Advocacy advertising and PR firm GMMB has dismissed its fraud lawsuit against Durazo Communications, according to documents filed June 5 in Los Angeles County State Superior Court.
The suit, originally filed by Omnicom-owned GMMB, charged that Durazo misappropriated $2.8 million in state funds – tax money allegedly missing and owed to TV stations that ran ads touting the California First 5 preschool program. Durazo, as the agency’s subcontractor, had been paid $4 million by GMMB to place Spanish language ads on TV as part of the effort.
The suit quotes Durazo Communications EVP Dan Durazo as acknowledging this budgeting oversight, explaining that his firm's accounting practices were insufficient.
In April, the two parties reached a partial agreement whereas $2.5 million of the state funds were transferred to a trust to pay certain outstanding vendor invoices and refunds due to the State of California.