A partnership with a Rochester radio station became a financial liability, court papers say.
Minnesota Public Radio has filed a lawsuit against the head of a Rochester radio station with which it had a broadcasting partnership, alleging that he embezzled hundreds of thousands of dollars and engaged in “other accounting machinations” over the past 10 years to siphon off money into his own pockets.
The suit filed in Ramsey County District Court on Friday against United Audio Corp. and its chief executive, Thomas H. Jones,, details nearly $315,000 MPR claims it is owed — a number which could rise once financial records are more closely scrutinized.
MPR and United Audio, which operates local “easy listening” station KNXR, formed a 50-50 partnership more than 25 years ago, court documents say, and together formed a third company called Silver Creek Tall Tower Associates. The purpose of Silver Creek was to lease property on which a broadcast tower and a small equipment storage building just east of Rochester would be built.
Under the deal, Silver Creek licensed to themselves and to other broadcasters the right to mount antennas on the tower and install other electronic equipment in the building. Silver Creek subleased the tower space back to MPR and United Audio rent-free for a 99-year term, and other TV and radio stations use the tower space.
United Audio was appointed managing partner under the 1985 deal, until MPR took over that role last spring when the financial misconduct alleged in the lawsuit was discovered, the documents say.
MPR allegedly was kept in the dark about day-to-day financial decisions of Silver Creek’s operations, including loans taken out by Jones and payments he made to himself above those allowed in the contract.
In 2009, the Internal Revenue Service (IRS) issued a notice of levy of more than $50,000 for taxes owed, which Jones dismissed as a bookkeeping error. But earlier this year, the IRS issued a summons to MPR to assist in sorting out United Audio’s tax liabilities — which by association could become MPR’s.
When MPR began delving deeper into the matter, court documents show, red flags became apparent.
“In short, MPR believes it has never received a distribution of cash from Silver Creek,” the suit says, adding Jones and United Audio “have secretly misappropriated hundreds of thousands of dollars from the partnership, accounted for in a number of different ways so as to deceive MPR.”
Jim Anderson • 651-925-5039