Opinion ID: 728163
Heading Depth: 2
Heading Rank: 2

Heading: Jackson's Loan/Purchase from Goldston and Wilbourn

Text: 7 By the spring of 1985, D. Paradies' relationship with the first minority shareholders group soured. At that point, the government contends, D. Paradies sought to include defendant Jackson as a minority participant in Midfield. D. Paradies and Jackson were close personal friends. In 1980, Paradies and Echols hosted the wedding reception for Jackson and his bride, Maudestine Mimi Simmons. 6 8 In April of 1985, Paradies wrote a personal and confidential letter to Jackson requesting Jackson's assistance in obtaining space for additional shops in the airport. If the space was obtained by October 1, 1985, Paradies stated, the minority shareholders would receive an increase in management fees to 2%. If the space were not obtained, the fee would remain at 1.1% for those shareholders. Under the government's theory, D. Paradies' letter was an invitation to Jackson to capitalize on a near doubling of the minority participants' management fee increase. Soon thereafter, Jackson began to negotiate with Goldston to purchase his interest in Midfield. 9 Goldston told Jackson that he was experiencing financial difficulty, and purportedly offered to sell Jackson his stock in Midfield for $50,000. Jackson made a loan to Goldston for $50,000 through his wife Mimi, operating as Metro Consultants, Inc. 7 The government maintained that the purported loan was, in fact, a purchase by Jackson of Goldston's interest. Indeed, Jackson's check to Goldston on his personal checking account specified: For Metro Consultants--Purchase Stock. The government also introduced agreements which purportedly transferred Goldston's Midfield stock in the name of AEI to Metro Consultants. On October 1, 1985, moreover, Midfield terminated its management agreement with Goldston and entered into a new comparable agreement with Jackson's wife. Mrs. Jackson was to render administrative assistance in return for her portion of the 1.1% management fee. Also, in order to qualify as a minority business, Metro Consultants had to be certified as a minority-owned company. Jackson asked the Atlanta Office of Contract Compliance to expedite the certification for Metro Consultants because his wife wanted to buy out Goldston and Wilbourn. 10 After Jackson had already distributed the loan proceeds, he appeared before the City's Board of Ethics for an opinion on the propriety of his loan. Jackson told the Board that he had loaned $50,000 to Goldston, and that his wife wished to purchase Goldston's and Wilbourn's interests in Midfield. He also stated that Wilbourn's asking price was $275,000. Jackson also testified that he had discussed the matter with D. Paradies. Jackson assured the Board that if the transaction were approved, he would not vote on any airport concessions matters, and that he wanted to be up front with the Board. Noting, among other things, that subconcessionaires issues came before the Council frequently, and that Jackson's interest could have at least an indirect influence on Council decisions, the Ethics Board disapproved of the proposed purchase. Such an acquisition by Jackson and his wife, the Board concluded unanimously, would violate the Code of Ethics and would result in a breach of Jackson's fiduciary duty to the City. 8 According to the Ethics director, Jackson told him that he disagreed with the Board's decision, but that he would not undertake to do indirectly what [the] board had told him could not be done directly. 11 After the Ethics Board's decision, Jackson entered into another disputed transaction with Wilbourn, who, according to Jackson, was experiencing financial difficulty. 9 Purportedly, Jackson loaned Wilbourn $275,000 (the exact asking price identified by Jackson in his Ethics Board testimony) from Options International, Inc. (Options), a corporation created in the name of his son, Ira Jackson, Jr., but controlled by Jackson himself. 10 The transaction was to be effected in two installments: $150,000 immediately, and $125,000 payable on May 1, 1987. Wilbourn used $50,000 of the proceeds to buy Goldston's stock, and transferred all of his and Goldston's interest in Midfield to Hartsfield Concessions, Inc. (Hartsfield), a company purportedly wholly owned by Wilbourn. The loan from Options was secured by all the revenue from Wilbourn's interest in Midfield. The stock in Midfield, Jackson claims, was never transferred to him as security for the loan. 11 12 The government argued that this was a sham loan agreement so that Wilbourn, doing business as Hartsfield, would be the minority participant in Midfield on paper only, and that Jackson was the de facto owner, reaping the full benefits of Wilbourn's interest in Midfield. There is evidence, together with reasonable inferences, that supports the government's contention. Jackson admits in his brief that, upon Wilbourn's counsel's recommendation, Jackson was given some control over the funds of Hartsfield, and that Jackson was authorized to accept payments directly from Midfield. Indeed, evidence showed that Jackson initially went to the Paradies company offices to pick up the dividend and management checks, which were made payable to Hartsfield, then later these checks to Hartsfield were mailed to Jackson directly. The evidence also showed that the first twenty-three Hartsfield management fee checks were personally endorsed by Jackson and ultimately deposited into his own personal bank account. 13 Between December, 1985, and March of 1992, D. Paradies paid Jackson, through Hartsfield, fees and dividends, more than $1,049,000, nearly four times the amount of the original $275,000 loan. After the minority interests were transferred to Hartsfield, Wilbourn never received another payment from the Paradies Companies, and he had no further substantial contact with Midfield. The government showed that Jackson had complete control over the Hartsfield bank account (making deposits, writing and signing checks, and making tax returns), despite Jackson's claims that he never had control of Hartsfield Concessions, Inc. or use[d] funds from the corporation for personal loans or payments. (Jackson's Brief at p. 10.) The proof indicated, however, that after checks were deposited into the Hartsfield account, Jackson would immediately transfer the money to his own corporation, Options, which transacted no business except the receipt of funds from Hartsfield. Through this dummy corporation, Jackson spent hundreds of thousands on such items as a $350,000 condominium on Peachtree Road in Atlanta, another very expensive luxury home on Hilton Head Island, furnishings for his Atlanta residence, $100,000 in securities, and a $200,000 investment in a printing company. 14