MANHATTAN (CN) – Investors say attorney Percy Sutton, who became famous as Malcolm X’s lawyer in the 1950s, looted millions from a company and sold off its assets. In their federal complaint, Hugh Wyatt and Chester Redhead, who say they were founding members of Inner City Broadcasting, which owned several radio stations and the Apollo Theater, want to dissolve Inner City, claiming that Sutton, as chairman emeritus, and his son, Pierre, the current CEO, wasted corporate assets.
Among the complaints are that the Suttons failed to pay back a $2.2 million loan to Inner City, which the Suttons used to buy stock, in violation of the terms of a settlement agreement with the attorney general.
There are no records to indicate whether the Suttons were charged interest on loans they took from Inner City, according to the complaint. It adds that Inner City, which was founded in 1971, and its officers failed to prepare audited financial statements.
The investors accuse the Suttons of restructuring Inner City’s assets without the required approval of an independent audit committee or shareholder vote. The Suttons leveraged Inner City’s assets by transferring radio stations to other companies and selling them for tens of millions of dollars, according to the complaint.
Investors say there has been no accounting for the sale of Inner City’s assets, and proceeds of the sales remain unaccounted for.
In addition to his work as an attorney, Percy Sutton was a major political force in Harlem for years. Under his direction, Inner City invested $24 million in a communications company that he chaired, according to the complaint. Pierre Sutton recently warned that Inner City “is in danger of financial collapse” and owes more than $230 million to Goldman Sachs and GE Capital, the complaint states.
The investors say the Suttons have hired lobbyists to press the Obama administration and the congressional Black Caucus for “special help” as a minority-owned corporation, though the company is not eligible for such consideration.
“Inner City is no longer a minority-owned corporation and is deceiving members of the Obama administration, Congress, minority shareholders and the FCC,” according to the complaint.
The plaintiffs sued Inner City and its officers, including the Suttons, for an injunction to protect Inner City’s assets. They also seek an order canceling the Suttons’ shares, dissolution, accounting and appointment of a temporary receiver.
They are represented by Benjamin Silbert.