Vidostream | News, sport and opinion from the Vidostream's US edition

https://vidostream.com

Michael Kassan’s Legal Salvo Tears Into UTA Amid Dueling Claims Over Company Expenses

The MediaLink founder resigned on March 6 a day before UTA fired him for allegedly misusing company funds. The agency's lawsuit against Kassan, who waived his nearly $10 million severance payment by resigning, may be moved into arbitration.
War at UTA: MediaLink founder Michael Kassan (left) is at odds with agency CEO Jeremy Zimmer. THR ILLUSTRATION; ADOBE STOCK; GETTY IMAGES

War at UTA: MediaLink founder Michael Kassan (left) is at odds with agency CEO Jeremy Zimmer. THR ILLUSTRATION; ADOBE STOCK; GETTY IMAGES

 

A legal showdown has erupted between Michael Kassan and United Talent Agency over the MediaLink founder’s departure, with Kassan claiming that he resigned after being lied to about his responsibilities and privileges at the firm and the agency saying it fired him for misusing company funds.

In an arbitration action initiated by Kassan on March 12 against UTA that names chief executive Jeremy Zimmer, he claims that UTA fraudulently induced him to agree to a sale of MediaLink “only to then walk back the very promises made” regarding what he would oversee at the agency and allowances for his special expenses budget. He resigned on March 6, which was proceeded by the agency terminating him the next day. UTA, in a lawsuit filed in Los Angeles Superior Court on Tuesday, accuses Kassan of treating company money as a “personal slush fund.”

In a statement, Sanford Michelman, a lawyer for Kassan, denied allegations that his client stole money from the agency. “UTA’s claims are a desperate attack in response to Kassman resigning and then suing them,” he said, adding that it’s an “attempted diversion tactic by UTA to hide that they fraudulently induced Michael into agreeing to a transaction when Zimmer had no intention of honoring his word.”

Bryan Freedman, a lawyer representing UTA, said in a statement that Kassan was “terminated by UTA on March 7 and made aware well before that that UTA had grounds to fire him.”

“His claim against UTA has no merit and is an attempt to divert attention from the misappropriation of company funds that led to his termination,” Freedman added.

In 2003, Kassan founded the strategic advisory firm MediaLink, which was then acquired by UK-based Ascential in 2016. Five years later, UTA bought the company after an aggressive courting effort. As part of the deal, Kassan remained as chief executive of MediaLink and became a partner at UTA.

According to the complaint against Kassan, he “almost immediately” began to abuse his authority by using company funds to pay for personal expenses.

In December 2021, two weeks after UTA closed its purchase of MediaLink, Kassan wrote checks to himself from the company’s business checking account for $155,000, which he said was for personal charitable donations, the lawsuit claims. A year later, he allegedly directed MediaLink to divert his special expenses budget to his S-corporation, a pass through entity generally used for tax purposes. He ultimately received over $700,000 before the payments ceased when MediaLink’s top finance executive allegedly realized that his contract did not allow lump sum payments, according to the complaint.

The lawsuit claims Kassan further breached his contract by using MediaLink’s bank account to pay nearly $500,000 of personal credit card debt. UTA argues that Kassan failed to direct clients to deposit funds into a UTA-managed account instead of one previously used by MediaLink, which he still had control over as the sole signatory.

When confronted, Kassan allegedly could not justify or provide documentation for his expenses, UTA claims. Other allegedly improper expenditures include giving his wife, who is not affiliated with UTA, a company credit card, spending a “small fortune” on luxury travel and expensing his personal driver’s housing, per the lawsuit. “As a result, following an investigation, Kassan was terminated for cause,” states the complaint, which notes that his contract was due to expire in 2026.

Kassan tells a different story about his departure from UTA. According to him, the agency, in violation of representations made to him, “concocted a scheme” to silo MediaLink and pressure Kassan into increasing prices, on top of refusing to invest in the advisory firm and slashed its marketing spend. He says he submitted his resignation on March 6, with an effective date of April 5 unless changes were made at the company.

“In response, Zimmer, sticking with his style of intimidation, tried to reject Kassan’s resignation and then issued a termination for “Cause,” states the complaint. “Ironically, the invalid termination — after Kassan had already resigned — was based on Kassan’s marketing spend and charitable giving which UTA alleged was too high and inappropriate.”

On allegations that he improperly spent company funds, Kassan claims that he was transparent about his level of spending, the level of which was agreed upon when Kassan agreed to sell MediaLink to UTA. He argues his special expenses budget was used to create new business opportunities for the company. According to the arbitration filing, Ascential provided him with a $1.5 million discretionary fund budget paid upfront each year to MEK, Inc. to net him $950,000 after taxes, which is allegedly still in effect following MediaLink’s sale to UTA.

“As an express condition to Kassan’s accepting UTA’s offer, he stated — in writing — that his marketing allowance must continue per ‘past practices,'” states the filing, which claims that Zimmer conducted a “sham” audit of his spending as pretext to fire him.

When Zimmer started to prioritize cost-cutting, Kassan argues that the firm backtracked on its promises. This allegedly included UTA directing Kassan to drastically discount services to UTA clients at the expense of MediaLink, shuttering its profitable executive search business and promoting certain people “in exchange for their complicity in UTA’s scheme to induce Kassan to agree to the UTA and Ascential transaction.”

The lawsuit from UTA details expense allowances for Kassan. Per the agreement, he was given a special budget of up to $950,000 to be used “consistent with past [MediaLink] practice.” This money was intended to serve for expenses he incurred over and beyond normal business expenditures, such as private jet travel, according to the complaint. UTA argues that he was entitled to these charges “only with respect to a budget that meets certain EBITDA goals.”UTA’s lawsuit against Kassan, who waived his nearly $10 million severance payment by resigning, may be moved into arbitration, per the partner services agreement. He’s expected to move for sanctions over the agency filing its legal action in the improper venue “so that it would become public,” Michelman says. If the case is allowed to proceed in Los Angeles Superior Court, however, it could possibly unearth whether UTA reneged on promises it made to Kassan when it was pursuing his approval for the merger, which could dampen its acquisition prospects.

Author: Editors Desk, WINSTON CHO

Source: THR (The Hollywood Reporter)

We are using cookies to give you the best experience on our website. By continuing to browse, you are agreeing to our Cookie Policy.
You did not use the site, Click here to remain logged. Timeout: 60 second