Art Firm Alleges Misconduct by Lawyers

It alleges that the ex-dealers' Michigan attorneys, Norman Yatooma and Joseph Ejbeh, improperly transmitted over the Internet a live feed of testimony to a witness in the case -- and that Ejbeh later tried to cover it up. The witness, Terry Sheppard, was named as a defendant in the lawsuit, which seeks damages of more than $25,000.

The lawsuit, filed in Oakland County Circuit Court in Michigan, comes a week after the company lost an $860,000 decision to other ex-gallery owners represented by the same lawyers.

In that case and five pending claims in arbitration, ex-dealers allege that Kinkade used his Christian faith to induce them to invest in Thomas Kinkade Signature Galleries, independently owned stores licensed to deal exclusively in his work.

They also allege that they were saddled with unsalable limited edition prints, were forced to open additional stores in saturated markets and were undercut by discounters that sold identical prints at prices they were forbidden to match. They also accuse the painter, one of the U.S.' most collected artists, of scheming to devalue his formerly public company, Media Arts Group Inc., before taking it private two years ago for $32.7 million as Thomas Kinkade Co.

Kinkade and his Morgan Hill, Calif.-based company have denied the allegations.

Plaintiffs in Thursday's lawsuit include two current Kinkade officers, Richard F. Barnett and Rose Capistran, and a former executive, Kenneth Raasch. As they were testifying at the arbitration hearings, a transcription of their remarks was sent to Sheppard, a former Kinkade vice president, according to the suit. Sheppard used the transcription to formulate questions for the dealers' lawyers questioning the witnesses, the suit says.

"Such actions violated fundamental notions of fairness in arbitration and constituted illegal eavesdropping under Michigan law," according to the complaint, which also said Ejbeh repeatedly denied the existence of the live feed before acknowledging it.

Ejbeh said he did not initially disclose the feed because he was trying to protect Sheppard, whom he said the company had retaliated against for providing key documents. Company executives deny the assertion.