Suit accuses Mavericks owner of diverting profits

DALLAS — Dallas Mavericks owner Mark Cuban is accused of wrongfully diverting millions of dollars from the NBA franchise's home arena to help make up for cash shortfalls incurred by the team, according to a lawsuit filed by a company controlled by the team's former owner.

The lawsuit claims Cuban covered the Mavericks' financial shortfalls by obtaining more than $29 million in unauthorized loans through a limited partnership designed to distribute profits from the arena, the American Airlines Center. It accuses the Mavericks and three other companies controlled by Cuban of breach of contract, breach of fiduciary duty and unjust enrichment.

The company that filed the suit, Hillwood Center Partners, is controlled by former Mavericks owner Ross Perot Jr. and holds a small interest in the arena's limited partnership, Radical Arena. A related Perot company sold the Mavericks to Cuban in 2000.

The lawsuit was filed Wednesday in state district court in Dallas, and a copy was obtained Monday by The Associated Press.

In an e-mail to media, Cuban said his attorneys have been open with Perot about the loans. He said the proceeds have been used "to put the best possible Mavericks team on the court," creating sellouts for the arena and driving customers to nearby businesses.

Cuban said he believes Perot is "trying to find nickels in the sofa cushion" in an attempt to recapture losses stemming from the Victory project, the retail and office development surrounding the arena. Perot's development company gave up its stake in the project to German investors in April, resulting in a reported loss of $100 million.

"I have to tell you that the biggest mistake I made in buying the Mavs was in not completely buying out (Perot's) interest," Cuban wrote.

Hillwood spokesman Eddie Reeves said the company tried unsuccessfully to resolve its issue with Cuban before filing the lawsuit.

"At this point, we feel this is the only option we are left," he said.

The suit claims Cuban, acting as Radical Arena's general partner, caused the partnership to make multiple loans to the Mavericks instead of distributing the funds within the corporation. The first loan was made in September 2006 and provided the Mavericks with $20 million at an interest rate of 5.4 percent, according to the lawsuit.