Former exec claims Kellogg Media inflated circulation numbers

By Steve Green (contact)

Friday, Nov. 6, 2009 | 5:33 p.m.

Legal problems appear to be mounting for Kellogg Media Group LLC of Las Vegas, publisher of the "What's On, The Las Vegas Guide" tourist magazine.

A second former executive, Andrea Collier, vice president of operations, sued the company Oct. 29 in Clark County District Court.

She claims it inflated circulation numbers, that Kellogg President David Peeler asked executives to provide false information to banks and advertisers and that the company diverted employee benefit money to other uses.

Collier claims she's owed $22,000 for expenses and was fired for pursuing a workers compensation claim and in retaliation for refusing to engage in illegal activities.

Peeler has not responded to a request for comment about the allegations against him and the company.

On Sept. 22, Kellogg was sued by former advertising executive Tammy Scarpati, who made similar allegations about inflated circulation numbers and alleged financial irregularities.

Kellogg has not responded to her suit in court and Scarpati has moved for a default judgment.

In other developments:

-- The company faces a suit filed Sept. 29 in Clark County District Court by What's On Limited Partnership, which sold the business to Kellogg and claims Kellogg defaulted on a $1.5 million note related to the sale.

-- Secured lender BHC Interim Funding II L.P. of New York, which says substantially all of the Kellogg Media assets are collateral for a loan, said in a notice Monday it plans to auction some or all of the assets Nov. 13 because the loan is in default.

In 2006, the capital fund Brooks, Houghton Interim Funding announced that it had closed on a $15.5 million senior loan facility to Kellogg Media Group.

Scarpati and Collier claim in their suits, filed by attorney Sharon Nelson, that Kellogg has been representing it published 205,000 copies of "What's On," but in fact fewer than 50,000 copies were being printed and circulated.

The latest suits are on top of suits filed against Kellogg Media, Peeler or both alleging unpaid bills. Those suits were filed by City National Bank, landlord CIP Hughes Cheyenne Fixed Portfolio LLC and Creel Printing & Publishing Co.; and by certain of the former owners over costs to arbitrate a dispute.