Thursday, April 28, 2005
Copyright © Las Vegas Review-Journal

Pacquiao seeking justice, sues promoter, managers

Former champ says he was swindled out of earnings

By KEVIN IOLE
REVIEW-JOURNAL

Former world champion Manny Pacquiao hits the speed bag during a workout session. Pacquiao filed a lawsuit Wednesday in New York against promoter Murad Muhammad and his managers. Photo by John Gurzinski.

Former world champion Manny Pacquiao filed suit against promoter Murad Muhammad on Wednesday in federal court in New York, alleging the promoter and his business managers bilked Pacquiao out of more than 30 percent of his money and left him with a huge tax liability.

Pacquiao, a native of the Philippines who engaged in a memorable slugfest with Erik Morales on March 19 at the MGM, alleged that Muhammad corrupted his business managers, Rod Nazario and Rod Rudolfo Nazario, into creating a shell company that they used to steal money that belonged to Pacquiao.

The suit alleges that the Nazarios, a father-son tandem who have a long history with the boxer, created Philippine Boxing LLC in California, a company they told Pacquiao was being formed to pay his taxes. Instead, according to the suit, Pacquiao's federal taxes were never paid.

In a statement released by attorney Keith Davidson, Pacquiao said, "It has taken me a while to come to terms with the fact that I have been cheated by people whom I trusted. I intend to see this suit to the bitter end so that I can recover every dollar that was stolen from me, as well as help protect other fighters from being taken advantage of by Mr. Muhammad.

"As for the immediate future, my fans can rest assured that I will be fighting soon, but not with Murad Muhammad or M&M Sports as my promoter. As of today, I have instructed my new management to begin negotiating for my next fight and fights thereafter. I will never fight again for Murad Muhammad and M&M Sports."

Despite repeated efforts, neither Muhammad nor the Nazarios could be reached for comment. However, in an interview before the fight with Morales, Muhammad denied cheating Pacquiao and claimed he is responsible for building Pacquiao into a star.

Davidson said the Internal Revenue Service wanted to withhold Pacquiao's entire $1.75 million purse before the Morales fight. However, after negotiations with Davidson and co-managers Nick Khan and Shelly Finkel, the IRS decided to withhold just 30 percent of the gross purse, or $525,000, Davidson said.

Davidson conceded Pacquiao is ultimately responsible for paying his taxes. But Davidson said the fighter is uneducated and unfamiliar with U.S. laws and that he relied on the Nazarios and Muhammad to help him.

"We should all pay our taxes, I agree, but in this situation you're talking about a guy who has a second- or third-grade education from a foreign country who is fighting in three or four different states and making these very large purses," Davidson said.

"So he picked people he thought he could trust to do the right thing for him. Manny wanted to do the right thing all the time. When we met with the IRS people and they saw how egregiously Manny had been treated, I think they understood what we as his new management team were trying to do."

Federal law requires promoters to withhold 30 percent of the purses of nonresident aliens. An agent from the local IRS office frequently attends the news conferences of fights in Las Vegas in which foreigners are participating in an effort to make certain the proper amount of tax is withheld.

The suit also alleges Muhammad failed to disclose where all of the money he was making on a Pacquiao fight was coming from, in violation of the Muhammad Ali Professional Boxing Reform Act.

The suit said "Muhammad had facilitated a scheme that permitted Pacquiao's business managers to retain as much as 50 percent or more of Pacquiao's earnings. Pacquiao's business management had a vested interest in not risking the exposure of their scheme by antagonizing Muhammad through hard negotiations for the highest possible purses."