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World Wrestling Entertainment Inc. filed a federal lawsuit Tuesday alleging a bribery scheme aimed at obtaining its licenses for video games and toys. The lawsuit, filed in New York, charges that Jakks Pacific Inc. and its subsidiaries made payoffs to win the licensing rights for the wrestling company’s toys and games. Payments of at least $100,000 were made to a foreign bank account of Stanley Shenker, WWE’s licensing agent, who allegedly split the money with James Bell, WWE’s senior vice president of licensing and merchandising, according to the lawsuit. Jakks shares plunged more than 22 percent, or $5.34, to close at $18.81 Tuesday on the Nasdaq Stock Market on news of the lawsuit. They lost another 5 percent in after-hours trading. According to the suit, Bell and Shenker recommended the license be granted to Jakks during the 1990s. Two payments occurred during the selection process and a third payment was made after the videogame license was awarded to Jakks, WWE said. “We very much regret having to take this action today, but regret even more the facts and circumstances which have compelled us to do so,” said Linda McMahon, WWE’s chief executive. “WWE’s intellectual property is a valuable asset of the company, and we believe the actions taken today are necessary to preserve the integrity of our licensing process and essential to ensure that WWE receives appropriate and fair compensation for the grant of a license to use our intellectual property.” In a statement late Tuesday, Malibu, Calif.-based Jakks denied the allegations and said it expects it “will be completely vindicated in the litigation.” The allegations are also part of a federal criminal investigation by a grand jury in Connecticut, WWE’s attorney, Jerry McDevitt, and Bell’s attorney, John Williams, told The Associated Press. Williams said he was surprised by the lawsuit because he expected a settlement. He also disclosed that talks had begun to resolve the criminal investigation. “I’m not going to take the position this is a pristine operation,” Williams said. “I think not every ‘i’ was dotted and not every ‘t’ was crossed. Whether in fact it cost WWE any money is a different question.” Attorneys for the other defendants did not immediately return calls seeking comment. In the suit, WWE alleges that Shenker and Bell also agreed to share hundreds of thousands of dollars in commissions from the deal. WWE officials said they learned of the payments during a state court case between some of the parties. The company accused the defendants of trying to conceal the payments. Jakks has been WWE’s toy licensee since 1995 and obtained the video game license in 1998. The licenses generate royalties of about $13 million, or about 3.5 percent of WWE’s $375 million in annual revenue, officials said. WWE is seeking damages, but has not yet calculated the amount. Copyright 2004 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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