EXCLUSIVE DOCUMENTS: Michael Douglas Sued For Fraud By Former Business Partner

Jan. 29 2010, Published 7:10 a.m. ET

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Michael Douglas’ troubled son Cameron, who pled guilty to drug charges Wednesday in a New York court and is facing ten years in jail,  isn’t the only one in the family facing legal woes.

In a case considerably less shocking and way more boring than his wayward son’s, dad Michael is being sued by a former business associate for an unspecified amount, to be determined at trial, for breach of contract and fraud and deceit.

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Read The Lawsuit Filed Against Michael Douglas For Fraud

In papers obtained by Douglas’ ex-partner Howard Zuker states that he first met Douglas at the Cannes Film Festival back in 1976, which started a long friendship that spanned decades, ending when “Douglas, his attorney and co-conspirators started diverting assets and profits” away from an Entertainment company Zuker had founded with Douglas in 1998.

Zuker claims Douglas agreed to go into business with him, investing $2.25 million into the newly formed movie production company, American Entertainment Holdings Company (AEHC) in September 1998. Amongst other investors and share holders, Zuker took a 15% stake in the new company and Douglas 5% as a promotional fee.

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Zuker states that in January 2000 he and Douglas entered into an agreement that after Douglas recouped his initial investment, plus 8% interest, he would split his profits from the company 50/50 with Zuker.

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According to the papers Zuker invested considerable time researching and creating  a film fund which was established in 2002 with the purpose of investing money into AEHC. In 2004 Douglas committed to investing $1 million of his own money into the fund.

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Things were going well for the company and in July 2004 a new investor and business partner was introduced into the mix, Christopher Baker, who invested $2.5 million and was appointed co-manager of AEHC.

Celebrity Justice

Zuker claims it was shortly after this that things started going awry, culminating with Zuker receiving a letter from Douglas and Baker’s attorneys in 2006 demanding a different deal to the one that had been previously set up between Douglas and Zuker, and reneging on the agreement that Douglas would split his company profits 50/50.

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Zuker claims the attorneys tried to force him into signing with threats that the company would be closed down, and that this caused time delays which subsequently scared investors off , making them change their mind about investing funds into the company. With funds disappearing and a general loss of confidence Zuker claims Douglas swooped in, seized control of the floundering company and ousted him.

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Zuker says his employment was officially terminated in March 2008.

He claims he has suffered, and continues to suffer damages, including loss of profits, loss of goodwill and damage to his business reputation, all in amount to be determined at trial. He also claims loss of his $192,000 salary that he was paid by AEHC, and his promised bonus of $1 million.

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Zuker is suing Douglas as well as Baker and the company itself. He is demanding punitive damages in amounts to be determined at trial, along with payment of his attorney fees and any other related costs.



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