Alexandria General District Court Judge Robert T.S. Colby was looking for a good retirement income last summer when he bought WQBX, a radio station in southern Virginia's New River Valley.
Broadcasting, however, did not turn out to be as lucrative as the judge expected. Under his ownership the station changed from a Christian format to country music and changed its call letters to WFNR-AM.
But the station continued to lose about $10,000 a month and Colby has placed it in Chapter 11 bankruptcy proceedings. A federal bankruptcy judge has said the station is in danger of becoming "a bucket of bolts."
Colby, 57, is suing the Washington man who brokered the sale, saying that he interfered with the station's operations. The broker, in turn, claims the judge made misrepresentations to him during the negotiations, statements that the broker said he accepted on faith because Colby is a judge.
In a lawsuit filed in U.S. District Court in Alexandria, Colby alleges that Kenneth Strawberry, a State Department official who helped found the radio station and then acted as a broker for the former owners, interfered with Colby's purchase and operation of the radio station. Colby is asking for $900,000 in damages.
For his part, Strawberry claims that Colby verbally agreed to some financial arrangements as part of the sale but did not want them in the written contract, "to protect him as a judge," according to court records.
"Colby represented . . . that it was better not to clutter up the agreement with that sort of thing," Strawberry alleged in court papers. He claimed that Colby failed to meet those conditions.
Colby referred inquiries about the station in Christiansburg, in southwest Virginia, to his lawyer, Richard G. Wohltman, who said that the judge "was looking for an investment, something he could do after he retired."
Colby is "managing the station in absentia, by telephone," Wohltman said. When he is not hearing cases at the Alexandria Courthouse, Colby works out of an office in Old Town, where a bronze plaque outside lists the New River Broadcasting Corp. He is president and sole shareholder of the corporation that owns the radio station.
The station "is losing a lot of money," said Wohltman, "but he has every reason to believe it will turn around; sales are going up and things are looking a little bit better."
The story began last summer when Strawberry, a State Department employe whose hobby is radios, was looking for a buyer for WQBX, which then was a Christian music station owned by Mary Lou and F. Richard Lee. The Lees had asked Strawberry to be their broker. Strawberry said that he was introduced to Colby by George Forschler, who is a friend of Colby's and a general in the Air Force Reserve.
On Aug. 17 a purchase agreement was signed by the Lees, Colby and Strawberry. But differences soon began to surface between Strawberry and Colby.
Strawberry says Colby promised him $20,000 or 20 percent of the capital of the new station. In addition, Colby agreed that New River would take responsibility for a $476,000 promissory note that the Lees owed on the business and in which Strawberry had a 35 percent interest, Strawberry claims.
"Colby, on two different occasions, assured the defendant that the contract as written was only to protect him as a judge and that Colby would do what was necessary to settle with the defendant on the matter of the 20 percent stock or $20,000 and also the promissory note," Strawberry claims in the court records.
Since he "believed Colby would honor his verbal promise, Strawberry did not insist that the promise be reduced to writing . . . . On Colby's representations that he was a judge, Strawberry had faith in the honesty and integrity of Colby, which Strawberry later learned was unfounded faith," the court papers say.
Wohltman said the Aug. 17 purchase agreement clearly states that New River would not assume responsibility for the note, although it would make payments on it. The distinction is crucial, according to Wohltman.
"The heart of the matter is that when New River Broadcasting signed its contract it intended to keep its right to own property bought from WQBX by making payments on the note . . . but didn't choose to assume the underlying obligation," he said.
The Lees and Strawberry began to have second thoughts about the deal and the Lees told Colby they would not sign the final sales contract on Oct. 12 the way it was written. Colby responded by getting a court order in Alexandria Circuit Court on Oct. 11 forcing them to go to settlement on the property.
On Nov. 5 Strawberry asked the Federal Communications Commission to reconsider the transfer of the radio station's license to Colby.
A month later Colby sued Strawberry for "intentional interference with contract and civil conspiracy."
An FCC spokeswoman confirmed that Strawberry's request had been received and said a response would be issued in about three weeks.
Colby placed his New River Broadcasting into Chapter 11 bankruptcy proceedings in January, a procedure intended to protect businesses in debt while they reorganize. When Colby sought to lend the radio station $50,000 of his own money, Strawberry objected, arguing that to make the station a success requires expertise that Colby does not have and the station would only incur more debt.
Bankruptcy Court Judge Martin V.B. Bostetter Jr. allowed Colby to make the loan, explaining: "If he doesn't put money in it, it looks to me like the whole thing will become a bucket of bolts."
"All of this, which appears to be bad business on my part, was done because the man was a judge," Strawberry said. "I was elated finally to have a judge getting involved in this matter, and his agent is a general."
The case is set for trial this month.