Lawsuit over contract leads to airing of James’ dirty laundry

Las Vegas businessmen Mark James and Stephen Kalish used to be the best of pals, but no longer.

The friends turned enemies over an ongoing lawsuit involving tens of millions of dollars. Now Kalish’s lawyers are trying to prove their case by alleging James shirked his duties while making daily contacts with prostitutes.

The allegations go against the former politician’s All-American image.

Having a falling out with a friend who knows you well has consequences.

James, 51, is a former Republican state senator who won a seat on the County Commission but in 2004 stepped down 15 months into his four-year term citing family reasons. As a senator between 1992 and 2002, he was considered tough on crime. He worked on sex crime legislation and truth-in-sentencing rules. He opposed escort ads, saying they were fronts for illegal prostitution.

Kalish, 54, once ran Republic Services. He now runs Waste Logistics Nevada and is president of Boulder City Disposal.

The third player in the fray is Phyllis Frias, widow of Charles Frias. After her husband died in 2006, his widow needed someone to run two limousine and five cab companies. She hired James, an attorney, as the chief executive officer of Frias Holding Co.

James took the job at the start of 2007, but asked Kalish to be his consultant, according to the breach of contract lawsuit Kalish filed in December 2009.

James and Kalish signed a private consulting agreement saying Kalish would receive 20 percent of any amount over $4 million that James received as CEO. When James received a $17 million bonus for turning the company around, Kalish received about $3 million under the consulting agreement.

Aside from that pact, James hired Kalish’s consulting company, OB1, for a flat fee of $15,000 a month. In 2008, Kalish’s fee went up to $25,000 a month. Over two years, Kalish received $480,000.

For this, Kalish reviewed insurance agreements, created a management team, hired a chief financial officer and outside accountants, implemented procedures, created budgets and provided lobbying advice, his lawsuit says.

According to Kalish, he was the behind-the-scenes CEO for Frias — without the widow’s knowledge.

The cab and limo companies became more profitable, and the widow Frias was happy with the improvements. She was so happy in fact that at some point (exactly when is disputed) she decided to make James a partner and give him 48 percent of the company stock.

Here’s the heart of the dispute outlined in the lawsuit: Kalish believes he’s entitled to 20 percent of James’ 48 percent of the Frias holding company, which is worth about $300 million. In rough numbers, Kalish wants about $29 million more.

James first said yes, then no, Kalish contends.

So, how is anyone’s sex life relevant?

Kalish contends he was running the Frias companies because James was “simply incapable of performing the duties of a CEO” because James was battling “certain personal demons in his life.”

Kalish’s attorneys subpoenaed James’ phone records and discovered a pattern of phone calls and text messages to escort services day and night. The records showed that on one day, James texted and e-mailed two escorts a total of 43 times.

James’ attorney Dennis Kennedy issued a brief statement Friday saying Kalish’s attorneys “in order to divert attention from their demand for more money, made allegations concerning the past conduct of (James). These allegations have nothing to do with the issues before the court, and can only have the effect of potentially harming the reputation of a distinguished citizen and public servant. They will not be dignified by any further response.”

Jane Ann Morrison’s column appears Monday, Thursday and Saturday. E-mail her at Jane@reviewjournal.com or call (702) 383-0275. She also blogs at lvrj.com/blogs/morrison.