A civil suit filed in Fayette Circuit Court charges Arron Rhodes, new owner of Buddy's restaurant at 854 East High Street, with embezzling more than $300,000 from his former employer, Comtronics Inc. of Lexington.
Rhodes is also the subject of a criminal investigation by the U.S. attorney's office, according to court documents filed by his attorney in response to the suit.
Rhodes bought Buddy's earlier this week from Debbie Long. Reached by telephone Wednesday, he said the deal was closed on Sunday.
According to the suit, Rhodes, 26, went to work for Comtronics Inc. in 2005. In June of that year, he became a 50 percent shareholder in Comtronics Enterprises, a separate company with the same address.
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The two companies, founded and owned by David Fried, have offices at 2456 Fortune Drive. According to its Web site, Comtronics Inc. manufactures vehicle intercoms, two-way radio accessories and headsets such as those worn by coaches at football games.
The complaint charges that between 2005 and his dismissal on Jan. 19, 2009, Rhodes embezzled $381,100.18.
Rhodes' attorney, Thomas Lyons, Friday denied the embezzlement and said the situation was "a business dispute."
However, Jerry Anderson, attorney for Comtronics, said, "They didn't have a falling out. He stole the money."
Rhodes has repaid some money, according to legal documents, taking the outstanding amount sought by Comtronics down to $317,737. plus interest, attorney's fees and punitive damages.
Lyons has not filed a response to the lawsuit in court, but twice has successfully obtained orders from Fayette Circuit Judge Pamela Goodwine allowing 30-day delays.
In seeking the delays, Lyons asked the court to hold the civil case in abeyance "pending the outcome of a federal criminal investigation against the defendant which is presently ongoing."
Lyons' motion said that Comtronics' claims against Rhodes are "presently the subject of a federal criminal investigation conducted by the United States Attorney's Office."
His motion went on to say that he understands an "Information and Plea Agreement are presently being negotiated between the United States Attorney and counsel for Arron Rhodes in the criminal investigation."
Lyons does not represent Rhodes in federal court. He told the Herald-Leader that he did not know who was representing Rhodes in the federal proceedings.
Lyons said the purpose of seeking the two delays was "to see if we could come to a mutually agreeable settlement."
However, Anderson, Comtronics' attorney, said there have been no settlement negotiations. "They have never made us an offer. They're just dragging this out," he said.
Comtronics will not take "anything less than $317,000," he said. "We can nail down the loss because of an audit by a certified public accounting firm," Anderson said.
Anderson will file a response in circuit court on Monday to give Rhodes an additional 20 days to file an answer. "But that's the last one," Anderson said.
Meanwhile, in federal court, Assistant U.S. Attorney Frances Catron said a notice of intent to file "an information" was filed in U.S. District Court in Lexington last week. Although she would not address this particular case, she said that filing "an information" generally means that charges are anticipated.
Embezzlement of more than $200,000 in federal court could carry between 27 and 33 months in prison without parole, Anderson said.
Asked if the legal proceedings could be an impediment to Rhodes' purchase of Buddy's, Lyons said, "I haven't spoken with him about that. My guess is the timing is not great."
He said he hopes the legal issues could be resolved so that they won't interfere with Rhodes' operation of the restaurant.
Rhodes could not be reached for comment Friday.
Long, the previous owner of Buddy's, was not available for comment Friday. She said Wednesday that she sold Buddy's so that she could concentrate on her other restaurant, Dudley's, which is moving to a new location on West Short Street.
By selling Buddy's, she said, "I've got one less restaurant to have to worry about. Plus, I've got a little cash in the bank." She did not say how much Rhodes paid for Buddy's.