News: CJ Exclusives

Official Owned Part of Theater Co.

Records: Economic developer owned part of company he was recruiting

A state-funded economic developer who recruited Randy Parton to headline a theater in northeast North Carolina owned a one-third interest in the company that managed the theater, documents show.

The developer, Rick Watson, owned an interest in Moonlight Bandit Productions while he was recruiting Parton to build the theater, according to signed records given to Carolina Journal by a source who asked not to be identified.

Watson was president of the Northeastern North Carolina Regional Economic Development Commission and the related organization North Carolina’s Northeast Partnership, Inc., both having headquarters in Edenton.

Moonlight Bandit was formed Feb. 11, 2005, but public records do not disclose the names of the members at the time of the initial filing. The organizer was Samuel W. Whitt, a lawyer with the Sanford Holshouser law firm, now based in Cary.

Ernest Pearson, another lawyer with the firm, also was the legal counsel to the Northeast Commission and partnership organizations. Pearson obtained a 3 percent interest in Moonlight Bandit.

Parton, representing Moonlight Bandit, and city officials signed an agreement June 30, 2005, for the city to build a theater and turn it over to Parton to manage. The city borrowed $21.5 million for the project. The state contributed an additional $6 million.

A document obtained by Carolina Journal entitled “Operating Agreement of Moonlight Bandit Productions, LLC, a North Carolina Limited Liability Company” [54MB, 33-page PDF], detailed how the new company was to operate and listed what share of the business each member possessed. Eight people signed the agreement March 2, 2006. The agreement references the earlier formation of the company in 2005 through the filing of articles of organization with the N.C. Secretary of State.

Watson said his 33 percent ownership in Moonlight Bandit did not commence until March 2, 2006. When asked whom the owners were when the organization was formed in 2005, he said he did not know.

Just prior to the release of a state audit on the commission and partnership organizations, both boards terminated their relationships with Watson and Pearson on March 20, 2006. Watson told CJ that he received more than $200,000 in severance pay.

But one document shows that Watson was directing business shortly after the project was announced. An Oct. 4, 2005, memo to Ernest Pearson signed by Parton and Watson directed Pearson to distribute from a Moonlight Bandit account, “$2,000 payable to Arlene Yates for minority entertainment consulting.”

Yates is the wife of Windfall Mayor Fred Yates, who was on Watson’s commission and partnership boards of directors. When asked about the memo Monday, Watson said the signature on the document was not his and that he was not involved in directing funds from Moonlight Bandit before 2006.

Watson also said that he, the Parton family, and their lawyer will hold a press conference later this week to address various “conspiracies.”

Pearson said Monday that he could not discuss any of the documents because of attorney-client privilege.

The agreement shows the initial financial contribution and the percentage membership interest:

• Randy and Deb Parton paid $100 for a 57 percent interest.

• Watson paid $100 for a 33 percent interest.

• Brenda Womble paid $100 for a 3 percent interest.

• Lewis C. Lane and Chari D. Lane paid $100 for a 2 percent interest.

• Pearson paid $100 for a 3 percent interest.

• Frank Harper paid $100 for a 2 percent interest.

Womble is a social acquaintance of Watson. Lewis “Rocky” Lane is a business associate of Pearson at Sanford Holshouser. Harper is a CPA from Snow Hill.

Financial records released by the city show how Moonlight Bandit spent $254,000 of funds advanced by the city. Some of the money was spent at state ABC stores, trips to Las Vegas, and apartment rent for Watson’s son Jason. Pearson signed several of the checks.

Records show that $65,000 went to the Sanford Holshouser law firm Sept. 26, 2005. The authorizing signature for that payment to his own firm was Pearson, and he also authorized the payment to Arlene Yates.

Watson and Pearson’s role in Moonlight Bandit Productions changed on Feb. 16, 2007 when Parton filed amended documents that left him as the sole manager of Moonlight Bandit and four related companies. The public records do not make clear whether Watson or the others have any current connection with Moonlight Bandit.

Since the theater opened for the first show July 26, city officials have been concerned about the low attendance and Parton’s management operation of the theater. The mayor and other city officials banned Parton, who appeared to be impaired or intoxicated, from the show before it began last Thursday night.

This was the latest in a series of setbacks for Parton and the theater, which city officials had hoped would spur a Branson, Mo.-style entertainment mecca. Late last month city officials scrapped their contract with Parton and hired a new firm to manage the theater.

As the 7:30 p.m. show was scheduled to begin, Parton went out the back door of the theater. He was met by reporters from Carolina Journal and WRAL-TV. [Watch WRAL-TV’s video of the impromptu press conference] He said city officials told him to leave, but he would not explain why. He denied being intoxicated. Officials of the theater’s new management company said he was “under the weather.” He has not performed since, but his band has continued to play without him.

The city council is expected to consider ending all relationships with Parton at tonight’s meeting.

Don Carrington is executive editor of Carolina Journal.