ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Monday, October 14, 1996 TAG: 9610140113
SECTION: VIRGINIA PAGE: C-5 EDITION: NEW RIVER VALLEY
DATELINE: RICHMOND
SOURCE: Associated Press
The money state Sen. Russell Potts Jr. expected to receive from his promotion of a National Basketball Association exhibition game Sunday was frozen as part of litigation between Potts and a brokerage firm.
Richmond Circuit Judge Walter W. Stout III froze the assets Friday from the game between the Charlotte Hornets and the New Jersey Nets at the request of Sports Productions LLC.
According to competing lawsuits filed in July by Potts, R-Winchester, and five principals in Davenport & Co. of Virginia Inc., Potts went to the brokerage firm last year seeking capital for his company, Russ Potts Productions Inc.
On the advice of Davenport, Sports Productions LLC was formed and Russ Potts Productions contributed its assets to Sports Productions in exchange for a 50 percent managing membership in the new company.
Nineteen people obtained an interest in Sports Productions based on the percentage of a $1.2 million line of credit from Signet Bank that they guaranteed.
In December, Signet declared the loan in default. and notified Potts and the guarantors that a balance of $255,000 was due immediately.
In their lawsuit, the principals allege that Potts collected money that the loan agreement required him to use to pay down the loan but spent the money for other purposes.
In his lawsuit, Potts alleged that Davenport induced him to transfer the assets of Russ Potts Productions to Sports Productions and then, by improperly accelerating payments to Signet, left the new company without money to pay teams.
Stout emphasized that freezing the proceeds was not prejudging the merits of the two lawsuits. The procedure that Sports Productions invoked is designed to preserve assets, not decide who is ultimately entitled to them, he said.
LENGTH: Short : 44 linesby CNB