Michael Michaels, who owns the Spring Valley, Calif., home in which Reggie Bush's family lived for nearly a year, said Thursday he will file a $3.2 million lawsuit for fraud against the Bush family Friday to recoup unpaid rent and other finances given to the USC star's family.
Michaels' attorney, Brian Watkins, alleged Thursday night that Bush's mother and stepfather, Denise and LaMar Griffin, failed to pay $54,000 in rent for the home that has become the center of a joint Pacific 10 Conference and NCAA investigation. Watkins also said that Michaels supplied money to the Bush family, including financing that allowed them to travel to several USC road games last season.
Not paying rent and taking cash from Michaels could constitute extra benefits and a violation of NCAA rules by Bush. Student-athletes, their friends and relatives are prohibited from receiving extra benefits from professional sports agents, marketing companies or their representatives. A breach of these statutes could result in an athlete being ruled ineligible, and games in which they played could be forfeited.
According to Watkins, Michaels became involved with the Bush family after LaMar Griffin and Lloyd Lake sought to establish New Era Sports & Entertainment – with Bush as a future client – in November 2004, prior to the Trojans winning that season's national championship.
Watkins said Michaels' role in New Era Sports was that of primary investor, and that Michaels' relationship with the family fell apart in recent months – after Bush signed with agent Joel Segal and didn't make good on a commitment to join New Era.
"There was an agreement that they weren't supposed to live free and mooch in that house," Watkins said of Bush's family. "They were supposed to pay rent. But they never paid one dime. Their premise for not paying was that, ‘Next month, we'll pay you. Next month we'll pay you.'
"Then it got to the extent where they were saying, ‘Well, don't worry about it, it's all guaranteed because we're going to be owners of this marketing and agency business, we'll give it to you out of our profits.' Twelve months passed by in that house, and not one dollar was paid."
Said Michaels: "They took advantage of me."
Bush has denied knowledge of any deal his family may have had with Michaels.
Watkins said that after New Era Sports & Entertainment failed as a business, Michaels sought to recoup $300,000 in back rent and other finances spent while establishing New Era over the course of the last 12 months. The attorney said his claims will be documented by different forms of communication collected in recent months.
Watkins said he had been negotiating a settlement with Bush's lawyer, David Cornwell, for the last three to four months, but moved to evict the Bush family from the home in early April.
"Reggie said that, oh, he found them a nicer house and that's why they moved, but the truth is I served them with an eviction notice," Watkins said. "They did not pay any rent. To this date, they haven't paid any rent. We haven't even gotten the keys back from the house. That's what is going on here."
During a 40-minute interview, Watkins laid out a timeline for the rise and fall of New Era Sports & Entertainment, along with the relationship between Michaels and the Bush family. Among the significant points alleged:
- November 2004 – LaMar Griffin and Lake approached Michaels about investing in the sports agency. Watkins said Michaels met Bush and his family for the first time around this date, and was led to believe that the agency would eventually have Bush as a client.
"There was the representation that Reggie would come with his stepfather," Watkins said. "Reggie ratified that."
Shortly thereafter, Michaels introduced Griffin to the Sycuan Indian Tribe's governing council, at which time Griffin asked the tribe – while wearing a Bush USC jersey – to become investors in the agency. After the tribe declined, it was agreed that the partnership in the agency would be a three-way split between Michaels, Lake and Bush's family, according to Watkins.
- April 2005 – Michaels allowed the Bush family to move into a new home he had purchased in Spring Valley. The rent for staying at the home was to have been $4,500 a month, according to Watkins.
"LaMar and Denise had financial problems," Watkins said. "Then it became, ‘Oh, we need a little something. We need a little money here, we need a little money there. But don't worry, it will all be paid back with our profits from the business.' They were saying this to Michael, who was carrying the lion's share of the money put into New Era. Michael Michaels had purchased a home, and hadn't rented it out. Around this time, the Griffin family needed a place to live. Michael Michaels let them move into the house."
- September 2005 through November, 2005 – Michaels provided money to help the Bush family travel to some road games during USC's season. Watkins did not specify the exact amounts given or the dates of travel to Yahoo! Sports.
"Yes, there was support there," Watkins said. "The [Griffins] said, ‘Don't worry about it. We'll pay it all back. It's all part of the business.' "
- October 2005– Michaels and Lake contact San Diego-based agent David Caravantes about a role with New Era Sports & Entertainment. Michaels and Lake offered to facilitate an interview with the Bush family.
- November 2005 – Reports surface that Bush and his family are being advised by Reebok consultant Mike Ornstein.
- December 2005 to January 2006 – Communication breaks down between Michaels and the Bush family. Bush hires agent Joel Segal by mid-January. With New Era out of the picture, Michaels considers ways to recoup his investment from the Bush family. "It fell apart when all of the sudden, LaMar Griffin and Denise would not return phone calls," Watkins said. "Voicemail messages, wouldn't return phone calls – they are missing in action."
- April 2006 – Yahoo! Sports approached Denise Griffin about the home April 20. Less than 24 hours later, the family began packing up the house and the residence was vacated by April 22. One day later, Yahoo! Sports published a report about the house, including information that USC had requested a Pac-10 inquiry.
The allegations by Watkins and Michaels conflict with some recent statements by Bush and his camp. Bush has denied knowing the financial arrangement between Michaels and his parents for the Spring Valley home, and he also denied ever having an agreement in place to join New Era Sports.
Bush, who is expected to be the No. 1 pick in this weekend's NFL draft, declined to answer questions about the rental agreement again on Thursday, when several top prospects met with the media in New York.
According to Watkins, the $300,000 figure "includes rent for the house and everything else" provided by Michaels. The remainder of the $3.2 million in the suit is for punitive damages.
"We're going to contend that they never planned to go forward with this [agency]," Watkins said. "They knew it was just a ruse. They were taking money and taking money and LaMar put very little work into it. It ended up being Michael Michaels and Lloyd Lake doing all the leg work – Michael Michaels and Lloyd Lake giving all the money and everything."
ESPN.com, quoting anonymous sources, reported Thursday night that the NFL Players Association and NFL Security had each independently concluded that Caravantes and New Era had used Watkins to demand $3.2 million from Bush. A source told ESPN that the NFLPA had filed a disciplinary complaint Thursday alleging that Watkins engaged in unlawful conduct by demanding payment in three letters dated Feb. 13, March 7 and April 26.
A source close to Bush also told ESPN that NFL Security has contacted the top four teams in the NFL draft and told them Bush was the victim of threats.
Watkins said the extortion claims were the last straw for Michaels, his client for the lawsuit.
"Let me be clear about this: We never wanted to do this in the press," Watkins said. "I was going to file the lawsuit after the draft so it didn't create a hoopla. I figured, after the draft, if he gets his big contract, Reggie is more likely to settle, because he knows they owe this money. They defrauded my client. [Michaels] did all the work, gave the lion's share of the money.
"The only reason we went public now is because the allegations have gotten so outrageous that I have to speak. When someone throws out the word ‘extortion,' we've got to speak. All that other bashing, we took it like men and smiled and prepared the lawsuit. Until they came out with this allegation of extortion. They brought this to the press. We didn't bring this to the press. We're going to be the plaintiffs in the case. They are going to be the defendants."
- Reggie Bush