Is this KY judge using a fake document in a lawsuit? Businessman says yes. He says no.
Is a judge who is running for a seat on the Kentucky Court of Appeals using a fake document in an effort to get his daughters a lucrative interest in a liquor store?
Or did a businessman let the judge and his partner work to get the store up and running, then cut them out after the profits started rolling in?
Those are the competing narratives in a fight over ownership of the first liquor store that opened in London after city voters legalized package alcohol sales in January 2016.
The case pits Michael O. Caperton, a circuit judge in Laurel and Knox counties, and business partner Dave Moore Jr., against Terry Blankenship, a Laurel County man who owns several businesses, including one that says it’s the world’s largest supplier of recreational-vehicle parts and has been a NASCAR sponsor.
The case is a tough one, with a good deal of acrimony and no sign of any middle ground.
“This is as complex a factual case as I have ever dealt with,” Judge William Engle III, who is handling the case, said in one hearing.
At stake is two-thirds of the stock in a liquor store on busy South Main Street in London.
Caperton is a candidate in the Nov. 5 election for a seat on the Kentucky Court of Appeals, where he served from December 2007 through the end of 2014.
He was a district judge in Laurel and Knox counties from 1994 to December 2007, and has been circuit judge for the counties since December 2016, according to the state Administrative Office of the Courts.
Caperton made headlines in 2005 by offering some offenders the choice of attending worship services instead of going to jail. Some people argued the practice was an improper entanglement of church and state, but Caperton disagreed.
He cites the initiative on his campaign Facebook page, saying he gave “those convicted of alcohol/public intoxication the option to attend worship services in hopes that it would help them and their families.”
Caperton said he still gets letters from people saying “I helped them to find Christ,” and that he’s grateful for the chance to make a difference in the community.
His opponent in the Court of Appeals race is Jacqueline M. Caldwell, an attorney from Nelson County who has worked as an assistant county prosecutor and in private practice. Caldwell said the allegations against Caperton are “pretty concerning for a host of reasons, not just because I’m a candidate, but as a voter, and practicing attorney, as well.”
Caperton has adamantly denied doing anything wrong, including being involved in using a false document.
Dispute over stock options
These are the competing accounts, as set out in a court record that stretches to thousands of pages:
In 2015, Moore, then an employee of a concrete company, approached Caperton, who was then in private practice, with an idea to try to get licenses for a liquor store in London if voters approved package alcohol sales.
Caperton also put up $7,500 to help hire a consultant to push for a successful wet vote in London, Moore testified.
The two needed an investor, so they approached Blankenship, who agreed to finance the venture with a loan to be repaid over six years from the profits.
The business was incorporated in December 2015 with Blankenship as president. It was named Buddy’s, after his dog.
Voters in London, Barbourville and Williamsburg approved package alcohol sales in early 2016.
Under their agreement, Caperton drew up applications for liquor licenses in all three towns. Buddy’s received a license for a store on South Main Street in London.
Moore and Caperton had arranged to lease a former pizza restaurant at the site, and Moore located a contractor, worked with the building inspector and oversaw renovations to the building.
Moore had a key to the store and was listed as the first contact for the security service, indications of his partnership in the venture.
Caperton and Moore say Blankenship signed an agreement in April 2016 granting Moore an option to buy 333 of the 1,000 shares in Buddy’s for $1 a share, and a second option for Caperton’s two daughters to jointly buy another 333 shares.
That would have left Blankenship with one share above 33 percent of the business.
The option agreements were compensation for the work Moore and Caperton had done. Caperton said he witnessed Blankenship sign the document.
Buddy’s opened in mid-November 2016.
A month later, Moore and Caperton’s daughters had their options and checks delivered to Blankenship’s office to buy stock, but Blankenship rejected the options and returned the checks in January 2017
“This entire case is about Mr. Blankenship obtaining a turn-key liquor store through the efforts of Mr. Caperton and Mr. Moore, not honoring his part of the agreement,” and then dragging out the case in court, Moore’s attorney, Gary W. Napier of London, said in one document.
Moore, Caperton and his daughters sued in April 2017 to enforce the stock options.
Did they have a deal?
Blankenship’s story is very different.
He said he told Caperton, who had done legal work for him, that he would apply for a liquor license if London went fully wet.
Caperton handled the application process, and after Buddy’s got a liquor license, Caperton told Blankenship he and Moore wanted a piece of the business. Caperton offered to take a 20 percent share as his fee for the work he’d done.
Blankenship, who put more than $400,000 into the business, rejected the offer.
He has argued that Caperton’s request would have been far too much money for the legal work he did, and that Moore had nothing to do with getting the store running except as an employee of the concrete company.
Blankenship said flatly that he didn’t sign the options and never saw them until December 2016, when he discovered “Caperton / Moore were trying to defraud him, blackmail him and / or shake him down with the fraudulent and void ‘option to purchase,’ ” one of his attorneys, Mary G. Hayes, said in a court document.
Blankenship testified his signature on the options was a “decent forgery,” but that he didn’t know who had done it.
Blankenship said he never had a deal to finance a joint venture with Moore and Caperton, and that Caperton acted only as a lawyer working for him, but Moore and Caperton argue they were partners in a joint venture with Blankenship.
There was no written agreement spelling out the roles of each of the partners. Blankenship’s attorneys have argued a written agreement would have been required for Caperton to go into business with him.
Blankenship countersued, arguing that Caperton committed malpractice, violated ethics rules and failed in his duty to Blankenship by trying to get a benefit for his daughters at the expense of his client.
Weak denial or fake document?
Napier said Blankenship waited months to claim he hadn’t signed the options, that his denial is “weak at best,” and that he has changed his story over time, while Hayes said Caperton and Moore have spun “exceptionally imaginative yarns.”
Napier and Corbin attorney Howard O. Mann, who represents Caperton, have argued that text messages provide evidence that Blankenship signed the options on April 26, 2016, when Caperton said he did.
The texts show Caperton contacted Blankenship the day before to set up a meeting for the next morning, and then texted at 8:45 a.m. that day to say he was running late.
Blankenship, however, said he had a meeting at a logging project at 9 a.m. on April 26 at a site 30 minutes or more from his office, meaning he wasn’t at his office when Caperton sent the 8:45 a.m. text.
Blankenship’s attorneys have raised the potential that Caperton drew up the disputed stock agreements months after Blankenship allegedly signed them, then backdated them.
“There are a number of methods to fake a date on a computer that a document is produced,” Blankenship’s attorneys said in one document.
There may not be a resolution until August 2020, when the trial is scheduled.
