Minnesota Public Radio alleged in a lawsuit filed Friday that the head of a Rochester company with which MPR is partnered misappropriated almost $315,000 over the last decade.
MPR and the United Audio Corporation, headed by Thomas H. Jones, formed a partnership called Silver Creek Tall Tower Associates in 1985 to construct a broadcast tower and a building to house broadcast equipment near Rochester. The partnership company was managed by United Audio, and space was subleased to MPR and United Audio rent-free for a 99-year term. It was also rented to other parties and broadcast stations.
In the suit filed in Ramsey County District Court, MPR said that United Audio and Jones had been "embezzling hundreds of thousands of dollars and engaging in other accounting machinations designed to deprive the partnership and MPR of revenue." United Audio was allotted a fee of about 10 percent of the partnership's gross income as the managing partner under the partnership agreement.
MPR learned in December 2010 that the IRS had issued a notice of levy of more than $50,000 related to payments made to United Audio, according to the suit. Jones told MPR that the issue was not related to Silver Creek and that he'd largely resolved it with the IRS. In February 2013, the IRS issued a summons for MPR to help with an examination of United Audio's tax liabilities.
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That IRS request led MPR to request documents from Jones that MPR's suit says raised "red flags." MPR hired an accounting firm to analyze Silver Creek's financial records. The analysis found that Jones had written checks from Silver Creek to companies he was involved with, including United Audio. MPR said Jones also failed to pay his company's share of electric bills and that he had overstated the value of assets and services.
In all, the suit claims that the defendants' conduct caused MPR at least $314,921 in damages.
United Audio operates the Rochester easy-listening radio station KNXR. Attempts by MPR News to reach Jones for comment on the lawsuit were unsuccessful.
MPR Director of Communications Angie Andresen emailed a statement in response to an MPR News request for comment.
"We are not only extremely disappointed that someone - who once had been a trusted partner -- has embezzled hundreds of thousands of dollars from our partnership, but also disappointed that he refused to negotiate a settlement to re-pay the damages. As good stewards of our investments, we must account for this money and unfortunately, this legal action was our only recourse at this point."
In the suit, MPR is asking that United Audio be expelled from the partnership, and that the defendants pay damages and cover court costs.