The FBI searched the offices of Los Angeles production company LMNO today, TheWrap has confirmed, amid an ongoing embezzlement and extortion scandal.
LMNO is the company behind “The Little Couple,” a reality series that it recently accused longtime partner Discovery Communications of stealing.
The production company has claimed that Discovery used ripped-off information and shady tactics to squirm out of a business agreement and started to make “The Little Couple” in-house instead.
The FBI offered us no further comment on the raid, as the search warrant is under seal by a judge. LMNO and its listed attorneys did not immediately return our requests for comment on the latest developments.
LMNO has also accused the publicly traded corporation (DISCA) also of weaseling out of arrangements for “7 Little Johnstons,” “Killer Confessions,” “Speaking For The Dead,” “Unusual Suspects” and “Hollywood & Crime.”
However, the cable channel group is not the only entity that its now-former production partner believes to have been recently robbed by. Enter: the Federal Bureau of Investigations.
“In late 2015, LMNO learned that it was the victim of a crime,” the company stated in a court document filed on June 22. “LMNO discovered that its accountant, who it entrusted with all of the books and records of the company, had engaged in a long-running fraud and embezzlement scheme that included falsifying the records of the company to hide hundreds of thousands of dollars in transfers to himself.”
As it turns out, this accountant was never actually a CPA, LMNO’s attorneys wrote.
“When this conduct came to light, the accountant stole the records of LMNO in order to prevent LMNO from obtaining evidence against him, and attempted to extort money from LMNO,” the legal document continued. “In particular, the accountant demanded that LMNO pay him more than $800,000, or he would irreparably damage LMNO’s reputation and business by taking his doctored books to LMNO’s largest customer and use his own fraudulent creations to destroy LMNO’s business relationship.”
Here’s a photo of the condition in which LMNO says it eventually found its stolen books:
“LMNO chose to stand up for itself, and refused to pay this illegal ransom,” the filing. “Instead, it reported the accountant to the authorities.”
This is about where Discovery comes back in to the story.
“In its darkest hour, however, what LMNO did not count on was treachery,” attorneys Stephen R. Mick and David W. Nelson went on. “Instead of standing by the side of its long-time business partner, Discovery saw an opportunity to enrich itself at LMNO’s expense. Working with, and using documents prepared by a criminal extortionist, Discovery chose this moment to manufacture bad faith claims surrounding the very books and records that it had received from a criminal in a scheme to steal ‘The Little Couple’ television show from LMNO, and put LMNO out of business.”
LMNO wants no less than $7 million from Discovery in damages.
It doesn’t sound like the reality producer will get that very easily. Here’s Discovery’s response:
Today, it has been reported publicly that federal authorities have executed a search warrant in connection with a criminal investigation at LMNO, one of Discovery’s long-standing production partners. Several months ago, law enforcement contacted Discovery to seek information in connection with an ongoing criminal investigation into LMNO’s business practices. Since that time, we have been cooperating fully with the authorities, including complying with a subpoena and providing records as legally required. We are not privy to the details of the government’s investigation of LMNO, but can confirm that Discovery did not initiate the investigation or file any kind of complaint with the authorities, instead the authorities first came to us in connection with their investigation of LMNO.
At the same time we were cooperating with the federal investigation, Discovery also was independently reviewing our existing production agreements with LMNO. This review revealed procedures and practices inconsistent with Discovery’s contractual rights. Earlier this month, Discovery made the decision to terminate certain of our contracts with LMNO, based on the results of our own review. LMNO subsequently filed suit against Discovery and made numerous allegations about our business practices. While we do not comment on ongoing litigation, we will vigorously defend against LMNO’s lawsuit.
Based on today’s reported events, it appears that the federal criminal investigation has progressed. We intend to continue to cooperate with any further requests from the government.
Discovery is a global content company committed to operating with integrity in all our business practices and we expect our business partners to live up to that same standard. We have terminated these agreements with LMNO because they have not met our standards. We hope for a resolution to the matters at hand so we can focus our efforts on working with our valued partners to continue creating content for our viewers.
“The Little Couple” recently completed its eighth season on the Discovery-owned TLC.
LMNO also produced “Kids Say the Darndest Things,” “Guinness World Records: Primetime,” and “Behind Closed Doors,” among other shows. All told, since 1999, the company had made more than two dozens series and a slew of specials for Discovery channels.
Pamela Chelin contributed to this report.