Hamilton County: $5 million bond upheld in Prebul civil suit

Hamilton County: $5 million bond upheld in Prebul civil suit

February 24th, 2009 by Lauren Gregory in Local Regional News

A Hamilton County Circuit Court judge isn't going to let New York City jazz club owner Danny Bensusan out of posting a $5 million bond in the civil case he filed against Prebul AutoGroup owner Joseph Prebul.

Judge L. Marie Williams on Monday denied a motion filed by Mr. Bensusan's attorneys asking for a reduction in the $5 million injunction bond set in the case - money he must front to cover for damages Mr. Prebul potentially could suffer while the litigation plays out in court.

Hugh Moore, who argued on behalf of Mr. Bensusan at a hearing Monday morning, said there was very little likelihood that Mr. Prebul would be adversely affected by the suit.

"I don't understand what damages they could possibly suffer," Mr. Moore said. "I think the amount of the bond should reflect the amount of risk, and I really don't see what the risk is."

Mr. Prebul, who owns several auto dealerships in Chattanooga and North Georgia, was arrested Feb. 10 on 11 counts of federal wire fraud for allegedly bilking a relative out of $7 million. Later that week, Mr. Bensusan officially outed himself as that relative by filing a $32 million civil suit, alleging that Mr. Prebul had promised to invest money for him but instead used it to pay for personal and business expenses.

Amid his legal controversy, Mr. Prebul has filed for federal bankruptcy protection for his dealerships. Mr. Bensusan's civil suit prevents Mr. Prebul from manipulating any assets not tied up in the bankruptcy proceedings, but it does allow for normal business transactions, according to Mr. Moore.

During Monday's hearing, Mr. Moore brought up a discrepancy in Mr. Prebul's reported equity, which originally was tallied at $13,064,407. Mr. Prebul's attorneys admitted that their client's available equity actually totals $11,864,407 because of two previously unreported deeds of trust.

Attorney Christopher Varner, representing Mr. Prebul, declined to elaborate on the issue after the hearing.

The case will continue with another motion hearing set for 9 a.m. Monday.