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Miles Levy, former manager to James Franco, has been sued by his business partners in what is described as a scheme to divert the actor’s commissions to one of Levy’s own companies.

Also named in the lawsuit, filed on Friday in Los Angeles Superior Court, were Franco’s financial manager, Steven Blatt, and his accounting firm, Tanner, Mainstain, Blatt, Glynn & Johnson. The suit claims that Blatt helped Levy set up the company Down Goes Frazier “for the sole purpose of facilitating this theft.”

The lawsuit also claims that Levy made “substantial” personal credit card charges on a card provided to him by Franco.

The suit was filed by Randall James, Levy’s longtime partner in James Levy Management, and Kenneth Jacobson, who had been shareholder and director in the firm from 1999-2006, when it was known as James/Levy/Jacobson.

Levy and Blatt did not immediately return calls for comment.

The crux of the lawsuit is a claim that, in May 2006, Levy informed his partners that Franco no longer wished to pay 15% in commissions but instead would pay only 10%. But the suit contends that Franco “had never directed any such thing,” and continued to pay the 15% commission. Levy, the suit claims, diverted the 5% difference to himself and the company Down Goes Frazier. The suit claims that when Randy James discovered the diverted money a month ago, Blatt “turned” on Levy and disclosed what had been going on.

Franco dropped Levy as his manager last year. According to the lawsuit, Levy and Franco reached a confidential settlement in December.

James and Jacobson are represented by Devin McRae and Michael Jones at Early, Sullivan, Wright Gizer & McRae.

Update: Tanner, Mainstain, Blatt, Glynn & Johnson filed a counter complaint on Friday afternoon, claiming that the management company was “rife with internal mismanagement, surreptitious behavior, duplicitousness, and questionable ethical acts.”

They contend that James and Jacobson believed back in 2006 that Levy had an “enormous gambling addiction” that was sliding him deeper into debt and that he stole money from the company and made side deals with his clients. That was the reason that Jacobson left in 2006, the countersuit contends, but James stayed because Levy was still “generating significant business.” Only when Franco quit the firm did James claim “ignorance of Mr. Levy’s character and actions,” and then “foist responsibility on others for the acts of their co-owner, Miles D. Levy, and for their own careless and reckless actions.”

The accounting firm is seeking indemnification on the grounds that Levy, acting on behalf of the management company, represented to Blatt and the accounting firm that he and James would personally split 5% management commissions on Franco’s income. “Mr. Blatt reasonably relied on the representation of Mr. Levy with respect to the split of management commissions and reasonably believed that Mr. Levy was acting within the scope of his agency for [James Levy Management] in making such representations,” they said.

The accounting firm is represented by Randall J. Dean of Chapman, Glucksman, Dean, Roeb & Barger.

McRae responded to the countersuit late on Friday. “This is no defense to the complaints allegations that Tanner Mainstain name partner Steve Blatt knowingly facilitated, concealed and profited from Mr. Levy’s theft from the corporation. The law doesn’t allow fraudsters to point to the victim and say it’s your fault I duped you. This pleading will be shut down quickly.”

 

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