In the wake of a recent arbitration ruling that the painter's company, the Morgan Hill-based Media Arts Group Inc., misled gallery owners about their financial prospects, another 20 owners are lined up with lawsuits of their own.

And now Kinkade's lawyers have filed suit, claiming their opponents used illegal eavesdropping tactics to tamper with the arbitration proceedings. According to the most recent claim, attorneys for two gallery owners who sued Kinkade and won $860,000, used the Internet to transmit testimony in real-time to a third-party witness outside of the hearing room so that the witness, a former Media Arts Group employee, could suggest questions for cross-examination.

"When one side seeks to get a secret, unfair advantage, it has the potential to corrupt the entire process," said Dana Levitt, Kinkade's Los Angeles attorney. "The grounds upon which you can get an arbitration decision reversed are certainly more narrow than in a trial, but we think we're going to get this one reversed. We believe there were a number of errors committed by the majority."

The arbitration panel voted to 2-1 to award two Virginia gallery owners $860,000 in mid-February. According to the Associated Press, the arbitrators found that Media Arts Group and one of its executives, Richard F. Barnett, "failed to disclose material information" that would have dissuaded the owners from investing $122,000 to open the first of their two Virginia galleries in 1999.

The panel did not single out Kinkade in its finding of fraud.

The American Arbitration Association ruling also found that Kinkade and other company officials used the artist's Christian-oriented themes to create "a certain religious environment designed to instill a special relationship of trust" with the owners.

The panel's decision was the first major loss for Kinkade and Media Arts Group in litigation brought by former dealers. The artist and his company had prevailed in at least three previous arbitration claims.

Norman Yatooma, the Michigan attorney representing a total of 23 gallery owners in six suits, called the ruling a triumph for the two Virginia-based gallery owners, and promised to press on with his fight against Media Arts Group.

"There was a massive scheme to defraud our dealers and it's about time they've been vindicated," Yatooma said. "Dealers were induced to become dealers by way of Kinkade's persona. He holds himself out as a Christian. It's not just a business, it's a ministry. An opportunity to take part in God's work."

Yatooma did not deny that an attorney in his office, Joseph Ejbeh, who left the firm last week, transmitted the hearing testimony, but said it was no different than providing paper copies of testimony after the hearing. He said the latest suit is just part of Kinkade's public relations strategy.

"This is clearly retaliatory," Yatooma said. "The idea that to provide hearing transcripts is untoward or unlawful is absurd."

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