Depending on just who prevails in various legal proceedings now underway in Nashville, we just might remember 2008 as the year of the scam.
Not all of Nashville's most closely watched civil court cases this year involve claims of sharp dealing that took money out of the pockets of innocent victims, but the number of alleged financial schemes seemed well ahead of the norm.
Whatever the cause of action, we found that Nashville readers take a keen interest in what's going on down at the courthouse(s). Here's a look back at a few of the legal stories that generated the most attention in 2008.
Waffling into bankruptcy
The story of the year, judging from online readership statistics and reader reaction, is the saga of SouthEast Waffles LLC. The story broke around Labor Day, just as the economy was breaking. And as public outrage grew amid tales of Wall Street honchos making millions while leading their companies to perdition, some saw a Main Street parallel in the person of SouthEast CEO Jim Shaub.
While running more than 100 Waffle House restaurants staffed by salt-of-the-earth fry cooks and waitresses — and while SouthEast Waffles was piling up millions in unpaid taxes and other past-due debts — Shaub was paying himself more than $1.4 million a year in salary until the company filed for bankruptcy in late August. All the while, he was a fixture of the Belle Meade social scene.
"So it is us pee ons [sic] that are getting the blame for Jim Shaub's stupidity," one longtime employee wrote in response to our coverage of the unfolding mess. "In the past it was not an effort to make $400 a week with this company, but this past year has put me into a chapter 13 [bankruptcy]. I am 63 years old and things for me are supposed to get a little easier — instead it's getting harder and harder."
Shaub blamed the company's woes on a former employee whom he accused of running a massive check-kiting scheme. Her lawyer scorned that claim. Creditor Waffle House Inc. was not buying that explanation from its franchisee, either. In a court filing, it accused Shaub of "abject mismanagement" and "incompetence."
The bankruptcy case continues.
Park at your own risk
In early July, NashvillePost.com broke the news that investment advisor Michael J. Park was liquidating his assets after signs of a massive fraud led regulators to shut down his firm.
Since then, the Park narrative has unfolded like some ill-conceived mashup of The Great Gatsby and Bonfire of the Vanities. A suicide attempt by Park was followed within weeks by a divorce filing, the foreclosure sale of his Brentwood home and an auction of his Rolex watch, late-model Mercedes and other baubles.
It soon became clear that all the best efforts of the bankruptcy trustee would yield little to compensate investors — who ranged from well-heeled business folk to waiters at The Palm downtown, where Park was such a legendary tipper that a portrait of him was painted on the wall. Lawsuits against the Florida brokerage that had licensed him ensued in due course.
In October, the Securities and Exchange Commission took civil action against Park for operating a Ponzi scheme. And this month, U.S. Attorney Ed Yarbrough announced that Park would face federal criminal charges: three counts of mail fraud and one count of wire fraud. Each count could carry a sentence of 20 years.
Stokes cops a plea
September saw the denouement of a long-running scam story, as once-high-flying entrepreneur and aspiring political player Barry R. Stokes struck a deal with federal prosecutors to plead guilty to 29 counts of embezzlement, in addition to various charges including the mail and wire frauds.
Stokes looted his Dickson-based employee benefits firm, 1Point Solutions, and in the process made the 401(k) funds of scores of companies and individuals magically disappear. (Give him points for trendiness, as he did this long before the rest of us watched our retirement savings vanish lately.)
Stokes, jailed since 2006 as a flight risk, is awaiting sentencing. He could face more than 20 years in prison.
A family that ran three Italian-themed bistros in Nashville used a secret recipe of sorts to bilk American Express out of more than $1 million, the credit-card company claimed last month.
American Express Travel Related Services Co. filed suit against Michael D. Tangredi, his son Michael G. Tangredi and their company M. Tangredi Restaurants Inc. as well as related parties. The family operates Tangredi's Italian Kitchen on Elliston Place and Michael T's on Division Street.
It also ran T's Bar and Grill, on Belcourt where The Trace and Faison's used to be, until its landlord shut the place down earlier this month, claiming the business was not properly insured.
The U.S. Department of Labor also filed suit recently against the Tangredi company, saying it had failed to cooperate with an investigation involving the restaurateur's employee records.
Last week, acting without a lawyer, Michael D. Tangredi filed an answer to the American Express complaint. To every assertion of wrongdoing, he responded: "The defendant does not know certainly of the accusation herein, therefore the defendant denies the accusation."
Reed firm's collapse
What started out in October as the reorganization of a Franklin-based mortgage and investment firm under Chapter 11 of the bankruptcy code soon turned into the dissolution of J.C. Reed & Co. amid claims of massive fraud.
In mid-November, the SEC sued the Reed firm, two of its subsidiaries, one of their officers and the estate of their late founder, claiming fraudulent stock sales to more than 100 investors. The bankruptcy, now a Chapter 7 liquidation, is ongoing, as is the SEC case.
KiS that money goodbye?
Following a similar trajectory in November was ill-starred KiS Golf Inc., a Nashville company that operated a chain of golf shops in malls across six states. Its Chapter 11 filing followed widespread customer complaints about its sales practices and hard scrutiny from the Better Business Bureau.
Golf enthusiasts paid KiS thousands of dollars each for custom-made golf club sets that came with "lifetime" access to a golf pro and indoor practice spaces. Some claimed they never meant to sign up as customers in the first place.
The company converted its case to Chapter 7 in mid-December, blaming its lenders for its downfall. It stated that one of its banks had "abruptly terminated" its lending agreement "even though the customer dispute rate had dropped dramatically from seven to two percent in the prior six-month period."