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Countersuit: James Franco's Ex-Management Firm Aware of 'Questionable Ethical Acts'

James Levy Management allegedly overlooked the gambling addiction and off-the-books deals of one of its founders as long as the manager had Franco as a client.

James Franco OZ arrivals - H 2013
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James Franco

Earlier today, talent manager Randy James sued his partner Miles Levy for allegedly diverting James Franco's commissions. According to the lawsuit, the fraud was perpetrated with the help of Steven Blatt at Tanner Mainstain, a financial management firm with an illustrious client list.

Now Tanner Mainstain has wasted no time in filing a counterclaim against both James and Levy.

The two were the founders of James Levy Management, which Tanner Mainstain says in its cross-complaint was "rife with internal mismanagement, surreptitious behavior, duplicitousness, and questionable ethical acts."

EARLIER: Talent Manager Claims Partner Stole James Franco Money

The suddenly hot dispute is now exploring more than just allegations that Levy hid a third of Franco's commissions from his partners and lost a prime client through other claimed misdeeds.

James allegedly believed as early as 2006 that Levy had an "enormous gambling addition, which was thrusting him further and deeper into debt, that he had stolen money from JLM, and that he made numerous unauthorized 'side deals' with his clients for payment of management commissions directly to him rather than to JLM."

Tanner Mainstain is now defending themselves -- or rather asserting that James Levy Management kept their "beliefs" about Levy secret while he was generating significant business.

"However, only now and because Mr. Levy's lucrative client, James Franco, has terminated JLM's services and their income stream is ending, do James and JLM claim ignorance of Mr. Levy's character and action," says the cross-complaint for equitable indemnity.

Here's the full cross-complaint filed by attorney Randall Dean.

Devin McRae, James' attorney, released the following statement to The Hollywood Reporter Friday night:

"This is no defense to the complaint's 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."

Email: Eriq.Gardner@THR.com
Twitter: @eriqgardner