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Nu Image Holdings, Millennium Films, CEO Avi Lerner and others were sued in L.A. Superior Court on Friday for wrongful termination of the company’s former corporate controller, who charges she was fired after bringing to light instances of tax fraud, violations of wage and hour laws and other illegal activity.
The suit was filed on behalf of Jane Smith, who says she worked for Nu Image and related entities from 2008 until 2011. She charges that during her employment she discovered “numerous improprieties,” which included the executives charged in the suit taking millions of dollars in personal loans to pay personal expenses with the understanding that the loans would never be repaid. She says it was done to avoid taxes.
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Smith adds that the executives not only paid their own personal expenses out of company funds, but also those of their girlfriends, which she says was also a way to avoid taxes.
She says they created “sham shell companies” to shield Nu Image revenue from U.S. taxes. She alleges that they created fake debt in the off-shore companies so that when revenue came in, they could route it through a shell company as debt repayment.
Smith charges they maintained three sets of books “to allow them to defraud investors, taxing authorities and creditors.”
She says they “engaged in bank fraud falsifying financial statements and other documents submitted to banks.” She also says they laundered money through Bulgarian accounts and accounts in Aruba.
She says these actions resulted in tax fraud not only against the U.S. government, but also against the states of New York, Louisiana and Michigan, “amounting to millions of dollars in checks written to the defendant entities by various state governments.”
Smith says that when she complained about these unlawful practices to CFO Trevor Short, VP of production accounting Alan Lam and others, they “reacted angrily” to her allegations, and she was soon fired.
Smith also says they created a hostile work environment for a woman through the use of foul and degrading language and depiction of violence against women in films and that they “created a work environment hostile to Jews, through the display of large anti-Semitic cartoon drawings in one of the offices.”
She says she was denied overtime compensation for duties that did not involve management functions, such as bookkeeping and clerical work. She alleges that her complaints to human resources director Barry Weiss were a “motivating factor” in her termination in January 2011.
There was no response to a request for comment made to a spokesperson for Nu Image on Friday evening.
View the full complaint here.
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