Day 3: Don't Go Back To Rockville

Kristi E. Swartz's yeoman work in Rockville, Maryland continues for the AJC as the Atlanta Spirit LLC continue to piss in each other's bowls of corn flakes.

Today's Episode: "He Tried To Rig The Numbers"

It's the contention of the seven owners today that, through memos and direct conversations with appraisers, Steve Belkin tried to have the CitiGroup appraisal reflect the economic figures he wanted them to reflect.

"An attorney representing the teams’ other owners accused the businessman, Felix Riccio, of interfering with the valuation of the teams and Philips Arena operating rights. Belkin had hired CitiGroup Private Bank to appraise the teams and arena rights in 2005 to determine how much Belkin’s 30 percent stake was worth.

Attorney Jim Shea presented memo after memo to show Riccio, Belkin’s right-hand man, consistently gave CitiGroup information that would influence the determination."

The buyout agreement, from the majority owners point-of-view, was to reflect numbers from August 17, 2005. They contend that Belkin and his representatives continued to send updated figures to CitiGroup after the date.

Swartz continues:
"Riccio said he gave CitiGroup the information to use, “only to the extent that they shed light on the value as of Aug. 17 … if something happened after Aug. 17 it could illuminate the value as of Aug. 17.”

That information included, for example, a letter of intent from the St. Louis Blues hockey team to be sold for $150 million. “That illuminated the value as of Aug. 17,” Riccio said.

Shea also said Riccio gave CitiGroup information on the luxury tax payments for the Hawks, a charge that Riccio denied, saying that the bank spoke with NBA executive and attorney Joel Litvin to get that information.

Shea produced a letter from Litvin to Riccio.

“Please be advised that the NBA has not provided the teams with any estimates on tax and escrow on the ‘05-‘06 season,” the letter said.

Shea pulled out an additional document from Litvin and asked Riccio if he could find 2005-2006 escrow projections. Riccio said it was in a memo but not that one.

Shea pulled out another one.

“Does the memo put the numbers in there?” he asked Riccio.

“It was provided by Mr. Litvin in a separate memo,” Riccio replied after he acknowledged the financial figures weren’t there either."

Riccio also testified the Spirit CFO, Bill Duffy, was concerned about the group's losses saying that the money problems were a "mess" and that they were "going to have to knock on doors to raise money."

Duffy left the group last year...
The final day of Week One is scheduled for tomorrow.
The trial is supposed to last for another week in the Maryland court.