Larry King's Sister-in-Law Denies Affair

4/14/2010 6:35 PM PDT

Larry King's Sister-in-Law Denies Affair

TMZ has learned Larry King's marriage fell apart in large part because Shawn Southwick believes Larry is having an affair with her sister, Shannon Engemann ... but Shannon tells TMZ exclusively it's absolutely not true.

Shannon says Shawn has been accusing her of fooling around with Larry for months.  She says Shawn has repeatedly pointed to the fact that Larry gave Shannon numerous gifts as evidence.  But Shannon says, "This is so ludicrous.  She's singling me out, but Larry has been nothing but generous to our entire family, including me."

Shannon says it's true ... Larry has given her gifts for Xmas and her birthday.  Shannon was not specific, but Shawn reportedly believes Larry bought Shannon a $160,000 car, among other things.

Shannon said, "Shawn has left me threatening messages."  After the National Enquirer published a story suggesting an affair, Shannon says, "Shawn left me a message ... 'If you dare sue the Enquirer I will pull out every last receipt that proves you had an affair with Larry.'"

Shannon adds, "I'm tired for taking the rap for things.  I did not have an affair with Larry.  He's been like a father to me."

And finally, Shannon added, "I have a date tonight and I'm not going to worry about it.  I love my sister.  What's happening is not my fault."