Chattanooga attorneys involved in Joseph Prebul's ongoing legal battles say Mr. Prebul's brother-in-law, New York jazz club owner Danny Bensusan, is wasting time and money by spreading a family dispute over four different courts in two states.
"They are forum shopping," Mr. Prebul's attorney, Thomas Ray, said Monday after receiving a copy of a new federal lawsuit Mr. Bensusan filed against his client and his client's stepfather, Julius Greenwald, late last Friday in New York.
Mr. Bensusan had first sued Mr. Prebul in Hamilton County Circuit Court but dropped that claim, only to refile nearly identical allegations in the New York lawsuit.
The new suit also addresses issues introduced in a separate Hamilton County Chancery Court complaint that Mr. Greenwald filed last week against Mr. Bensusan's company, TSE Group, LLC, effectively moving that litigation to New York as well, said Mr. Greenwald's attorney, Barry Abbott.
Both Mr. Ray and Mr. Abbott said they believe the move was calculated, as civil suits are known to move much more slowly in federal court than in state court. That keeps pressure on Mr. Prebul to pay up while delaying the deadline for Mr. Bensusan's attorneys to share their evidence, Mr. Ray explained.
There would be no other reason to file the federal civil suit while cases are pending in the criminal division of federal court in New York plus two different state courts and federal bankruptcy court here in Hamilton County, Mr. Abbott agreed.
"We think it's proper to litigate in Tennessee, because that's where everybody is, except for Mr. Bensusan," Mr. Abbott said. "Filing multiple lawsuits in multiple jurisdictions just costs all the parties involved extra money."
Hugh Moore, the local attorney who has represented Mr. Bensusan during civil proceedings in Chattanooga, deferred all questions on the new suit to the New York City attorney who filed it, Gerald McMahon.
Mr. McMahon could not be reached for comment Monday afternoon.
In an interview with the Times Free Press last week, Mr. McMahon said his client was forced to use legal channels "to get as much money back as he can. It's an enormous amount of money to him."
In the new suit, he asks for $25 million in punitive damages plus attorney fees and compensatory damages and any other damages a jury would see fit to award him. Mr. Bensusan says Mr. Prebul used "deceit, artifice, subterfuge, and active concealment" to take at least $7.4 million of the $15 million he thought Mr. Prebul was investing for him, according to the suit.
Mr. Bensusan also says Mr. Greenwald conspired with Mr. Prebul to pretend to loan Mr. Bensusan money to open B.B. King Blues Club & Grill in New York, but actually just funneled some of Mr. Bensusan's own money back to him, the suit says. Mr. Greenwald then took $573,559 in interest payments on the "loan," Mr. Bensusan alleges.
All of this is still tied up in Hamilton County Circuit Court. Although Mr. Bensusan has received a judge's approval to dismiss his suit there, a counterclaim filed by one of the parties in that case keeps it alive.
The counterclaim, filed by an attorney for Mr. Prebul's Dayton, Tenn., Chrysler Dodge Jeep dealership - which was closed in December - introduces allegations of extortion and shady business practices against Mr. Bensusan. Circuit Court Judge Marie Williams must decide whether to allow the claim to move forward.
In a hearing on the matter Monday morning, Judge Williams indicated that if she does allow the case to proceed, she will grant a motion by Mr. Prebul to intervene in the case and countersue Mr. Bensusan.
To make matters even more complicated, attorney Jerrold Farinash - the court-appointed trustee overseeing the bankruptcies of several of Mr. Prebul's dealerships - has expressed interest in becoming a party in the civil suit as well.
Mr. Farinash is overseeing the sales of Mr. Prebul's bankrupt dealerships and says he should be involved in Mr. Bensusan's civil case because he is suing Mr. Bensusan for $9.1 million in the bankruptcy filings.
Meanwhile, Mr. Prebul is waiting to see whether he will be indicted on the criminal charges that led to his Feb. 10 arrest on 11 counts of federal wire fraud. So far, court records show prosecutors have charged him in a criminal complaint but have yet to publish formal charges in the case.
All of this adds up to a legal mess that isn't going away any time soon, Mr. Ray lamented.
"We can't unring the bell," he said, "and it's unfortunate for both (Mr. Prebul and Mr. Bensusan)."
Joseph Prebul: Chattanooga area car dealer with numerous franchises in Southeast Tennessee and North Georgia. Arrested in February on 11 counts federal wire fraud for allegedly defrauding his brother-in-law out of $7 million; forced to file for bankruptcy protection and liquidate dealerships. Said in recent civil court filings that his brother-in-law, Danny Bensusan, conspired to have him arrested because he couldn't immediately front a loan payment.
Danny Bensusan: New York-based jazz club mogul who owns the Blue Note and B.B. King Blues Club & Grill plus clubs in Japan and Italy; married to Joseph Prebul's sister. Says he wired more than $15 million to Mr. Prebul to invest for him, but instead Mr. Prebul used the money to cover personal and business expenses and never returned $7 million of it. Filed a $32 million civil suit in Hamilton County Circuit Court to collect damages, but later dropped the suit with the option to refile depending upon the outcome of Mr. Prebul's bankruptcy proceedings.
Jerrold Farinash: The federal trustee who is overseeing Mr. Prebul's bankruptcy filings and facilitating the sales of his dealerships.
Hugh Moore and Bruce Bailey: Chattanooga attorneys representing Mr. Bensusan in Circuit Court.
Christopher Varner and Wayne Peters: Chattanooga attorneys representing the defendants in Mr. Bensusan's Circuit Court lawsuit, which include businesses he did not declare bankrupt such as Prebul Chevrolet Inc. and Carolex LLC.
Thomas Ray: The attorney who represents Mr. Prebul personally in both civil and bankruptcy proceedings in Chattanooga.
Roland Riopelle: The New York City attorney Mr. Prebul has retained to represent him in criminal proceedings, which were initiated by the U.S. Attorney's Office for the Southern District of New York.
Prosecutors for the Southern District of New York: Have filed a criminal complaint against Mr. Prebul but have yet to release a formal indictment outlining the charges against him.
Julius Greenwald: Mr. Prebul's stepfather through marriage to his mother, Esther Prebul. Mr. Greenwald allegedly loaned $1.5 million to a company run by Mr. Prebul, Mr. Bensusan and family friend Gary Chazen and had to sue the company for breach of contract after Mr. Bensusan failed to continue interest payments on the loan. Is now a defendant in a federal civil suit filed in New York by Mr. Bensusan.
TSE Group LLC: The New York limited liability company that does business as B.B. King Blues Club & Grill in New York City's Times Square. Mr. Bensusan is considered the managing member of the group, but Mr. Prebul and Mr. Chazen also have stakes in the company.
Barry Abbott: The Chattanooga attorney who is representing Mr. Greenwald in his lawsuit against TSE Group.
Gerald McMahon: The New York City attorney who called himself simply a "legal adviser" to Mr. Bensusan until he became directly involved in the dispute with Mr. Prebul on March 20, filing a civil lawsuit against Mr. Prebul and Mr. Greenwald. Accuses Mr. Prebul's attorneys of unethical court filings.