Rest of Grand Station lawsuit thrown out

Published 12:00am Saturday, May 31, 2014

The remainder of a federal lawsuit between investors involved in a botched purchase in 2012 of the defunct Grand Station Casino has been thrown out of court by a federal judge after arguments against two of 10 parties in the case were dismissed in March.

Documents filed last week in federal court in Jackson show U.S. District Judge Tom S. Lee threw out claims filed in January by AGT Capital LLC against M Street Investments Inc., which had tried to buy the vessel from bankruptcy. Terms of closing weren’t met and the boat was auctioned for scrap in April 2013. The casino’s adjacent hotel was purchased three months later by Vicksburg Hotel LLC.

AGT sued as an assignee and successor in interest to Alexandra Trust and Avondale Shipyards Inc., two minor investors in M Street. All three entities are based in Texas and headed by Richard Sterritt, a Texas businessman who served nearly three years in federal prison in the early 2000s for securities fraud, money laundering and filing false income tax returns.

The suit had said Great Southern Investment Group Inc., which had operated the gaming venue’s adjacent hotel, had no legal claim to the 117-room facility due to issues over how votes were taken in June 2012 to replace M Street’s corporate board. U.S. District Judge Tom S. Lee ruled the claim was baseless, citing multiple points of case law.

Nine groups and individual investors were named as defendants in the case. In March, Lee agreed with two of them that the court lacked personal jurisdiction over them because neither was as involved in the venture’s business dealings as Sterritt and his front companies alleged them to be.

Earlier this month, the Mulberry Street hotel reopened as Portofino Hotel, part of the Ascend Hotel brand of lodgings owned and operated by independent franchisees of Choice Hotels International Inc.

In an email, one of the defendants, Donald A. Bailey, a Texas venture capitalist, termed the suit “baseless” and praised the judge for his statements.

“This may not end his attacks on us but at least it’s a start,” Bailey said, referring to Sterritt. He continued, “It is simply unfair for Sterritt to pile on the hotel purchaser.”

In a related case, the hotel’s new owners have asked U.S. District Judge Henry T. Wingate to order removal of a lis pendens Avondale filed on the hotel property in October. A trial date has been set in that matter for Feb. 17, 2015. Briefs filed this week showed AGT and Sterritt’s trust entity have countersued the hotel owners. The Texas groups claimed their involvement in the now-dismissed federal case caused them to miss certain filing deadlines in the lien case.

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