Video game studio Gearbox Software is engaged in contentious legal battle with the company's former general counsel, Wade Callender.Gearbox initially filed a lawsuit against Callender alleging that he misused company funds for to pay for tuition, a home loan, and other personal expenses.In a countersuit, Callender leveled multiple serious allegations against Gearbox CEO Randy Pitchford, accusing Pitchford of taking a $12 million bonus that was intended as an advance against profits of "Borderlands 2," its blockbuster video game.Callender's suit also alleges that Pitchford once left a USB drive in a Dallas restaurant containing underage pornography ' though Pitchford separately told a podcast interview that the model featured in the video was "barely legal."In a statement issued to Kotaku, Gearbox said the allegations have "no basis in reality or law," and the company plans to settle the matter in court.A messy split between a video game Gearbox and its former general counsel has led to a legal battle, resulting in some serious allegations against Gearbox CEO Randy Pitchford.Kotaku reports that Wade Callender, former general counsel for Gearbox Software, has filed a lawsuit against Pitchford over several allegations involving the video game studio, as well as a co-owned joint real estate venture. Among other things, Callender alleges that Pitchford secretly took a $12 million bonus from publisher Take-Two Interactive that was intended to fund development of Gearbox's blockbuster game, "Borderlands 2."More seriously, Callender's lawsuit also makes allegations of improper personal conduct against Pitchford, including claims that Pitchford once left a USB drive in a Dallas restaurant that contained confidential Gearbox documents, as well as info belonging to business partners including Sega, Sony, and Microsoft ' and that "upon information and belief," Randy Pitchford's USB drive also contained Randy Pitchford's personal collection of 'underage' pornography," says the lawsuit.The suit also says that Pitchford hosted parties where 'adult men have reportedly exposed themselves to minors, to the amusement of Randy Pitchford.'Gearbox shared the following statement with Kotaku in response to the allegations: "The allegations made by a disgruntled former employee are absurd, with no basis in reality or law. We look forward to addressing this meritless lawsuit in court and have no further comment at this time.'Later on Friday, Gearbox also told Kotaku that it would pursue action against Callender directly over his claims about Pitchford's personal conduct:"Gearbox will be filing a grievance with the State Bar of Texas against our former general counsel Wade for disciplinary proceedings for filing a lawsuit that includes accusations that he knows to be untrue," reads the statement, in part.Gearbox did not immediately respond to a request for comment from Business Insider.The background of the caseCallender joined Gearbox in 2010 and served as general counsel and vice president of legal affairs until August 2018. Callender and Pitchford were long-time friends for over 40 years, but the friendship fell apart over the last two years, according to Callender's lawsuit. An old Twitter post from Pitchford appears to back up that assertion.Here's me playing guitar and singing with my friend (and lawyer) Wade Callender. #LifeInTexas pic.twitter.com/0bI7A16ICs' Randy Pitchford (@DuvalMagic) April 9, 2016In November, Gearbox filed a lawsuit against Callender, claiming that he had violated the company's trust and used company funds for tuition, a home loan agreement, legal fees, and other personal expenses. The suit claims that Gearbox had agreed to pay Callender's tuition for an MBA program and home loan in exchange for his continued employment at the firm, but he left less than a year after obtaining his degree.Gearbox is asking for more than $1 million in damages, accounting for money Callender allegedly spent on firearms and family vacations, as well as other expenditures."As an executive with the company and fully knowing that Gearbox's special trust in him would result in Gearbox's assured payment of his personal charges passed off as business expenses," Gearbox's lawsuit reads. "From 2016 up until his resignation in July 2018, Callender incurred thousands of dollars' worth of charges from Disneyland, Frisco Gun Club, Gun Gear To Go, and sixpackshortcuts.com, just to name a few."In December, more than a month after Gearbox filed its original suit, Callender countered with his own lawsuit, with claims that he had been "shamefully" exploited by Gearbox CEO Randy Pitchford. He claims that he was instructed to help hide from employees the $12 million payment, which had been intended as an advance on "Borderlands 2" royalties.The USB driveIn an interview with "The Piff Pod," a stage magic podcast, Pitchford gave what appears side of the story with regards to the USB flash drive. The podcast episode was uploaded a day after Callender filed his lawsuit.According to a report in Ars Technica, Pitchford said that he left a USB stick containing confidential documents at a Medieval Times Dinner & Tournament restaurant. The stick was found by an employee, who accessed the drive, which contained information about future Gearbox projects ' as well as pornographic material, he said.However, it was a video featuring a model who goes by the online handle "Only 18," he said. Pitchford, a stage magic enthusiast, told "The Piff Pod" that he had saved this particular video to the USB drive because he believed that the model used a sexually-explicit magic trick in the video, and he was trying to crack the secret. He described it as "barely legal porn," seemingly in an attempt to refute allegations that it was child pornography.Callender also alleged that Pitchford used Gearbox funds to host "Peacock Parties" at his home, where adult men had exposed themselves to minors. As theDallas Morning News reports, Pitchford and his wife made a regular habit of hosting a private "Peacock Theater" in their home, featuring magicians and variety acts, though the content is not described as sexually explicit.SEE ALSO:'Red Dead Redemption 2' is getting a 'Fortnite'-style battle royale modeJoin the conversation about this storyNOW WATCH: 7 science-backed ways to a happier and healthier 2019 that you can do the first week of the new year Click here to read full news..