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Davis on Receiving End of Suit

He is accused by the family of a Raider co-founder of denying his partners access to financial documents and misusing funds.

October 16, 2003|Sam Farmer | Times Staff Writer

As the litigious leader of the Oakland Raiders, Al Davis has a reputation for suing first, asking questions later.

Now, he's on the receiving end of a lawsuit that seeks to oust him as the team's top man.

The family of the late E.J. McGah, whose father was a co-founder of the team, is claiming in Alameda County court that Davis has misused team funds for personal gain and has denied the family access to Raider financial records.

"We're alleging that there has been mismanagement and misuse of funds," said Los Angeles attorney Neil Papiano, who represents the McGah family, which owns 31% of the Raiders. "If that's not true, show us it's not true. If it is true, the partner should be replaced."

Davis, 73, was hired as coach and general manager of the Raiders in 1963 and eventually acquired an ownership stake in the team. He now owns 38% of the franchise, more than any of the five other partners.

The Raiders are worth an estimated $576 million, according to Forbes magazine, which ranks them 21st in value among the league's 32 teams.

According to the lawsuit, which was filed Friday, Davis' refusal to open the books is hampering the McGah family's ability to file state and federal tax returns and to find a potential buyer for its share.

Papiano said that it's illegal to deny partners access to the partnership's financial records, and that team officials have responded to requests by releasing dribs and drabs of information.

"They just won't show us the documents," Papiano said. "We're talking about hundreds of millions of dollars. We've been trying for nine months to get [the financial records]. We've been getting a ham sandwich instead of a steak."

Papiano faxed a letter to the Raiders on Wednesday asking them not to discard or destroy any financial documents.

According to the lawsuit, Davis used team earnings for a private jet, cars and "other accommodations" for his brother, and the purchase of expensive suites and floor seats to Laker and Golden State Warrior games. The suit also alleges Davis decorated his vacation home in Palm Springs by using team funds to hire a Raider employee to do so.

The Raiders say the lawsuit is frivolous and without merit.

Said team attorney Jeff Birren: "They're lies told by liars."

Four decades have passed since E.W. McGah brought Davis on board to coach the fledgling Raiders.

By 1975, Davis was in control of all business operations for the team, using legal avenues to push aside the club's other co-founder, P. Wayne Valley.

Davis' "all-consuming goal is the end, and he'll use whatever means to get there," Valley's son Mike told the San Jose Mercury News in 1991.

Now, the McGahs are claiming in their lawsuit that Davis is angling for another power grab. In their lawsuit, they say he is interpreting a 1999 partnership agreement to his benefit and to the detriment of the other partners.

In the months before his death in 2002, E.J. McGah transferred his partnership interests to his grandson, Sherratt Reicher, who spent the last eight years working for the Raiders.

The partnership agreement states that if a partner dies and that partner's shares are distributed to more than one family member, the new owners lose the rights afforded limited partners. But, if those shares are transferred to only one person, that person retains limited-partner status.

The lawsuit disputes the Raiders' claim that Reicher has lost limited-partner status.

Not only do limited partners have the right to examine the team's finances at any time, they have voting rights as members of the partnership. By all accounts, those voting rights are worth millions of dollars.

"If the McGahs lost their voting rights, then Al Davis would have absolute control over the limited partnership," said Randy Harris, a tax attorney representing the McGah family. "It's difficult to say how much of a drop in value that is, but it's a big drop. A third, a half, two-thirds of the value move from the McGah side of the ledger to the Al Davis side."

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