Lance Martin, Herald Senior Staff Writer

Lance Martin | Daily herald Jeanette Doran, an attorney with the N.C. Institute for Constitutional Law, stands beside Roanoke Rapids resident Jim Garrett in Raleigh Thursday. Garrett is suing Randy Parton and others for allegedly defrauding the city in a scheme to build The Randy Parton Theatre, now called The Roanoke Rapids Theatre. Advertisement

RALEIGH - Roanoke Rapids and its taxpayers were victims of a scam by Randy Parton and his partners to induce the community into building a multi-million theater with little chance of the entertainment venue succeeding, according to a lawsuit filed in behalf of a local resident Thursday.

The plaintiff, Roanoke Rapids businessman Jim Garrett, isn't seeking personal compensation in the lawsuit but demands Parton, Rick Watson and Earnest Pearson pay the city back at least the $21.5 million in bond money the city used to build the theater.

The theater was named for Parton who served as its star attraction and general manager from its opening in July of 2007 until December when he and the city parted ways.

The lawsuit filed in the civil division of Halifax County Superior Court names as defendants Moonlight Bandit Productions and its subsidiaries, along with the Northeastern North Carolina Regional Economic Development Commission and North Carolina's Northeast Partnership.

The defendants “lured the city into taking $21.5 million in bond debt for the start-up of the theater. They sold the concept as a way to bring jobs and much needed economic development (to the city),” said Jeanette K. Doran, an attorney for the N.C. Institute for Constitutional Law, at a press conference at the Institute's Raleigh headquarters. The Institute is representing Garrett at no charge. It has a history of challenging perceived inequities in taxation and government.

Doran claimed the defendants withheld important information and gave false information to the city “so they (the defendants) could personally profit at the expense of people in Roanoke Rapids.”

Public money, Doran said, went to pay for a $600 girdle for Parton's wife, trips to Las Vegas and liquor stores and apartment rent for Watson's son.

“They should have known the theater was not going to make a profit,” she said. “They led the city to believe Randy Parton had the experience to run a theater. They touted the relationship with Randy's sister (country music star Dolly) and concealed the scheme from the people.”

One of the reasons the Institute decided to take the case was because of the way the theater was funded, through the use of Tax Incremental Funding, which was an amendment to the state Constitution passed in 2004.

The constitutional change, known as Amendment One, removed the requirement of a vote of the people to allow government to borrow money through bonds under specific circumstances.

Roanoke Rapids was the first community to use the Tax Incremental Funding law.

The Institute argues that “because people were never allowed to vote on it (financing the theater through TIF), they (the defendants) were able to hide the scheme from the taxpayers.”

Doran said the Institute has been following the theater issue since its start because it was the first project to use TIF and because “fraud became apparent.”

“Mr. Garrett, he was the one who stepped up to the plate and decided to take on the defendants,” she said.

Doran explained to reporters the Institute is demanding a jury trial, hoping a panel will find the parties guilty of the following:

€ Civil conspiracy through fraudulently getting public financing to construct the theater.

€ Breach of fiduciary duty because Watson, the former president and CEO of the Economic Development Commission, allegedly advanced his personal interests as an owner of Moonlight Bandit when the Commission had “financial, professional and other dealings with Moonlight Bandit companies and, as a fiduciary, his highest duties was to the Commission and the taxpayers.”

There is also a breach, the lawsuit claims, because Pearson, an attorney with Sanford Holshouser, who represented the Commission, served on the board and at time owned an interest in Moonlight Bandit.

€ Common law fraud because Parton, Watson and Pearson allegedly made omissions such as Parton's professional management experience, Watson's and Pearson's ownership in Moonlight Bandit and alleged false statements made to Economic Research Associates (which did a study of proposal).

€ Tortious acting (intentional interference with contractual relations) because they allegedly, through fraud, caused public funds to be used for financing the theater.

€ Unfair and deceptive trade practices.

€ Fraudulent misrepresentation including allegedly making false statements there was competition between several cities for the theater and false statements made to produce a positive economic impact study.

€ Negligent misrepresentation.

Doran said “it was very clear” Parton had no previous management experience and that he also allegedly has a history of alcohol problems.

She said a feasibility study was prepared from false statements by the defendants the theater would spur more economic development in Carolina Crossroads. “The defendants should have known surrounding development (would not come). The city is really the victim,” Doran said. “The city was desperate for stimulation to the economy and had really high hopes for development.”

Doran said the $21.5 million was a base and attorneys would be looking at other sources, such as payments to Parton. “I'm not willing to put a total dollar figure on it. The floor is $21 million. This is all about making the city whole again and fixing what was done.”

Until there is a final accounting, she said, attorneys won't know what all the losses are.

She said she believed the three defendants targeted Roanoke Rapids, which she described as a great community without the resources to examine everything closely, because “they knew Roanoke Rapids was more likely to rely on the misrepresentations made by the defendants” because of its hunger for economic development.

Garrett said he has long been recognized as an opponent to the project and believed it was time to do something.

“As a taxpayer I'm pretty mad to think all of the taxpayers have been taken advantage of. It's time for someone to say this is where the buck ends. I think there is a lot of hostility because of the tax increases we've faced,” he said.