Playboy Being Sued For Back Room Vodka Deal And Sham Accounting


Playboy Being Sued For Back Room Vodka Deal And Sham Accounting

Playboy Enterprises is being sued for $12 million for allegedly hiding commission amounts for Playboy-branded liquor and not honoring partnership contract stipulations it made with the Broad Street Licensing Group (BSLG).

As part of a two year agreement to act as Playboy's exclusive spirits licensing agent, BSLG made a deal with Philippines-based company VuQo Inc.to manufacture Playboy coconut nectar branded vodka. The group alleges Playboy went behind its back, making a direct deal with VuQo's lead investor, cutting Broad Street out of the commissions it would have received.

It also claims that before Playboy struck the backroom deal with VuQo, it had been hiding the commissions that BSLG should have been receiving.

The complaint filed in court says, "Not surprisingly, this 'new' Playboy-branded vodka is identical to the VuQo-manufactured Playboy-branded vodka: the vodka, the bottles, the label — everything is the same."

Broad Street claims that because of the original agreement with Playboy it is entitled to commissions for the two years of the deal, plus one year following termination.

The complaint says, "To make matters worse, Playboy has also refused to pay BSLG commissions on $800,000 in royalty advances Playboy received in March of 2014 from VuQo, claiming — in a feat of accounting that would make Enron jealous — that these funds were 'returned in the form of a credit to [VuQo's lead investor] toward a future relationship with Playboy.' "

Playboy says that it "independently" formed a relationship with VuQo's investor. BSLG claims "credit or not," it is owed commissions.

Legal experts say the dispute mirrors what happens "when talent switch talent agents and look to avoid paying commissions to old reps".

In the complaint BSLG "asserts breach of contract as well as breach of implied covenant of good faith and fair dealing while praying for damages not less than $12 million".

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