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Wednesday, October 17, 2001
Suit is filed against IceRays general partner
Partners want financial information; they question certain spending details
By Javier Becerra , and Laura Elder
Caller-Times
   Two days before hockey season, a group of IceRays investors filed suit Tuesday to gain access to team financial information, citing concern about the way the organization's business affairs are being managed.
   A group of limited partners who own the IceRays filed a lawsuit in the 319th District Court against general partner William D. Davidson and Corpus Christi Hockey Partnership, Ltd., which operates as the IceRays.
   The investors assert that Davidson in some cases ignored or refused their requests for details about the team's financial status, used the hockey team's credit card to make purchases for rival team El Paso Buzzards and made unsecured loans to team employees.
   Davidson owns an interest in the Buzzards. Davidson could not be reached for comment.
   Taylor Hall,general manager and former head coach, also could not be reached for comment.
   But the team's attorney, John Bell, denies all allegations in the lawsuit.
   "We believe these allegations have no merit at all," said Bell, an attorney with Wood, Boykin & Wolter.
   "Second, the people who are making the allegations are a small minority of the owners.
   "The majority of the owners are pleased with the management of the IceRays organization."
   Bell said the partners who have filed the lawsuit own less than 30 percent of the team. Bell also said that the allegations are about accounting issues that can easily be explained or resolved.
   About 13 people make up the partnership that owns the IceRays.
   Behind the lawsuit are Gaylord Hoyt,Victor Hays, Patrick Kasperitis, John Murray,Charles K. Miller,W.G. McBeanand Texas Television.
   McBean, a partner in Vista Automotive Group, helped lead a group of local investors who bought the team in 1999 from its original, absentee owners and lifted the team out of a debt reported to be about $250,000.
   The lawsuit asks the court for supervised accounting of the team's books.
   "All we're asking from the court is a supervised audit of the team, so that everybody knows where we are right now, and I think that's in everybody's best interest," said David J. Dunn, an attorney for local law firm Dunn & Weathered, who represents the investors.
   A limited partnership is made up of a general partner who manages a project and limited partners who invest money but have limited liability, are not involved in day-to-day management and usually can't lose more than their capital contribution.
   Usually, limited partners receive income, capital gains and tax benefits; the general partner collects fees and a percentage of capital gains and income.
   On Sept. 12, the partners made a written request asking Davidson to make documents available that would show any income received from any source by the IceRays.
   The group also asked for documents that would show expenditures of any nature made by or on behalf of the IceRays since June 1, 1999.
   While the investors received some documents, they say the information is incomplete.
   Among other things, the lawsuit asserts:

Davidson transferred more than $140,000 from the IceRays' bank account to the El Paso Buzzards, an IceRays competitor.
   The lawsuit contends that Davidson's alleged unsecured loan to the Buzzards violates a requirement that "the general partner shall exercise ordinary business judgment in managing the affairs of the partnership."

The partners say Davidson also made about $200,000 in unsecured loans to himself, Hall and Kevin Simpson. Simpson is the vice president of sales and marketing for the IceRays.

Also, it says Davidson provided records to the partners that showed numerous charges of a personal nature, made on company credit cards.
   Those charges have no apparent connection to the IceRays.
   And the lawsuit asserts that there also are charges made on the IceRays' company credit card for purchases that apparently relate to the Buzzards.
   Because the Buzzards and IceRays share some management, it isn't unusual for one credit card to be used to cover expenses for both teams, Bell said.
   For example, to reduce costs, management for both teams are considering sharing a single insurance policy, he said.
   One owner, Ed Martin, chief executive of Bay Ltd., the largest private industrial employer in the city, declined to comment about the lawsuit.
   Martin also is a former city councilman. He is not among the plaintiffs.
   "A partnership is a private matter," Martin said.
   Alex Harris, president of San Jacinto Title Co., who also is an IceRays owner, could not be reached for comment.
   McBean, president and chief executive officer of Vista, one of the largest car dealerships in Corpus Christi, also could not be reached for comment.
   In May of 1999, the limited partnership paid more than $1 million to buy the IceRays from Canadian venture capitalist Rick Brezer.
   At the time, the team was struggling with management issues.
   Despite huge revenues, the team in its first year had racked up as much as $250,000 in debt, without cash to pay it back. McBean, at the time, said he was concerned the team would fold.
   Some partners had said it was their love of hockey that spurred their investment in the team.
   Since it purchased the team, the partnership has acquired assets valued at more than $500,000, according to the lawsuit.
   The IceRays open their fourth season - the first as one of 16 teams in the new Central Hockey League - Thursday night against the San Antonio Iguanas.


Contact Javier Becerra at 886-3734 or becerraj@caller.com. Contact Laura Elder at 886-3678 or elderl@caller.com

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