The US casino magnate Sheldon Adelson is suing the umbrella organisation for Jewish Democrats because he claims it defamed him.
Last month David A Harris, the president of the National Jewish Democratic Council, urged the Republican presidential hopeful Mitt Romney to distance himself from Mr Adelson on the basis of alleged improprieties at his Macau casino. The claims included one that he condoned prostitution at his luxury gambling resorts.
Mr Adelson, 78, is known for his strongly pro-Israel stance. He has given an estimated $10 million to a super political action committee that supports Mr Romney, as well as millions more to other Republican candidates. In the wake of media reports and the call by the NJDC for Mr Romney not to accept "tainted money", he strongly denied all the allegations.
The lawsuit, filed in New York yesterday, accuses the NJDC and its staff of character assassination and asks for $60 million in damages. It criticises the NJDC for "maliciously false and defamatory statements that conveyed to the public that plaintiff personally approved of and profited from prostitution".
The NJDC said it would not be "bullied into submission" or "silenced by power".
A spokesman said: "This is not Putin's Russia, and in America, political speech regarding one of the most well-known public figures in our country is a fundamental right.
"It is both an American and a Jewish obligation to ask hard questions of powerful individuals like Mr Adelson, just as it is incumbent upon us to praise his wonderful philanthropic endeavours."
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