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Friday, September 30, 2011
The 'death penalty' and the Dodgers

By Lester Munson
ESPN.com

Baseball's best teams are going to battle in the postseason, starting this weekend. But in the view from our Courtside Seat, those are just simple little skirmishes next to the heavy fighting going on in the courtroom right now. Yep, it's a matchup for the ages that makes the starting pitchers in Game 1 of the Yankees-Tigers divisional playoff round (CC Sabathia vs. Justin Verlander) look like small potatoes: Frank McCourt vs. Bud Selig. We'll get to some legal problems over financial shenanigans involving a couple of high-profile former athletes, too; but today, we start with …

Battle of the Titans (of Industry)

Using legal weapons no baseball commissioner has ever used before, Bud Selig has declared all-out war on embattled Los Angeles Dodgers owner Frank McCourt.

Unless McCourt agrees to a sale of the team to the highest bidder, Selig and his attorneys have promised in court papers that they will "terminate" McCourt's franchise ownership and leave him with nothing. That "death-penalty" power has been part of the MLB constitution for years, but baseball has never employed it. Now, it could cost McCourt his team and hundreds of millions of dollars.

Three months ago, McCourt sought refuge from the wrath of the commissioner in federal bankruptcy court, claiming that the Dodgers were insolvent and consequently entitled to the protections that American law offers to any business struggling to survive.

But Selig, with some artful lawyering from the Proskauer Rose firm (its alumni include David Stern and Gary Bettman), has pushed McCourt to a precipice from which there might be no escape.

Frank McCourt
The stakes in Frank McCourt's struggle to keep control of the Dodgers just got raised.

McCourt wants to auction off the rights to televise Dodgers games, claiming he needs the money to operate the franchise. But, as MLB explains in documents using language unusually vivid for the courthouse, McCourt has already "siphoned off $180 million to finance a lavish lifestyle" and wants to use another $173 million to end a divorce that MLB describes as "acrimonious." (If the reports from the proceedings over the summer are accurate, this particular divorce might re-define the word "acrimonious.")

The auction McCourt wants is the kind of thing that happens in bankruptcy court. But Selig states that even if McCourt succeeds in the Dodgers' bankruptcy, the commissioner will be waiting for him when that litigation is concluded.

"The same violations and misconduct by McCourt will continue to be addressed," MLB's attorneys assert in papers filed in bankruptcy court in Delaware last Friday.

The "violations and misconduct" alleged by MLB include McCourt's persistent use of Dodgers money to pay personal expenses. As part of the agreement with his estranged wife, Jamie, he must pay her $640,000 each month in support, including $412,159 in monthly expenses for homes the couple owns in Malibu, Cape Cod, Vail and rural Montana. And Frank McCourt is currently living at the Montage Hotel in Los Angeles in a $30,000-per-week suite.

He does all this, the MLB lawyers explain, with no income beyond what he can take from the Dodgers. With the closest thing to a sneer you will ever see in legal documents, the lawyers report that McCourt had "only $47,765" in his checking account on Aug. 31 as he faced his September bills.

Paying his personal expenses with Dodgers money, baseball says, prevents McCourt from "acquiring new players," meeting "future payroll obligations" and "improving the Dodgers fan experience."

MLB even suggests that McCourt's reductions in Dodger Stadium security were a cause of the savage beating of Giants fan Bryan Stow on Opening Day.

The attempt to auction the television rights in bankruptcy court is a direct violation of the interlocking agreements that govern baseball, according to MLB attorneys, and they seem to be correct in that assertion. Even filing the bankruptcy without the agreement of the commissioner is an apparent violation of a provision in the MLB constitution that bars all 30 MLB owners from "any form of litigation … with any MLB entity."

Bud Selig
Thanks to MLB's constitution, Bud Selig has an ace in the hole if he needs to wrest the team from McCourt.

MLB also warned that McCourt's auction maneuver would violate the Dodgers' contract with Fox Sports and lead to more litigation. And sure enough, on Tuesday, Fox Sports filed a breach of contract case against the Dodgers and demanded enforcement of its contract (it runs through the 2013 season) and money damages.

Selig's lawyers appear to have a strong case when they say that McCourt is "forcing the Dodgers down a path of destruction" and that his "path is a dead end or worse."

McCourt, who made his fortune in a series of court battles over Massachusetts parking lots, does not seem concerned about Selig's promise to terminate his ownership and leave him with nothing. He accuses the commissioner of "abusive" tactics and seems ready to fight.

But he might have a serious problem. Selig's lawyers have asked the bankruptcy judge in Delaware to disqualify McCourt's attorneys, asserting that the lawyers are working to protect McCourt's interests at the expense of the interests of the Dodgers (who are paying the fees, an enormous sum). It's a serious charge and seems well-founded.

If McCourt is forced to hire and pay personal lawyers, that $47,765 could be gone in a couple of days.

MLB is right when it says in court papers that McCourt's only way out is to sell the team. A sale, MLB lawyers assert, would produce "hundreds of millions of dollars for McCourt" even after paying his divorce expenses, and "leave him a very wealthy man."

The MLB legal team also suggests that a forced sale would avoid "further protracted and expensive litigation." That's probably correct. On the other hand, though, Major League Baseball might be wise to remember that McCourt seems to enjoy "protracted and expensive litigation," even if it could result in Selig pulling the trigger on his ultimate weapon and terminating McCourt's franchise ownership altogether.

Another race down … er, into the court(room)

Time is running out again for Tate George, the former University of Connecticut star who beat the buzzer in one of the most memorable shots in basketball history during the 1990 NCAA tournament.

George, now 43, is facing a different kind of pressure this time. Federal authorities say he ran a real estate Ponzi scheme for six years, persuading investors to join him in nonexistent development projects. They arrested him last week, and Tate now faces the possibility of penitentiary time unless he can negotiate a settlement in the next few weeks.

Tate George
Tate George beat the clock in 1990 with UConn. Now he's in a different kind of time crunch up against the government.

That won't be easy. Prosecutors say he took $2 million from his investors, including several former professional athletes.

In one typical deal, the government alleges, George obtained $300,000 in June of 2007 from a former athlete (identified by authorities only as "B.K."), promising that he would pay $318,000 back in six months, an annual return on investment of 12 percent. But instead of investing the money in a real estate development project in New Jersey as he had promised, a court complaint says that George used the money for "mortgage payments on his residence," child support payments to his former spouse and "other personal expenses."

In addition, George is alleged to have gathered another $1.7 million from other investors who fell for his descriptions of real estate projects in Illinois, Florida and Connecticut.

In the complaint, federal prosecutors in Newark, N.J., describe a lawyer and a business partner who were involved in the scheme. Although prosecutors won't name them, it is apparent that both have offered testimony against George in return for favorable treatment.

Under the federal rules for a speedy trial, George now has a brief period of time to cut a deal. With the testimony of two former colleagues and several victims lined up against him, he would be wise to find a way to settle the charges. Under the advisory federal sentencing guidelines, George faces significant penitentiary time if he is indicted, tried and convicted.

He won't duplicate the miracle shot of 1990, but George can beat the buzzer again if he admits his wrongdoing, promises to make restitution and accepts a period of incarceration.

Toeing the slab (of scrap iron) again

Is it a simple matter of an unpaid bill? Or something more sinister?

A steel company buys some scrap metal and a dispute arises over payment. It's the kind of thing that happens all the time.

But this time, it involves Denny McLain. And, like many things involving McLain, it is not so simple. And, again like a number of things involving McLain, it has resulted in his arrest.

Denny McLain
Life was good for Denny McLain after Win No. 30 in 1968. But he's been knocked around lately.

Since he won 31 games in 1968 (28 complete games, 336 innings pitched, a 1.96 ERA) for the Detroit Tigers, earning both the Cy Young Award and the MVP, McLain's life has been marked by a different kind of statistics: three suspensions by MLB, prison terms of two years and six years, one divorce and one remarriage.

His current problem began when McLain and some business associates spotted some scrap iron in suburban St. Charles Parish west of New Orleans. McLain's group bought the metal after agreeing to pay a set price per pound. But then the dispute developed.

Was it a forgotten payment? Was it an argument over the weight of the iron? Did a check bounce? The prosecutors who ordered McLain's arrest are not talking. Neither District Attorney Harry J. Morel, Jr., nor assistant district attorney Howard Peters, who is handling the case, returned calls from ESPN.com.

Morel authorized the warrant for McLain's arrest Aug. 26. But McLain's attorney, Josh Fahlsing of Grand Rapids, Mich., says McLain knew nothing about it.

McLain was arrested when he made a wrong turn into Canada in a construction zone in Port Huron, Mich. Imagine that: McLain making a wrong turn. When he made a U-turn and re-entered the U.S., the Border Patrol found his name on a hot list.

Attorney Fahlsing and McLain are now trying to settle things with Morel and the sellers of the scrap metal. It might really be a simple misunderstanding. Or not.

"I'm not sure how it went from an unpaid bill to an arrest," Fahlsing told ESPN.com.

When McLain is involved, that sort of thing just seems to happen.

Lester Munson, a Chicago lawyer and journalist who reports on investigative and legal issues in the sports industry, is a senior writer for ESPN.com.

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