Former Associate Sues Michael Jackson

A former associate and confidant of Michael Jackson has sued "The King of Pop" for alleged breach of contract and other agreements, alleging Jackson is broke and has had problems with drugs and lavish spending, ABC News has learned.

In the complaint, obtained by ABC News, the former associate says he is owed millions by Jackson but that Jackson's representatives have refused to pay him, saying Jackson is broke. The complaint also alleges that Jackson has had problems with drugs and lavish spending.

Jackson, 46, is set to face trial in late January on 10 charges that include felony conspiracy with 28 overt acts involving child abduction, false imprisonment and extortion. The conspiracy charge against Jackson refers to his alleged attempts through five associates to quiet the alleged victim and his family after the British documentary "Living With Michael Jackson" aired early last year. Jackson has pleaded not guilty.

One of the unindicted alleged co-conspirators is Marc Schaffel, a reputed pornography producer who, sources have previously told ABC News, dealt with the alleged victim's family after they appeared in "Living With Michael Jackson." Today Schaffel filed a lawsuit against Jackson in Los Angeles Superior Court that alleges that the singer has had problems with drug abuse and excessive spending and that his representatives say he is broke.

According to the lawsuit, Schaffel is seeking more than $3 million, alleging Jackson has failed to pay him for work done for Fox TV specials and has not repaid money Schaffel lent him for shopping sprees and purchases for friends.

Tales of Money Problems, Drugs and Spending Sprees

In his lawsuit, Schaffel says the pop star's need to borrow money "accelerated when Jackson's increasingly more frequent excessive use of drugs and alcohol impelled him into irrational demands for large amounts of money and extravagant possessions." Schaffel claims Jackson was devastated by "Living With Michael Jackson" and asked him to oversee the creation of a rebuttal TV special that aired on Fox.

Jackson, Schaffel says, failed to pay him for his work and has failed to reimburse him for money he lent him to go on spending sprees, pay bodyguards, pay delinquent agreements to avoid lawsuits and pay friends such as the late actor Marlon Brando to appear on Jackson's TV special in the summer of 2001 and buy jewelry for Elizabeth Taylor so she would agree to sign a release agreement to appear on another TV special, "Michael Jackson's Private Home Movies."

Schaffel's lawsuit says he has had a business relationship with Jackson since 2000 and that he created Neverland Valley Entertainment with Jackson. He says he "was at all times a loyal and devoted associate and confidant" of Jackson and feels "betrayed" by the pop legend. He says Jackson stopped paying him in June 2004, as his financial representatives claimed he was broke.

Prosecutors in Santa Barbara, Calif., allege Schaffel and other associates played various roles in surveilling the alleged victim's family, taking the boy and his siblings out of school and making them virtual prisoners of Jackson. The alleged victim in the case is believed to be a cancer survivor, now 14 years old, who spent time at Jackson's Neverland ranch and appeared in the British documentary.

The British documentary also showed Jackson on a lavish shopping spree in Las Vegas, spending hundreds of thousands of dollars on ornate urns and other objects.

News of the apparent breach between Jackson and one of his associates comes as a boxed set of the singer's greatest hits spanning his entire career, "Michael Jackson: The Ultimate Collection," was released today.

Jury selection in Jackson's child molestation is expected to begin Jan. 31.

ABC News' Eileen Murphy, Santina Leuci and Eric Avram contributed to this report.