LMNO Productions, which is embroiled in a legal dispute with Discovery over a half-dozen reality TV shows, has filed a $10.5 million fraud and civil extortion lawsuit against its former accountant. The suit accuses Paul Ikegami of embezzlement, falsifying its books and attempting to extort $800,000 from the company.
The 20-page lawsuit, filed today in Los Angeles Superior Court (read it here), is just the latest twist in a tangled saga of intrigue and alleged duplicity. LMNO claims that Ikegami had been embezzling from the company for years and that when confronted, he attempted to shake the company down. When that failed, the suit claims, the accountant took the books he’d allegedly cooked to Discovery Communications, which then launched an audit. Last week, Discovery took control of six reality shows LMNO had been producing for its networks, including The Little Couple and Unusual Suspects.
FBI Raiding LMNO Offices Amid Reality Producer's Legal Battle With Discovery
Ikegami did not return numerous calls for comment this week.
Last week, LMNO filed a $7 million breach-of-contract suit against Discovery, and earlier today, FBI agents showed up with a search warrant at LMNO’s offices in Encino.
In its suit against Ikegami, LMNO says that from April 2010 to October 2015, the accountant “used his control over LMNO’s payment system and accounting system to embezzle funds, and further used his control over LMNO’s books and records to falsify entries to hide his embezzlement. Then, when Ikegami’s behavior became erratic and LMNO decided to hire a new accountant in October 2015, Ikegami tried to hide his theft by withholding LMNO’s records, attempting to extort LMNO for more than $800,000, and when his demand was not met, sought to destroy LMNO by dumping its physical records into dumpsters, and then telling lies to LMNO’s largest customer about the financial records, over which Ikegami had exercised control for years, and had repeatedly falsified.”
In its suit, LMNO says that it is “only now beginning to piece together the full extent of Ikegami’s fraud and embezzlement. Virtually everything about Ikegami turns out to be fraudulent, down to the basic and original lie that he was even a CPA. LMNO has discovered more than $1,500,000 in unauthorized payments that Ikegami made to himself through a variety of schemes.”
The suit claims that Ikegami “began his embezzlement scheme in approximately April 2010 by issuing two checks from LMNO’s account to Ikegami & Co., one for the agreed monthly fee of $3,500 and a second unauthorized check for $8,925.” The suit alleges that this appears to have been a “test” to see if LMNO CEO Eric Schotz and SVP Corporate Operations Ned Davis “would notice or question this additional payment.” The suit says that after the additional payment went unnoticed, Ikegami continued issuing unauthorized checks on the LMNO account to his Torrance, CA-based accounting firm, Ikegami & Co.
“Over the next five years, the suit claims, “Ikegami issued four to eight unauthorized checks from LMNO’s account to Ikegami & Co. each month, with monthly payments ranging from $21,225 to $91,965. … To cover up his embezzlement, Ikegami doctored LMNO’s books to omit many of the fraudulently issued checks and to falsify payments to other entities so that LMNO’s books did not reflect the unauthorized payments to Ikegami and/or his company.”
Attorneys Stephen Mick and David Nelson of Barnes & Thornburg LLP in Los Angeles are representing LMNO in the lawsuit, which seeks a jury trial.
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