LMNO filed suit in June 2016, claiming that Discovery was in breach of contract by canceling several LMNO series and taking over production of “Little Couple.” Discovery countersued and claimed LMNO had been maintaining two sets of books on its shows in order to shortchange profit participants and overcharge TLC’s parent company for expenses.
At the time, LMNO alleged that its accountant, Paul Ikegami, had been embezzling from the company for years, and that Discovery took advantage of LMNO’s weakened condition to sever its relationship with LMNO on six shows. LMNO filed a separate fraud claim against Ikegami that is set for trial in Los Angeles Superior Court on May 1.
“LMNO and Discovery have reached an amicable settlement of the claims between them in the litigation. The settlement resolves all claims and issues that were asserted in the case between LMNO and Discovery to the mutual satisfaction of both parties. The terms remain confidential, and the parties have agreed to make no further comment regarding the settlement agreement.”
Industry sources said the settlement talks had been going on for some time. The sides pursued the discovery process for the federal lawsuits and also went through private mediation.
The stars of “Little Couple,” William Klein and Jennifer Arnold, filed their own lawsuit against LMNO last June, echoing the allegations that Discovery had previously made. The stars, both of whom have dwarfism, alleged that LMNO had underreported foreign licensing revenues and deprived them of their fair share of proceeds from the show. Klein and Arnold recently filed for an injunction to block the settlement between LMNO and Discovery, but the judge rejected that request. Their litigation against LMNO is still ongoing.
The claims of large-scale accounting fraud drew the attention of federal prosecutors in Los Angeles, which launched an investigation of LMNO and its leader. The status of that probe is unclear, but LMNO is no longer believed to the target of an active investigation.