NASHVILLE, Tenn. - The FBI wants to study documents California businessman William "Boots" Del Biaggio III gave to sports and government officials guaranteeing his share of the NHL's Nashville Predators and a new arena lease for the team.
The agency delivered subpoenas to the Metro Nashville Sports Authority and the Metro Nashville City Council Wednesday looking for information.
Del Biaggio is being sued for unpaid loans, deals being investigated by the U.S. Attorney's Office and the Securities and Exchange Commission over allegations he used brokerage accounts that weren't his for collateral.
Nashville's sports authority meets Friday in a rare executive session to hear from attorneys about Del Biaggio's bankruptcy filing last week and other legal issues surrounding his 27 per cent share of the Predators.
Sports authority chairman, Kevin P. Lavender, called Del Biaggio's legal problems surprising.
"There's no way to detect fraud on the front end," Lavender said Thursday. "Anytime you have something like this come out as a fraudulent act, and you and your contracts are impacted, it's absolutely a surprise. ... It was a shock and a surprise."
Del Biaggio's lawyer was travelling and did not immediately return a message from The Associated Press on Thursday.
Lavender, out of town on business, had not seen the subpoena and did not know exactly what information the FBI wanted. An attorney for Metro Nashville-Davidson County did not immediately return a message.
Del Biaggio's participation was key to the US$193 million purchase of the Predators from original owner Craig Leipold - who now owns the Minnesota Wild - by a group of investors who were mostly from Tennessee. Nashville and the sports authority finalized a new lease for the team's arena in April after lengthy negotiations and study.
"We took a long time to make sure we had the right guarantees and in the event something like this happened, the authority and the city would still be in the strongest position to deal with it," Lavender said.
"That's what we'll find out (Friday) from legal. What contracts are in default and what contracts have been reached? What are our rights and remedies and when should we exercise any of them?"
Del Biaggio filed for Chapter 11 bankruptcy last week in California, and a list of the biggest unsecured claims against him shows he has at least $57 million in unpaid loans and other financial obligations.
Included in that are $10 million owed to Modern Bank in New York that Del Biaggio used to help buy his share in the Predators, $10 million owed to Leipold and $7 million owed to another company that helped del Biaggio purchase the team.
A federal judge granted a request from one of Del Biaggio's creditors to appoint a Chapter 11 trustee, and his creditors asked that Todd Neilson be appointed to the job. Neilson sold off Bruce McNall's share of the Los Angeles Kings after he declared bankruptcy in 1994.
Lavender, who works for a bank himself, said he isn't surprised by the FBI's subpoena and expects every regulatory agency with an interest to investigate Del Biaggio's financial dealings. The sports authority isn't owed any money, but Del Biaggio did have a prorated guarantee on the Predators' arena lease.
"We've got the best and the brightest on the case to find out what he did, what he didn't do and who's impacted. Hopefully, those agencies will give us the best shot at recouping that. ... We'll be looking to shore that up," Lavender said.