Cross examination began this morning in the clash between Columbus businessmen Oliver Phillips and Don DePriest, after a day of testimony from Phillips, who detailed a friendship he said ran sour after nearly three decades of unpaid debt.
Phillips is suing DePriest for close to $10 million; DePriest is countersuing, claiming Phillips” case is not valid.
DePriest recently resigned from the board of the Tennessee Valley Authority after it was revealed the Internal Revenue Service was investigating him for owing $1.1 million in unpaid employment taxes. The embattled entrepreneur also is being sued by several others for millions in what they have cited as unpaid loans.
For almost eight hours Monday, Lowndes County Chancery Judge Kenneth Burns listened to testimony from Phillips, who worked for decades as a senior partner with T.E. Lott and was DePriest”s accountant for nearly 30 years. He also is co-owner of Plantation Pointe Retirement Home.
The complicated case centers around a business venture begun in the early ”80s by DePriest, Chuck Cooper — who ran a Starkville-based radio station owned by DePriest — and Phillips. In an effort to cash in on cellular technology, the trio created Charisma Communication Corp. DePriest supplied the capital to finance the operation, Cooper brought the technical know-how, and Phillips worked to secure the licenses for the cities in which the company planned to operate.
DePriest maintains Phillips was never a partner in the group.
During his testimony, Phillips” attorneys — spearheaded by Jay Nichols, of Columbus — produced a 1984 document that Phillips claimed entitled him to 10 percent of anything DePriest received as a result of Charisma Communications.
Although DePriest”s signature is on the document, he said he didn”t understand its intention at the time.
In 1986, Phillips said, DePriest pushed to sell the company to pay off several millions of dollars in debts he had accrued through several other companies he controlled. In the same year, DePriest sold the company to McCaw Cellular for $85 million, receiving about $31 million.
After paying off the debt he owned, DePriest did not have enough money to pay what he owed to Cooper and Phillips as was set forth in the 1984 document, Phillips testified.
When Phillips approached DePriest about the $2.75 million he said he was due, DePriest was only able to pay $1 million, Phillips said.
In 1990, DePriest signed over 70 investor units of MCT LP — a venture capital company run by DePriest — in lieu of paying Phillips. According to documents provided by Phillips” attorneys, MCT LP was to be dissolved in 1996; any money coming from those units was to go to Phillips.
$100 million lawsuit
During the same time frame, DePriest was part of a lawsuit concerning the sale of Charisma Communications to McCaw Cellular. Phillips said he helped fund the lawsuit by loaning DePriest several million dollars, which he said DePriest eventually paid back.
DePriest and McCaw in 1995 settled the suit for $100 million, $84 million of which was distributed to Charisma stockholders. Phillips said he again asked DePriest to honor the 1984 agreement. But, Phillips testified, DePriest said their agreement concerning Charisma had already been fulfilled.
During this time, Phillips said, the value of the MCT LP units had risen considerably. Phillips” attorneys produced a handwritten document in which DePriest offered to buy the units from Phillips for $7 million and “conclude any and all financial obligations.”
Phillips, who believed the unit to be much more valuable than $7 million, said he balked at this deal.
“I thought it was a bunch of hogwash and crap,” he said.
The two men met, and Phillips said DePriest offered him a $5 million check and the promise of paying him an additional $5 million by Dec. 31, 1996. Phillips produced a promissory note to this effect, which carried DePriest”s signature.
When Phillips asked for the money on the due date, he said DePriest told him he couldn”t pay.
Left without ”Two nickels to rub together”
“He told me he didn”t have two nickels to rub together,” Phillips said.
DePriest contends the $5 million check given to Phillips was the $5 million promised in the promissory note, saying there was never a deal for $10 million.
Between 1997 and 1999, Phillips said he was constantly loaning money to DePriest so the businessman could keep his several businesses running. Phillips said DePriest paid the principal but has not paid more than $200,000 in interest Phillips said he is owed.
During the same time period, DePriest signed over 367 units of MCT of Russia LP in an effort to make good on the $5 million he was owed, Phillips testified. Later, DePriest granted Phillips an additional 100 units of the company.
When the time came for Phillips to exercise his option with the units, Phillips said DePriest was unable to comply.
DePriest has said he was not unwilling to allow the exercise of the options, but only asked it be done in a reasonable time frame. A document was produced which showed the time frame being pushed back several times.
Cash, check or investor units
And Phillips is willing to take the $5 million in cash investor units.
“I want $5 million or I want $5 million worth of the units,” he said. “I just want the $5 million we agreed upon.”
Four other promissory notes also are part of the lawsuit; however, DePriest agreed last week to pay a sum between $3.14 million and $3.15 million.
Although he has agreed to the four promissory notes, DePriest is countersuing Phillips. He says the 1984 agreement Phillips is basing his claim upon is not valid nor is it enforceable. The countersuit says any money given to Phillips as a result of Charisma Communication was given to him improperly and, therefore, is owed back to DePriest.
“In the end, the whole case comes down to the validity of the 1984 agreement. If it is valid and fully enforceable, as Phillips claims, then DePriest owes Phillips money. If it is not valid and enforceable, then Phillips owes DePriest money,” reads the defense”s brief. “We suggest to the Court that the 1984 agreement is a product of Phillips” artifice and scheming to take advantage of DePriest when he knew DePriest was struggling and vulnerable.”
Court recessed at about 4:30 p.m. Monday, just as DePriest”s lawyers, headed by Ernest Taylor, began cross-examination of Phillips.
The case continued this morning and is expected to last all week.
The Dispatch Editorial Board is made up of publisher Peter Imes, columnist Slim Smith, managing editor Zack Plair and senior newsroom staff.
You can help your community
Quality, in-depth journalism is essential to a healthy community. The Dispatch brings you the most complete reporting and insightful commentary in the Golden Triangle, but we need your help to continue our efforts. In the past week, our reporters have posted 41 articles to cdispatch.com. Please consider subscribing to our website for only $2.30 per week to help support local journalism and our community.
You can help your community
Quality, in-depth journalism is essential to a healthy community. The Dispatch brings you the most complete reporting and insightful commentary in the Golden Triangle, but we need your help to continue our efforts. In the past week, our reporters have posted 41 articles to cdispatch.com. Please consider subscribing to our website for only $2.30 per week to help support local journalism and our community.
