Battle over Maddox Foundation ends in settlement

A significant amount of money will return to Tennessee for charitable causes here

Email | Print By Richard Lawson

If there isn't a major hiccup, the battle over the Maddox Foundation's assets has ended in a draw.

Davidson County Probate Judge Randy Kennedy today approved a settlement agreement between the battling sides that will bring $55 million back to Nashville. The money will be returned to the Maddox Foundation here that the late Dan Maddox started in 1968. It will be renamed the Dan & Margaret Charitable Trust.

"I think this is a great settlement for both sides," Davidson County District Attorney Torry Johnson said in a news conference this afternoon. Johnson said both sides decided to push for a settlement because of the prospect of protracted and expensive litigation. Legal bills have already run well above $1 million.

Johnson and Tommye Maddox Working, Dan Maddox's step-granddaughter, have been fighting to get the assets returned to Tennessee for the past three years. They claimed that since Robin Costa, the foundation's president, moved the foundation to Hernando, Miss., she had squandered millions on such expenditures as lavish business trips and purchases of a minor league hockey team and an arena football team. The battles took place in Mississippi and Tennessee courts and included sordid revelations of an alleged relationship Costa had with former Mississippi Gov. Ronnie Musgrove, the foundation's Mississippi attorney, and details of a sexual harassment case against Costa.

Johnson couldn't say specifically how much would be left in Mississippi. The foundation has about $81 million in liquid assets and another $20 million to $30 million in real estate assets, depending on how they are valued, he said.

The settlement and asset distribution agreement includes a detailed analysis of the entire Maddox portfolio, which is distributed among several investment managers (a copy of agreement is available at this link). The analysis starts on page 33 of the document at that link.

The road to a settlement began a couple of months ago, with Woody Woodruff, the Waller Lansden Dortch & Davis attorney representing Johnson and Working, meeting one-on-one with Costa's foundation attorney in Nashville, Aubrey Harwell of Neal & Harwell.

There are still some hoops to jump through, however. In Mississippi, a DeSoto County Chancery Court still has to approve the deal, but that isn't expected to be a problem. Both the Mississippi and Tennessee Attorney Generals have approved the settlement. Both sides need some rulings from the U.S. Internal Revenue Service.

Johnson said $1 million has already been transferred to Tennessee. Once the DeSoto County court and the IRS rule, another $19 million comes and the remaining $35 million is supposed to be transferred 60 days later.

Johnson and Tennessee Attorney General Bob Cooper along with consultants will put together a board of trustees for the Dan & Margaret Charitable Trust as well as regulations for operating the trust. Kennedy will have final approval.

Woodruff said the goal is to make the trust a model of transparency and governance for others to follow. "There's going to be no question about the trust being squeaky clean," he said.