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Auction House Blasts TJ Martell Foundation Over Fraud Lawsuit

The music industry-supported cancer charity is suing others to "deflect blame away from its own failures" that led to the scam, a new countersuit says.

A New York auction house is countersuing the T.J. Martell Foundation to prove that it wasn’t complicit in a $4 million embezzlement scheme against the music industry-supported cancer charity, arguing the foundation is merely trying to “deflect blame away from its own failures.”

T.J. Martell is currently suing Darran Brown and his Go Charity Inc. for allegedly enabling former vp/GM Melissa Goodwin to steal millions from the foundation by helping her re-sell concert tickets and other pricey items she purchased with company credit cards.

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But in counterclaims filed Thursday in Tennessee state court, Brown’s attorneys argued that he and his companies were actually victims of a blatant fraud that the Martell Foundation should have prevented.

“T.J. Martell Foundation for Cancer Research brought this lawsuit … for one simple purpose – to deflect blame away from its own failures to exercise rudimentary levels of internal financial controls over its own senior management,” Brown’s lawyers wrote. “TJ Martell turned a blind eye to, or otherwise failed to uncover, her malfeasance.”

In January, federal prosecutors brought criminal fraud charges against Goodwin over alleged scheme, claiming she abused her position of total control over the foundation’s financial operations to buy $3.96 million in concert and sporting event tickets, including for Lady Gaga, Celine Dion and the Super Bowl. Goodwin pleaded guilty in February and is scheduled for sentencing in June.

Hours after the charges were filed, the Martell Foundation filed a civil lawsuit against Brown, Go Charity and his other affiliated company, Executive Sports Group Inc. The foundation claimed that Brown knew about the fraud and helped Goodwin conceal it.

But in Thursday’s (May 12) countersuit, Brown’s attorneys said it was the Martell Foundation that had a “clear view” of Goodwin’s scheme and could have prevented it. They argued that a “small, boutique consignment auction firm” was not in position to do so, and had also been duped by the fraud.

In one incident, Brown’s attorneys argued that Executive Sports Group had lost at least $75,000 when Goodwin and the foundation failed to deliver on an order of Super Bowl tickets. “The Go Charity defendants are also victims of TJ Martell’s reckless failure to exercise basic internal financial controls over its own senior management,” Brown’s attorneys wrote in the countersuit.

The Martell Foundation responded with the following statement: “It is outrageous and shameful that Mr. Brown and his attorneys would stoop to victim-blaming as a way to avoid responsibility.  It is also ironic that Mr. Brown claims TJ Martell Foundation should have known what Ms. Goodwin was up to, when, as our lawsuit states, ‘Brown and Goodwin grew to not only be close business associates, but also close friends,’ during the time she was taking millions of dollars from the Foundation, a non-profit organization that provides vital funds to the fight against cancer.”

The case against Brown, Go Charity, and Executive Sports Group are still in their earliest stages. Barring a settlement, both sides will now move to dismiss the other’s case; if those motions are denied, both sides will exchange evidence and the case will head toward an eventual jury trial.

The Martell Foundation has also filed a  separate lawsuit against auditors Kraft CPAs and Dorfman Abrams Music, arguing that their negligent work “created and allowed a situation whereby the culpable employee was able to carry out a multi-year, multi-million dollar embezzlement scheme.” That case is also still pending.

 

Assistance in preparing this story provided by Melinda Newman.