush says in the complaint.

The next day, Rush agreed to invest $150,000.

Over the next few months, he says he sunk more than $4.5 million into Kult Labs in exchange for 10 per cent of the company and assets for collateral that included Sherwood Park and Arizona properties, as well as an Audi R8 sports car.

Rush says his decision to invest was based on Crawford's alleged claim that Kult was poised to be a multi-billion dollar company and the next Amazon.com, already valued in excess of $100-million.

But last fall, Rush "became suspicious" that Crawford and Kult Companies "were not what they purported to be." He invited some advisers along to the company's launch party in Arizona.

The complaint says that's where they noticed Crawford's "suddenly lavish lifestyle," which included acquiring ocean front property, a 1999 Ferrari F1 and two late model Porsches.

Taylor Swift, Justin Timberlake no-show

They also noted Taylor Swift and Justin Timberlake were absent from the launch party after Crawford allegedly suggested they might be there.

Rush said Crawford refused to provide corporate governance or financial documents. When confronted, the complaint alleges, Crawford said he was finished working with Rush.

Rush is seeking damages of not less than $4.5 million.

Allegations denied

In his 22-page response, Crawford denies most of the allegations but admits Rush purchased shares in Kult Labs from his personal holdings and now owns 10 per cent of the company.

He denies making false representations.

But he admits to violating a court-imposed order that froze disputed properties and assets. In December, he took out an illegal $200,000 mortgage for Kult Labs on an Arizona office building.

Last December, Whitten found Crawford in contempt and ordered him to pay back the illegal loan plus $10,000 each day until then, which would now work out to nearly $2 million.

Crawford asked the court to reconsider due to his dire financial situation. That led to a scathing judgement in which Whitten criticized Crawford for testimony that lacked credibility and an "incredibly lavish lifestyle." 

But in his latest ruling this week, Whitten agreed to cap the penalty at $450,000 if Crawford meets next Tuesday's deadline. If not, the amount owing shoots up to $1,370,000 and an arrest warrant will be issued. Whitten says he will stay in jail until he pays the $200,000 deposit.

If you have information about this story, please send an email in confidence to andrea.huncar@cbc.ca@andreahuncar