Lawsuit shows Brown empire undervalued by millions


By Sue Summer - For The Newberry Observer



By Sue Summer

For The Newberry Observer

AIKEN COUNTY — The trustee of the James Brown estate may have undervalued Brown’s music empire by millions of dollars in documents submitted to the Internal Revenue Service in December 2010, according to Aiken County court filings in a lawsuit against Atlanta attorneys.

In the 2010 IRS documents, trustee and Columbia CPA Russell Bauknight set a value of $4.7 million on Brown’s music empire at his death on Christmas Day 2006.

Yet, in the lawsuit against Atlanta lawfirm Greenburg Traurig and others, Bauknight submitted tentative reports from Tim Hernandez and Danny Zook of Alien Music Services that estimated lost “sampling” revenues ranging up to $50 million.

“Sampling” occurs when a recording artist wants to use part of another artist’s work in his or her songs. The artist must obtain “clearance” before making the recording and must pay royalties.

The lawsuit alleges that Greenberg Traurig and entertainment lawyer Joel Katz were “asleep at the switch” and failed to collect Brown’s sampling revenues.

The lost sampling estimates from Alien Music were challenged by Greenberg Traurig. Still, on-line sources such as “Rolling Stone” and “BET” have declared Brown to be the most-sampled performer in the music industry, in no small measure because of his popularity with hip-hop performers.

In a November 2016 filing, the estate refers to a Universal schedule that claims of 106 sampled works of James Brown, there were sales of 153 million recordings, providing “further evidence of the amount of sampling revenue which James Brown works were capable of generating.”

Six months before Bauknight submitted the $4.7 million value to the IRS, he was sent a letter from entertainment industry accountants, Haber Corporation, in which $1 million in lost sampling revenues was reported for Universal alone during the period Jan. 1, 2006 – June 30, 2008.

In 2011 Universal paid $2 million to the estate, but Universal was not the only company that handles James Brown’s music. A more recent report from Alien Music included estimates of uncollected royalties from UMG, Warner Chappell, and Carlin North America.

Also mentioned in the Haber letter was a report from music manager Peter Afterman of Inaudible Productions.

According to his deposition, Afterman was introduced to Bauknight in November 2009, and his job was to optimize revenues for the estate. He immediately started to work on deals involving a video game, a movie and documentary.

Even before he was hired, Afterman had already begun to compile a list of songs that could be a source of revenue, and he identified over 200 songs that contained samples of Brown’s music.

Sampling is not the sole source of income for the Brown estate. Additional sources of revenue such as royalties and publicity rights could make the Brown music empire particularly valuable—perhaps as valuable as the $100 million at-death value reported on Brown’s 2008 estate tax return, filed by previous trustees Robert Buchanan of Aiken and Adele Pope of Newberry.

The value of Brown’s music empire is important because his will left up to $2 million to a family education trust and the rest to an education charity for needy students, the “I Feel Good” trust. The larger Brown’s gift, the greater number of needy students he can help.

A value higher than $4.7 million is indicated in previous court filings, as well as those from the Greenberg Traurig case.

Six months before Brown died, the Royal Bank of Scotland prepared loan documents for him based on a $42 million appraisal of royalties alone, not including publicity rights.

In 2007 “branding expert” Terry Cox offered to buy the music for $100 million, according to a Dec. 6, 2007, email from Deputy Attorney General “Sonny” Jones.

Brown’s business manager, David Cannon, took an Alford (guilty) plea after being charged with taking $12 million from Brown in the years before he died. Cannon was named a co-conspirator with Greenberg Traurig and entertainment lawyer Joel Katz in the Aiken lawsuit.

A 2006 email in the Greenberg Traurig suit gives Brown’s annual income as $3.35 million.

At least three Brown songs have been sold, and when deposed in another case, will contestant Tomirae Hynie Brown claimed she received $1 million, and some Brown children received $1 million. The rumored sale price was $6 million, and while not all songs would have the same value, Brown does have over 850 songs.

Hynie Brown contested Brown’s will in 2007, claiming to be his wife. The two exchanged vows in 2001, but her 1997 marriage to another man was not annulled until 2004.

In early 2015 an Aiken judge ruled her to be Brown’s wife, but the decision is now in the S.C. Court of Appeals.

Despite Hynie Brown’s uncertain status, she was paid from the sale of the songs, and she has filed a claim to a number of Brown’s songs with the U.S. Copyright Office.

Bauknight has denied that he handled the sale of the songs.

Hynie Brown’s attorney is Robert Rosen of Charleston, whose sister Debra Rosen introduced Bauknight to Peter Afterman in 2009, according to Afterman’s deposition. Debra Rosen is former head of the South Carolina Film Office and co-owner of Digital Meida Group.

Even though the Aiken filings reveal a great deal about the business dealings of Brown and the estate, much has been kept secret.

In February 2017 Aiken Judge Doyet Early ordered several filings in the Greenberg Traurig lawsuit to be removed from the Aiken Courthouse, out of public view.

Bauknight has claimed the $4.7 million figure is based on a professional appraisal, but he has refused to release the appraisal or the documents upon which it is based.

Although Bauknight was appointed by the Attorney General, a request for the $4.7 million appraisal from the Attorney General’s office under the Freedom of Information Act (FOIA) was refused. The Attorney General claimed he had never seen the appraisal nor had the appraisal been in his possession, even though his deputy asked the South Carolina Supreme Court to accept the value during an appeal.

An FOIA lawsuit was required to obtain a December 2010 email in which one of Bauknight’s attorneys, William Wilkins of the Nexsun Pruet lawfirm, advised the Attorney General and an attorney for Hynie Brown that the $4.7 million appraisal should be withheld from the South Carolina Supreme Court until the value had been accepted by the IRS and final briefs had been filed in an appeal.

That way, no arguments could be made against the $4.7 million valuation.

The final briefs were being filed in an appeal of the “McMaster Settlement.” Brown’s will was contested in 2007 despite a clause that said: anyone who contests, receives nothing. In 2008 then-Attorney General Henry McMaster negotiated a settlement that gave will contestants over half of what Brown left to charity— and gave to himself the right to appoint trustees. The settlement was approved by the Court in 2009.

Buchanan and Pope appealed the settlement, and in 2013 the deal was overturned because it ignored Brown’s wishes and “dismembered” his estate plan.

http://www.newberryobserver.com/wp-content/uploads/2017/04/web1_James-Brown.jpg

By Sue Summer

For The Newberry Observer

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