NBA stars invested in startup facing fraud charges, what Intelligo uncovered about the CEO

In 2020, Roots Food Group Holdings was formed. The startup was designed to offer customized meals to cater to the increasingly diverse dietary needs of consumers. Rooted in the philosophy that food is medicine, the venture quickly gained high profile backers and angel investors thanks to its early valuation and hype. NBA stars Chris Paul of the Golden State Warriors and the Miami Heat’s Kevin Love joined the ranks of investors. Private equity was also attracted by the company’s 2022 presentation, which listed contracts with clients such as CVS Health, UnitedHealthcare, Centene, Health Net, and Aetna - contracts that Roots claimed to be worth about $50 million. 

Based in Dallas, the startup pitched to investors, seeking a $10 million growth investment to help bolster inventory and uphold their contractual obligations to their new clientele. Since the company allegedly provided food solutions to meet doctor-prescribed diets as treatment for an array of medical conditions such as diabetes, Roots Food Group claimed it qualified as insurance covered care and gained business with state and federal Medicaid programs in California. Almost $9 million in grants went to Roots to cover meal services for 14 counties. This deal was dependent on Roots’ alleged contracts with Medi-Cal managed insurance plans including Inland Empire Health, Health Net, and Central California Alliance for Health.  

In addition to the for-profit arm of Roots Food Group, a not for profit foundation was created to serve underprivileged communities with clean, unprocessed and medically prescribed meal solutions, donating one meal for every 10 sold. It was even reported that NBA star and investor Chris Paul’s family foundation was involved in this mission. 

Given all this, Roots Food Group was seemingly off to the races, primed to be a successful startup addressing an untapped market and offering a solution to a unique and growing market. Its roster of investors was star studded and contracts were penned with top insurance companies and government entities. However, their meal ticket began to look less legitimate and show cracks in 2023 when chief executive Robert T. Jones was sued by investor HMC RFG Investors last November in a Dallas district court claiming Roots used false and misleading information to secure investments. Jones has denied the allegations, but new scrutiny revealed that Aetna and CVS Health are not in fact under contract with Roots.     

While externally investors took Roots to court claiming a misleading presentation and valuation, internally the company battled its own conundrum. In January, Jones sued Roots’ top executives and investor Bhavin Shah claiming that they undercut his authority, going behind his back to make moves that purposefully positioned the business and its dealings out of Jones reach. Carvajal, Dorsey, and Shah maintain that Jones’ allegations are false and will be contested in court next January. HMC RFG Investor’s suit against Jones and Roots Food Group is scheduled to go to court the following April. 

We ran an Intelligo background check on Jones and uncovered a spotty past punctuated with red flags. Jones reportedly holds a degree in Farm Agriculture and Management from California Polytechnic State University – San Luis Obispo, however the university could not verify his degree or attendance. Before Roots Food Group, Jones worked at True Food Innovations, Chef'd, Gourmet Foods, LLC, and UltraBlend Solutions, LLC. Several companies he was involved with have been involved in lawsuits with Jones, reportedly created to funnel funds for personal expenses. He also reportedly created non-profit organizations to misuse funds. Jones arranged for the creation of Feeding the Blind, appointing unqualified friends to leadership positions and covering their salaries and expenses with Roots Food Group and investor funds. The foundation raised very little money and a non-refundable advance of $625,000 for a planned fundraiser performance by Andrea Bocelli which reportedly came from investor funds.

In addition to his professional past, he also has a rich legal history. Jones has been involved in several significant legal cases with numerous allegations against him. He has accumulated upwards of $700,000 in tax liens, mostly for unpaid state taxes, and his non-compliance with tax liabilities has been referenced in litigation. In a personal case, Jones filed for divorce from Janet Elizabeth Jones in September 2009, citing irreconcilable differences. Ms. Jones alleged that he neglected their children, engaged in substance abuse, and created an unsafe environment for the family. Intelligo has also confirmed Jones’ failure to pay child and spousal support. The divorce was finalized in March 2023, with Jones required to pay $75,000 for child support.

Furthermore, court records from civil litigation against Jones indicate allegations of felony assault and battery involving his ex-wife, Janet. These documents reveal that Jones was reportedly sentenced to three years of probation, mandated community service, and ordered to pay restitution.

In regards to the Roots fraud charges, our Intelligo Clarity report filled in the blanks with more details surrounding the case. According to recently filed court documents, Jones resigned as director on November 22, 2023, and was terminated as CEO on December 7, 2023, due to egregious misbehavior, including self-dealing transactions, embezzlement, plundering corporate resources, and abusive employment practices. He allegedly mismanaged the company, treating it as his "personal fiefdom," and used company funds for personal expenses, leading the company to near insolvency.

An internal investigation revealed he misappropriated at least $3 million in company funds for personal use and paid another $1 million to friends and companions. The investigation included a forensic audit, document review, and interviews with investors and employees. Personal transactions he claimed as business expenses included wiring $923,500 to his personal limited liability company, spending $10,346 at a jewelry store, $2,321 on personal clothing, and $32,238 on private jet transport.

Had our favorite NBA stars done a background check on Jones prior to investing in Roots Food Group, they would have uncovered his questionable past and most likely benched the deal. Do you perform due diligence before you invest? Vet the businesses and startups you are interested in backing with Intelligo’s range of background checks. Whether you’re looking for a one and done solution or ongoing monitoring, we have a customizable approach to ensure your investments are a safe bet. Schedule a free demo today.