Revolver Owners Engage in Another Round of Legal Battles

UPDATE:  The battle over ownership of Revolver has ended.  Chris Miller now has 100 percent ownership of Loaded Gun, the company that owns the gay video bar.  In an email to WEHOville he said he has purchased the interest of Kenneth Linzer and bought Alfredo Diaz’s stake out of bankruptcy.

The bitter battle over the ownership and management of West Hollywood’s Revolver Video Bar has taken another twist. Chris Miller, who successfully pushed out co-owner and business partner Alfredo Diaz last fall after suing him for embezzlement, now is locked in a lawsuit with co-owner Kenneth Linzer, who is accusing Miller of embezzlement.

Linzer is suing Miller and Loaded Gun, the company that owns Revolver, and Mike Stommel, a local publicist who is Diaz’s husband and represents Christopher Street West, the non-profit organization that puts on the annual L.A. Gay Pride event. In his suit Linzer alleges that Miller and Stommel illegally took hundreds of thousands of dollars from Revolver. Linzer’s suit is a response to one filed last year by Miller, who says that Linzer has improperly billed Loaded Gun for $200,000 in legal services.

According to Miller’s suit, Linzer, who represented Loaded Gun when it opened Revolver, agreed to accept a 10 percent interest in the company in lieu of $173,000 in attorney’s fees that Loaded Gun couldn’t afford to pay. Miller said that the deal, which was an oral agreement and not in the form of a written contract, also provided that Linzer would provide services for free or at a reduced rate for future legal action involving the bar’s previous owner and for another lawsuit involving Loaded Gun. Linzer, however, has billed Miller and Loaded Gun $200,000 for those other legal services.

The Miller suit says that Linzer sent letters to Miller and Diaz affirming the agreement to waive his claim for $173,000 in exchange for a stake in the company. However the letters did not mention Linzer’s alleged promise to provide free legal services in the future. In the suit, Miller and Loaded Gun say their “consent to the Membership Transaction was given by mistake, undue influence and under duress, under the impression that the amount of attorneys’ fees billed by its attorney Linzer and Linzer PC was reasonable and necessary.” The suit also alleges that Linzer violated rules of professional conduct by lawyers in acquiring an interest in Loaded Gun without advising them to seek the advice of another lawyer on the deal.

In March Linzer filed his countersuit against Miller and Stommel, accusing them of having diverted Revolver’s revenue for their personal use in ways that mirror the accusations Miller made in his successful effort to force Diaz out of the business.  Linzer alleges that Miller “stole tens or hundreds of thousands of dollars in cash receipts received by Loaded Gun” and used the company’s credit card and revenue to make a down payment on his Porsche and monthly payments on it and a BMW. Linzer’s suit claims that Miller and Stommel diverted at least $400,000 that rightfully belongs to the family trust that holds Linzer’s stake in Loaded Gun. It also claims that Loaded Gun owes Linzer and his law firm at least $304,000 in legal fees.

Linzer’s suit asks the court to name a receiver to take over the management and financial affairs of Revolver and to order a thorough accounting of its books. Linzer also is asking the court to enforce an agreement by Miller to pay Linzer  9.67 percent of the money he and Diaz have made from Revolver. According to the suit, Miller agreed to do that in exchange for Linzer’s agreement to side with him in his effort to have Diaz removed as Revolver’s manager. Linzer estimates that payment would total at least $100,000.

In his successful petition to oust Diaz, Miller described a scheme in which he alleged that Diaz and Stommel contacted Viking Funding Group in New York in July to arrange a $65,000 loan for Revolver and then diverted the money to themselves. Miller also alleged that Diaz took money from Revolver for his own use, including installing a koi pond at his home and paying personal travel expenses for himself and Stommel.  In October of last year Diaz filed for personal bankruptcy, listing debts of between $1 million and $10 million and assets of $500,000 to $1 million.