Tuesday, 11 August 2020 09:00

The 2002 Magic scandal: A tale of embezzlement, falsified spending, and restructuring

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The 2002 Magic scandal: A tale of embezzlement, falsified spending, and restructuring WOTC

For as long as Magic: The Gathering has been around, it’s somewhat incredible that there have been no real major scandals. Sure, there was the Rebecca Guay controversy, the Maori language card, and a few other incidents here and there, but they were solved pretty quickly and honorably. Even cheaters and harassers are dealt with quickly, and when attitudes change about certain things (like race relations, for example), Magic changes along with them. As far as companies go, Magic is on top of things.

So back in 2002, when some higher ups at Wizards of the Coast's parent company, Hasbro, started embezzling, WotC quashed it’s largest scandal to date. And probably helped keep it’s reputation above water.

But let’s backtrack a bit. Back when the game of Magic was created, virtually every employee was hired from the original core out. By 1997, however, business was growing fast. Peter Adkinson had departed as CEO, and, with a lot of potential buyers of the game on the horizon, WotC decided to go for the big guns and installed a former Boeing executive by the name of Vince Caluori

Caluori had been with Magic in some capacity since the mid 1990s, and being a Washington native certainly helped. With his experience in Boeing, he made Magic: The Gathering known worldwide to a much higher scale. This interested Hasbro (which would wind up buying the privately-held company), opened new markets, interested possible TV airings of tournaments, and all sorts of perks.

He also infamously yelled at employees for making broken sets, realizing that the game is only as good as its product. He was the CEO and he was responsible. After all, he knew product.

Vince Caluori, former WotC CEO.
Vince Caluori, WotC CEO from 1997-2002. / FACEBOOK

Production itself was another matter though. Since production in companies is often away from where the headquarters is at, there’s a bit of disconnect there. And as good as the higher-ups at WotC were, what it boiled down to was cost and quality. If it was coming within budget and quality was up, you could coast. This was proven after the huge Wyvern card back mishap in the mid 1990s that only heightened standards in the aftermath of the printing error.

So, in the early 2000s, Senior Vice President of Production Tom Fenderling and Quality Assurance Consultant Gene Maddox decided to play it a little fast and loose and started altering purchase practices and falsifying expense reports. In short, they were taking in more money than needed. And that money money was going… somewhere.

Wizards of the Coast HQ. / FOURSQUARE
Wizards of the Coast HQ. / FOURSQUARE

 

With successful sets like Invasion pulling in a lot of money at that time, it was no wonder that this wasn’t seen at first. But, by mid-2002, the cat was out of the bag. Wizards of the Coast went through one of it’s largest upheavals ever. Fenderling and Maddox were fired and sued in multi-million dollar lawsuits. Officially, the amount that “disappeared” was never released, but by the lawsuit amount it was rather substantial. Caluori, which WotC and Hasbro stressed was not because of the firings, had decided to retire almost on the same day, leaving the company reeling for leadership and restructuring to deal with the losses.

A Hasbro and former Coca-Cola executive was in for a few years, but soon was gone in favor of one of the remaining pre-Hasbro executives to get the magic back into Magic. Which, by their success and lack of anymore monetary scandals today, worked.

Not all companies can bounce back from concurrent crises, but as WotC have proven time and time again, a strong commitment to product and consumer happiness can prevail. Though having a company with mostly fan employees doesn’t hurt, either.