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July 6, 2015

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Lawsuit filed over management of Pure nightclub

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Sam Morris / File photo

Patrons step up to the bar and fill the dance floor at Pure in Caesars Palace.

Professional tennis’ husband-wife duo Andre Agassi and Steffi Graf, who own a stake in Pure nightclub, claim that managers of the club mismanaged finances and used money from Pure to fund competing nightclubs, according to a lawsuit filed this week.

Agassi and Graf, along with other part-owners Darren Cahill, Ron Boreta and Todd Wilson, are suing Pure Management Group, its associated companies and former executives for breach of fiduciary duties, breach of contract, negligence and misappropriation, among other claims in the lawsuit.

The five individuals are owners of Touch LLC, which has operated Pure nightclub at Caesars Palace since it opened in 2004.

The lawsuit was filed in Clark County District Court on Tuesday, one day before Angel Management Group announced it had reached a deal to acquire Pure Management’s nine venues.

A spokeswoman for Pure Management said the company does not comment on pending litigation.

Following the success of the Pure nightclub, the lawsuit alleges, Pure’s manager, Touch Management LLC, and Pure executives Steve Davidovici and Robert Frey, formed other entities, such as Pure Management Group, to open other nightclubs that would compete with Pure.

Pure Management Group opened LAX nightclub at the Luxor in 2007 and Christian Audigier nightclub at Treasure Island in 2008. Pure Management Group also owns and operates the adult pool at Caesars Palace, two bars and two restaurants in Las Vegas.

By 2007, Pure Management Group was operating other nightclubs, bars and restaurants and began to charge Touch LLC for certain corporate expenses not related to the management of Pure, the lawsuit alleges.

The expenses included an increase in Pure Management’s corporate salaries from $380,000 in 2005 to $1 million in 2007 and rent for its corporate headquarters, which increased from about $2,360 per month to $22,913 per month during the same period, the lawsuit says.

Overall, the lawsuit claims, corporate expenses charged to Pure nightclub by Pure Management nearly tripled. The lawsuit states that sales, marketing and public relations costs directly paid by Pure nightclub increased sharply as well.

The lawsuit also says that following an Internal Revenue Service investigation of Pure nightclub in February 2008 involving the club’s cash-handling and tipping policies, Pure Management used Touch funds to pay $1 million-plus legal fees.

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