BET Holdings II Inc. last week called a wrongful-termination lawsuit filed by its former chief financial officer "frivolous." The complaint claimed the CFO was dismissed for refusing to go along with several alleged company financial improprieties.
The suit, filed in Washington, D.C., Superior Court by former BET CFO Dwight Crawford, alleged that BET terminated Crawford's employment because he was "outspoken" in his opposition to several instances of illegal and improper financial practices exercised by BET during his one-year tenure.
He seeks $21 million in damages for lost wages, emotional distress and damage to his professional reputation. The suit names BET Holdings Inc. chairman and CEO Robert Johnson and BET president Debra Lee.
BET issued a statement calling the complaint "mean-spirited" and "without merit." BET's statement also called Crawford a "disgruntled former employee" who filed the complaint "after he and the company failed to agree on the financial terms associated with his resignation."
BET general counsel Byron Marchant said in a prepared statement that the network would "seek dismissal of the lawsuit and pursue appropriate legal action against Mr. Crawford."
The suit claimed that Johnson and Lee "conspired" to unlawfully evade payment of federal income taxes in 1999 by deducting from BET's income, as business expenses, company moneys that were used for personal purchases by employees.
It also stated that the network unlawfully evaded payment of federal income taxes by "allowing and encouraging BET employees not to report, as individual income, the value of the goods and services BET had provided them through the use of their corporate credit cards."
According to Crawford's claims, BET collaborated with Johnson friend and boxing promoter Butch Lewis to set up a dummy company to avoid paying taxes for employees hired to develop movies and network programming.
The fictitious company allegedly contracted the employees to BET, even though BET directed their on-the-job performances, allowing the network to "evade liability for withholding of taxes from the wages of these employees."
The suit also said the network sidestepped concerns from PricewaterhouseCoopers LLP after a 1999 audit turned up an improper $6 million tax deduction for fiscal-year 1998, which BET had distributed in profits to Johnson and minority partner Liberty Media Group.
BET falsely reported the payment as expenditure for salary and consulting services, as opposed to a dividend, according to the suit.
BET insiders said the complaint came at an inopportune time for the company and for Johnson. The network expects to launch its new multimillion-dollar production facility in New York next month, along with its most ambitious programming lineup in years.
The lawsuit could overhang several noncable deals by Johnson. He wants the government to approve a multibillion-dollar deal between US Airways Group Inc. and UAL Corp., parent company of United Air Lines Inc., which would give Johnson control of the airline's Washington, D.C.-based business.
Johnson is also in discussions to buy part or all of the Continental Basketball Association.
"It's not the best of timing for the company," one BET employee said.
Crawford was the fifth CFO BET has had in its 20-year history. One former CFO, Antonia O. Duncan, was sentenced to 30 months in prison in 1994 for embezzling nearly $2 million in company funds, according to an April 21, 1994, report in The Washington Post.