2:00pm PT by Eriq Gardner
David Letterman's Company Claims Convicted Fraudster Stole Its Money
David Letterman's Worldwide Pants says it takes "audacity" for a guy to be convicted of federal mail fraud, then be caught "red-handed" stealing its money, then to sue claiming he is owed.
The guy is Raul Galaz, a former entertainment lawyer at Loeb & Loeb and Katten Muchin, who in the late 1990s got into the business of collecting secondary rights royalties from cable and satellite transmissions of copyrighted works. Galaz, who started several companies including the Worldwide Subsidy Group and the Independent Producers Group, was convicted in 2002 and sentenced to 18 months in prison for creating a fictitious company and submitting fraudulent claims to the Copyright Office. He's been in battles with the Motion Picture Association of America, DreamWorks and others since then, and he now finds himself fighting the retired late-night television legend.
In 2014, Galaz' Worldwide Subsidy Group sued with a $500,000 claim that Letterman's company was breaching a deal to cooperate with the collection of royalty distributions and that it retained the authority to pursue royalties from Late Night.
On Wednesday, Worldwide Pants submitted a blistering summary judgment motion.
Letterman's company says the relationship with Galaz began back in 1999 when he, without authorization, claimed $407,000 worth of retransmission royalties attributable to its shows from broadcasts in Latin America. Evidently, Galaz turned over the money and it led to a 2002 agreement where his company was given collection rights in return for a 20 percent commission. But Worldwide Pants says the agreement terminated, and when Galaz went to prison, it sent his other co-founder a letter making clear that it was not authorized to be its representative.
It is Galaz's contention that sometime in 2007, the companies made a new oral agreement that restored that authority, which Letterman's company disputes.
In the summary judgment motion, Worldwide Pants states "Galaz admitted under oath during his deposition in this case that WSG misappropriated tens of thousands of dollars from Worldwide Pants" and further, "over $325,000 more remains missing."
A review of that deposition shows that Galaz admits to holding onto $60,215 of Worldwide Pants money from the Copyright Collective of Canada as well as admitting to holding on to $19,000 belonging to PBS. It's not clear whether he's arguing any entitlement to such funds.
Regardless, Worldwide Pants is asking for judgment in its favor by way of the contract it had, the argument it has been rightfully terminated, that Galaz waited too long to pursue his claims, that any oral agreement fails under the statute of frauds and that "WSG stole from Worldwide Pants." Here's the full motion authored by attorneys at Gibson Dunn & Crutcher.