The pay TV porn provider and former board member David Nicholas are accusing each of other of trying to secretly rig a potential sale of the company to investment firm Longkloof, according to letters made public today in an SEC filing. Their differences culminated in Nicholas’s September 29 resignation after 10 years on the board — which followed the company’s September 18 firing of company co-founder and CEO Michael Weiner. Nicholas says in his resignation letter that directors on a Special Committee exploring the Longkloof offer “may have breached their fiduciary duties” to shareholders by trying to derail the bid. But New Frontier’s directors sent a letter to Nicholas today that attacked his “baseless and misleading statements” adding that he secretly wanted to sell, and was asked to resign because his “conduct as a member of the Board has been unacceptable.”

Nicholas had been a member of the Special Committee but says that he “began to have serious concerns” about other directors’ intentions when he questioned the high fees they intended to pay themselves for their work. “I was told by other members of the Special Committee that it would ‘look bad’ if I was the only member who did not accept additional fees,” he says. Nicholas was removed when the committee was reduced to three members from five. Directors charged that Nicholas secretly favored Longkloof, he says, because he did not support New Frontier’s decision to sue the investment company and others. New Frontier alleged that they violated securities law by not reporting that they were acting as a group in a hostile takeover effort. That charge “is absurd and is completely lacking of merit,” Nicholas says. He considered the suit to be “a waste of corporate assets” and objected to it being filed “without first holding a Board meeting to obtain formal approval” or consulting Weiner, who was still CEO. “My intent has always been to obtain the highest and best offer for the Company, irrespective of who made the proposal, in order to maximize shareholder value.” He told the board that he hopes his resignation impresses shareholders that they have “an urgent need to question your true independence and closely monitor your future actions, including your decision to be the only director nominees up for election at the upcoming annual meeting of shareholders.”

In its response, the board says that former CEO Weiner is a friend of Longkloof adviser Adam Rothstein. “It became clear very early on in the Special Committee’s deliberations that you were committed to advancing Michael’s frequently stated and unambiguous preference for selling the Company to the Longkloof/Rothstein investor group even if such a transaction would not maximize value for our shareholders,” the letter says. The board’s suspicions grew when Longkloof said it would mount a proxy fight to gain control and “we learned that Longkloof had invited you and Michael to participate…and serve as nominees on their slate.” (Longkloof ended its proxy battle in July.) Nicholas’ alleged “unwavering loyalty to Michael and his agenda culminated in our complete lack of faith and confidence in your ability to act in the best interests of shareholders and fulfill your fiduciary duties and, accordingly, we determined not to re-nominate you at the upcoming annual meeting and asked for your resignation.”

New Frontier produces VOD features, the Penthouse TV premium channel and pay-per-view services packaged as The Erotic Networks (or TEN) that include Xtsy, Juicy, and VaVoom. New Frontier’s stock has lost nearly 79% of its value over the last five years, in part due to growing competition from the Internet. But the share price is up 26.2% so far in 2012 as investors looked forward to a possible sale.