Laundry Service firm: Papa John’s founder extortion claims ‘completely false’

Laundry Service on Wednesday told its employees in an internal memo that Papa John’s founder John Schnatter’s claim that the marketing firm tried to extort him for $6 million are “completely false,” according to a report.

Schnatter, who stepped down as Papa John’s chairman last week after Forbes reported that he used a racial slur during a May conference call with Laundry Service executives, publicly accused the firm on Friday of demanding a payoff to keep his remarks from going public. The pizza executive said he believed the call, which was meant to serve as a media training session, was confidential.

"As you all know, there's been a lot of coverage about Laundry Service and Wasserman related to the Papa John's situation in the past several days," the firm said in an internal memo obtained by AdAge. "The disparaging and outrageous comments about Wasserman and Laundry Service that have been covered are completely false and we have a centralized PR strategy to go on the record and refute them. Until that time we cannot expect the media to know the truth."

The memo also asked Laundry Service employees not to speak to the media about the situation, AdAge reported.

Laundry Service did not immediately respond to a request for comment. It’s unclear when the firm plans to go public with its refutation of Schnatter’s claims.

Schnatter accused the firm of an extortion attempt during an interview last Friday with WLKY in Kentucky.

“They wanted $6 million to make it go away,” Schnatter said during an interview with WLKY, a Kentucky CBS affiliate. “They made it pretty clear. The words were, ‘If I don’t get my [expletive] money, I’m going to bury the founder. … I’m not for sale. They tried to extort us and we held firm and they took what I said and they ran to Forbes, and Forbes printed it.”

Within hours of Schnatter’s interview with the network, Papa John’s board of directors moved to oust him from the company’s headquarters and ordered him to cease all media appearances. Schnatter’s image has also been removed from the brand’s marketing materials.

Papa John’s has yet to comment on Schnatter’s extortion claim.

In response to the board’s actions, Schnatter called his decision to resign under pressure a “mistake.” His attorney, Patricia Glaser, argued that the board should not have been able to remove Schnatter without a shareholder vote and asked the company to conduct a formal investigation.

Schnatter remains Papa John’s largest individual shareholder, with a 30% ownership stake worth more than $500 million.