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An attorney for Michael Michaels – the man who owns the Spring Valley, Calif., home in which Reggie Bush's family lived for nearly a year – outlined intentions Friday to file a $3.2 million lawsuit claiming Michaels was defrauded of "large sums of money" by Bush's parents, Denise and LaMar Griffin, during a business relationship.
One document obtained by Yahoo! Sports alleges the Bush family received "over $100,000 in cash disbursements" from Michaels and New Era Sports & Entertainment associate Lloyd Lake between November 2004 and February 2006.
If the alleged payments indeed began in 2004, USC's national championship following that season could be in jeopardy.
According to a statement released by Michaels' attorney, Brian Watkins, Bush's family started receiving money from Michaels almost immediately after he decided he would become an investor in New Era – the firm that was allegedly the creation of LaMar Griffin and Lloyd Lake. Watkins said Michaels and Lake gave the money to the Griffins because they believed it was necessary to ensure Reggie Bush would be a future client of the firm.
"As Mr. Griffin, Mr. Lake and Mr. Michaels began working on the technicalities of the company, ongoing meetings with Mr. Griffin began to reveal that Reggie's continued participation came with conditions," the statement released by Watkins reads. "Mr. Griffin suggested that in order to 'keep them happy,' Michaels and Lake would have to help them with some of their personal problems. The first order of business was that Mr. Griffin needed to clear up some debt,' a sum of $28,000 in order to help him focus' on the enterprise. The Griffins presented Mr. Michaels with a prepared spreadsheet of existing debt. Mr. Michaels paid $28,000 in good faith to settle the Griffins' debts.
"In point of fact, Lamar and Denise Griffin, Reggie Bush's parents, with Reggie Bush's knowledge, defrauded our clients out of large sums of money by holding out the carrot of Bush's future football career in order to entice our clients to invest in their sports and entertainment company."
According to Watkins, Michaels went on to financially support the Griffins in various ways over the last 18 months, including allowing them to accrue $54,000 in unpaid rental commitments at the Spring Valley home. Watkins told Yahoo! Sports on Thursday that Michaels also provided money to the Griffins that allowed them to attend several USC road games in 2005.
The relationship between Michaels and Bush's family fractured in January when Bush signed with agent Joel Segal. It was at that point, Watkins said, that Michaels began seeking to recoup the money he had poured into New Era and allegedly given to Bush's family.
Michaels' attempts to recover those finances have been a significant point of contention between the two parties. Through Watkins, Michaels threatened a lawsuit of $3.2 million but offered to settle out of court for $500,000. That overture led the NFL Players Association and NFL security to look into whether Reggie Bush was a victim of an extortion effort by Watkins and David Caravantes, the agent who was briefly involved with New Era Sports.
Though Caravantes appears to have had no role in seeking monetary damages from Bush, sources told ESPN that Caravantes and Watkins threatened to reveal embarrassing details about the Bush family if financial demands were not met.
Watkins emphatically denied Caravantes had anything to do with recouping money for Michaels, and said that it was he, not Caravantes, who evicted the Bush family from the Spring Valley home and sought financial repayment and damages from Bush for his role in allegedly defrauding Michaels.
Watkins also disputed there was ever an attempt to "extort" money from Bush. Instead, Watkins said the settlement offer of $500,000 was an out-of-court attempt to recover $300,000 of Michaels' expenses, as well as an additional $200,000 in special damages for the time and investment Michaels put forth trying to get New Era off the ground.
Watkins said he never sent letters to Bush's attorney threatening to reveal "embarrassing" family details if Michaels was not repaid. Instead, Watkins said he sent three letters expressing that Michaels was seeking to recover finances, and that he was willing to settle out of court if that was what Bush wished to do.
Segal and Cornwell did not return calls on Friday. Asked about the letter, Watkins said it was a standard document that he would typically send when settling financial disputes out of court.
"That letter is a professional lawyer letter that we do all day every day," he said. "If you grab any lawyer's file and look inside, it looks and sounds like this. This is not [extortion]. That word is such a strong word. You know what is key about that letter? [It states] I want to mend our relationship.
"Does that sound like 'I'm going to tell personal business of yours if you don't pay me $3.2 million?' "
The ramifications of the latest round of allegations from Watkins and Michaels could have serious implications for USC. The scope of the family's involvement with New Era Sports & Entertainment – once thought to span only 2005 – now goes back to November 2004, according to Watkins' assertions, and could potentially bring into question the Trojans' national football championship from that season.
Per NCAA rules, if Bush is found to have been intimately involved with the New Era business scheme and his family is found to have taken financial inducements from Michaels, USC's entire 2005 season – and a portion of 2004 – could be subject to serious scrutiny by the NCAA.
Asked for an assessment of the latest allegations, an NCAA source said Friday that the claims of Michaels and Watkins are likely to draw keen interest from college sports' governing body.