DALLAS - The city of Eufaula, Okla., and a bondholder in a failed amphitheater project filed a lawsuit last week against a trustee and two underwriters of a defaulted $5 million bond issue.
Eufaula and bondholder Jack Eldridge allege in the lawsuit that mismanagement by the trustee, Liberty Bank & Trust Company of Oklahoma City, led the Eufaula Industrial Authority to default on bonds sold to build the Mega Star Amusement Complex. The authority sold $5 million of revenue bonds in January 1994 to build the music-oriented tourist attraction.
Earlier this year the bank began foreclosure proceedings after learning that the authority was delinquent on interest payments and is $1.5 million short of the cost to finish construction of the amphitheater.
A spokesman for Liberty Bank didn't comment by press time. Officials with the two Wichita, Kan.-based underwriting firms also named as defendants in the lawsuit - Riedl & Co. and Cooper Malone McClain Inc. - hadn't seen the suit and declined to comment in detail on the allegations.
"Neither our company nor Cooper's company sold the bonds to the people who brought the suit," said Jerry Riedl. "So I'm totally in the dark." It is unclear who actually sold the bonds to Eldridge.
But the lawsuit brought in McIntosh County District Court is seeking to become a class-action case on behalf of all bondholders. The suit alleges that the defendants should have known about financial problems with the project and problems with its promoter, Sam Medley. Plaintiffs want a receiver appointed for the Mega Star complex.
Kay Wall, the Eufaula attorney who brought the lawsuit on behalf of the city, couldn't be reached for comment Friday.
Problems with the project were revealed late last year when Oklahoma auditor Clifton Scott reported questionable payments for land and other services, unaccounted-for funds, and other possibly illegal activities involving the amphitheater.
The Eufaula authority wanted to build a tourist attraction in southeast Oklahoma to compete with the booming music industry in nearby Branson, Mo. The 26,000-seat amphitheater, designed to draw music fans to one of the biggest man-made lakes in the country, was to be part of a city-funded complex on Lake Eufaula that was to included bumper boats, miniature golf, and a water slide.
