CINCINNATI -- City Manager Harry Black is running public money through a company his close friend owns, according to a federal lawsuit filed Tuesday.

Cincinnati has paid that company, BFX LLC, at least $2.7 million since November, online records show.

And Police Capt. Jeffrey L. Butler, whose lawsuit claims Black retaliated against him for a different issue, alleges the arrangement effectively requires the city to pay a 15-percent markup.

Butler says it's just one example of what he calls Black's pattern of misusing funds and abusing power. The city manager dismissed the claims as frivolous, calling the lawsuit a personnel matter involving "an unhappy employee" who didn't get a promotion.

Four members of Cincinnati City Council -- Charlie Winburn, Wendell Young, Chris Seelbach and mayoral hopeful Yvette Simpson -- want Black to answer questions about what happened at an upcoming public meeting.

"The allegations first reported by WCPO are serious and disturbing," they said.

Read the entire lawsuit.

State records show Al Foxx, who Butler claims is Black's close friend, incorporated BFX in May 2016. Its offices are located on Ninth Street across from City Hall.

Foxx and Black worked together for the city of Baltimore, Maryland. According to news site Baltimore Brew, Foxx left his job as that city's public works director in January 2014, saying he was moving to Cincinnati to work at a construction and facilities maintenance company with a relative. Mayor John Cranley hired away Black, Baltimore's finance director, about six months later.

In a memo released late Tuesday, Black said BFX is a "third-party administrator" for repair and maintenance work. The old system of having multiple repair contracts exposed the city to risks, he said; BFX is part of a pilot program to try a new, and possibly better, way. According to Black's memo, the company is a joint venture between D.E. Foxx Construction and Brown E&C Construction, two minority businesses that had worked with the city for more than a decade before Cranley hired him from Baltimore.

WCPO could not reach Foxx in person or by telephone for comment. Black said Foxx has no equity interest in BFX and wasn't even its owner, only an employee. And he denied steering public money toward a friend's business.

"Everything that we do from a procurement standpoint is above-board," he said.

Butler was in charge of the city's emergency communication center for about a year. His lawsuit separately claims Black illegally took money earmarked for its 911 center and used it to pay for other city operations.

Butler alleges Black and Assistant City Manager Sheila Hill-Christian refused to make him an assistant chief because he pointed out the problem with those 911 funds. Around the same time, Butler says his counterpart in the Cincinnati Fire Department was promoted to assistant chief even though he supervises fewer people.

Then, Butler alleges he was transferred out of managing the 911 center "with virtually no notice."

Sgt. Dan Hils, president of Cincinnati's police union, said he was disappointed with that move. He said he had confidence in Butler's management of the emergency communications function at a challenging time.

"We had, as you remember, big issues with our radios, and Capt. Butler tackled that, was tackling that issue and was very well-informed, and I had a lot of trust in him moving forward," he said.

In a separate allegation, Butler claims Black also retaliated against Assistant Police Chief Dave Bailey by reassigning the 911 center to another assistant chief. He alleges the move came after Bailey raised concerns about Black improperly using $800,000 from another pot of funds intended for police equipment and technology.

Cincinnati's 911 center has been dogged with technology problems for at least a year -- so much so that Black said last month he was dumping subcontractor Comtech because it was unreliable. Butler spoke with the I-Team last October about a technology hiccup called "ghost calls" from cellphones: The line rings and rings, but it's not really ringing at a 911 center, he said:

Black said part of the friction might be his work to fix those problems.

"As you know, when you're doing a turnaround of any sort -- when you're making changes, significant changes -- not everybody's going to like it. Not everybody's going to be comfortable with it," Black said.

Randy Freking, one of Butler's attorneys, said they tried to resolve Butler's issues with the city before filing suit but were unsuccessful. The lawsuit alleges abuse of power, violation of right to free speech, violation of substantive due process, violation of procedural due process and tortious interference with business relations.

"Allegations come up all the time, but not from a current sitting police captain, so I think these are more heightened and more serious," Seelbach said.

At a mayoral debate Tuesday, Cranley said he hadn't seen the lawsuit yet. Simpson, his opponent, called the allegations "shocking" and said she'd urge City Council to look into them right away.

"We will -- of course, it's just, right now, an allegation -- and so we want to make sure we're careful not to place blame until we know what's happened," Simpson said. "But we will fully investigate."

She, along with Winburn, Young and Seelbach, asked Black to appear before City Council's Budget and Finance Committee. Winburn, the committee's chairman, said he'd be "fair and objective, as these are just allegations."

Vice Mayor David Mann was similarly cautious: "The allegations are serious," he said, "but I don't take serious allegations seriously until I understand the facts."

Butler is asking that a jury hear his case. He says he wants to be made an assistant chief, as well as compensatory and punitive damages and attorney's fees. He's also asking Black to be barred from "misusing funds" intended for 911 operations and "from forcing the City to use the business of his friend Al Foxx for its purchases."

"Our concern is not just misuse of the 911 funds, but the city manager's, we believe, pattern and practice of misuse of taxpayer funds for pet projects and taking care of friends," said Brian Gillan, another of Butler's attorneys.

Cincinnati Police Capt. Butler lawsuit against city manager by WCPO Web Team on Scribd

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WCPO's Ashley Zilka, Briana Harper and Tom McKee contributed to this story.