Camping World sues previous owners of Little Canada-based Active Sports, alleging fraud

National retailer Camping World is accusing the former owners of Little Canada-based Active Sports of fraudulently courting an acquisition by "artificially inflating earnings and understating expenses," according to a lawsuit filed last week.

Camping World acquired Active Sports in 2017. The suit charges that the owners of Active Sports lied about their company's financials to induce Camping World to make the acquisition.

Camping World alleges it uncovered a "long-running scheme of falsifying financial information, including falsifying sales transactions ... dating back to at least 2010." The lawsuit claims the Active Sports operators "created fictitious customer transactions on PayPal and Amazon's e-commerce platforms resulting in $600,000 loss for Active Sports in March 2020."

Philip Kaplan, attorney for the defendants, said Camping World's suit is baseless.

"They claim that misrepresentations were made ... and we totally deny that," Kaplan said.

Chris Madel of Minneapolis-based Madel PA, who is representing Camping World, could not be reached for comment.

Camping World filed the suit Aug. 1 in Ramsey County District Court and lists six claims including fraud, breach of contract and civil theft. The suit is seeking more than $50,000 in damages.

Earlier this year Active Sports filed notice with the state that it was closing its retail and warehouse operations, laying off approximately 90 workers.

Camping World initially said it would end Active Sports operations "as part of its review of underperforming assets and business lines," according to company filings. But after liquidating a large amount of inventory, Camping World "concluded instead that it would integrate the remaining operations into its existing distribution and fulfillment infrastructure."

The lawsuit follows another filed in July. Landlord JHM Owasso Properties Inc. is suing Active Sports for not making required repairs and abandoning its property. JHM Owasso Properties is owned by Jan H. Magnusson, the previous CEO of Active Sports. Camping World still owns the Active Sports name.

"This new lawsuit appears to be a retaliation for a lawsuit we filed a week earlier," said Kaplan of Minneapolis-based Anthony Ostlund Louwagie Dressen Boylan, who represents JHM Owasso Properties in the first suit and the former Active Sports operators in the newly filed case.

Camping World's lawsuit names 10 defendants, including five largely inactive entities and Active Sports' previous owners Steve Poindexter, Jan H. Magnusson, Jan Kristofer Magnusson, Ann Magnusson and Catrin Magnusson.