But the suit, described as "a first salvo" by Burstein, could implicate Nazario on the allegation that he was "corrupted" by Muhammad in transferring 30 percent of Pacquiao’s purses from US fights since 2001 to pay for taxes which, it was also claimed, were left unpaid.
Nazario, however, denied that Pacquiao has back taxes to pay and recently showed receipts, copies of checks and Internal Revenue Service (IRS) clearances to media in proving his contention.
The suit is silent on the pay-per-view share that Pacquiao hopes to recover from his fight against Erik Morales in Las Vegas last March. Pacquiao has repeatedly said he deserves a 40 percent share of the pay-per-view upside that a marquee fighter usually receives. The amount was estimated to be $2.8 Million.
Muhammad said Pacquiao has no claim to the pay-per-view upside because his fight contract has no stipulation for a share, only a $1.75 Million guaranteed purse.
"You think Morales should get 40 percent, Pacquiao 40 percent and (promoter Bob) Arum 20 percent?" asked Muhammad, quoted by Claude Abrams in Boxing News. "Am I not deserving of anything? I brought Manny to this point. I created this whole event. That doesn’t make any sense."
The suit accused Muhammad and his company M&M Sports of refusing to provide Pacquiao "disclosures" to which he is entitled by the Muhammad Ali Boxing Reform Act.
In a statement released by his lawyers, Pacquiao said he was cheated by people whom he trusted. "I intend to see this suit to the bitter end so that I can recover every dollar that was stolen from me," he added. "I will never fight again for Murad Muhammad and M&M Sports."
The suit alleged that Pacquiao has "a massive bill of back taxes, penalties and interest" and said the IRS required M&M Sports "to withhold (his) tax monies and the defendants diverted the funds in violation of the law."
A source said the Nevada State Athletic Commission withheld 30 percent of Pacquiao’s purse for the Morales fight to pay for back taxes amounting to at least $480,000 excluding penalties and interest. The withheld amount was $525,000. If the amount was to pay for back taxes, it means Pacquiao still owes the IRS for what he earned in the Morales bout.
Another source insisted the Commission withheld the amount to pay the taxes for the Morales fight as Pacquiao has no outstanding back taxes.
Since arriving from the US, Pacquiao and Nazario have met twice to go over the receipts, copies of checks and IRS clearances that the business manager brought out from his file. Pacquiao has declined to comment on their discussions.
Nazario said he is quitting as business manager if Pacquiao continues to retain Shelly Finkel as manager, Freddie Roach as trainer and Keith Davidson and Nicholas Khan as lawyers. Pacquiao signed a two-year contract to be managed by Finkel last February and said he is not dismissing Roach.
Nazario remains the business manager of Pacquiao’s younger brother Bobby, a Philippine champion.
Pacquiao allocated a 10 percent share of his Morales purse for Nazario, largely credited for his rise to world stardom. He also allocated a 10 percent share for Finkel, 10 percent for Roach and five percent to be split by Davidson and Khan.
Finkel once told The Star he hopes to work closely with Nazario as his Philippine connection.
What is hampering a possible reconciliation is Pacquiao’s refusal to give Nazario his 10 percent share which he has withheld.
A source said Pacquiao withheld Nazario’s share because the fighter was not given a cut of the $150,000 TV rights fee and payments in cash and in kind from a major sponsor. The TV rights fee was supposedly paid to Arum as lead promoter.
The same source said Pacquiao decided to sever ties with Muhammad after he found out he would not receive a share in the pay-per-view upside from the Morales fight and was shown a document indicating he was shortchanged in a previous US fight. The alleged shortchanging involved skimming off the top and giving Pacquiao a purse less than what was in the contract.
Burstein, 48, initially asked for a $250,000 fee to accept Pacquiao as a client. But he later agreed on a fee of $100,000 plus 30 percent of over $700,000 that Pacquiao recovers.
Pacquiao could only pay Burstein $50,000 from his bank account and took a $50,000 advance from his July 4 non-title fight to cover the balance. The advance was reportedly provided by his management team.
Burstein graduated summa cum laude at Brandeis University in 1975, earned a master’s degree at McGill and finished law at New York University in 1981. He initially worked for criminal lawyer Gerald Shargel and later became his partner.
Burstein has won cases over several promoters, including Don King, in behalf of fighters like Lennox Lewis, Terry Norris and Julio Cesar Chavez. In 2002, he won a $7.4 Million federal court judgment for Lewis against promoter Panos Eliades on grounds of racketeering and fraud.
According to writer Thomas Hauser, Burstein has no partners and his office staff consists of five associate lawyers and five administrative personnel. He bills at rates as high as $600 an hour but also takes partial contingency work because "if it’s a case I like, I’m happy to bet on my talents."
A source said Nazario was excluded in Pacquiao’s case only because the US court will not accept a suit where a Filipino resident is charging another Filipino resident.
Is it make-up or break-up for Pacquiao and Nazario?