'Longtime Friend,' Thompson Adviser Has Rap Sheet

 

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In 1983, Martin was arrested again, five days after appearing in court for the previous charges, the records show. This time, authorities arrested him in connection with a cocaine dealing scheme, in which Martin helped sell an ounce of cocaine to an undercover policeman and was conspiring to sell him another pound. He eventually pleaded nolo contendere to felony charges of trafficking and conspiracy and received five years' probation.

After his probation ended in 1989, Martin settled in Ooltewah, Tenn., and operated dozens of businesses, state records show, ranging from a pizza parlor to environmental cleanup firms and real estate developments. Many folded, leaving behind them trails of outstanding tax debts, unhappy former employees and furious investors.

In a number of cases in which debtors have accused Martin of fraud or breach of contract, judges tried to block Martin from moving assets to other states, where they would not be subject to a state court's ruling.

Despite his past, Martin appears to lead a comfortable existence. He owns a secluded mansion on a semi-private island in the Gulf of Mexico, estimated to be worth $2.4 million. He also owns two planes, according to public records. At least one is frequently used by Thompson, his family and campaign aides. The former Tennessee senator travels so often on Martin's planes, they are known inside the campaign as "Thompson's Airforce," according to one Web site connected to the campaign.

Martin has had to defend himself against roughly a dozen lawsuits from angry investors who accused him of breaching contracts and defaulting on loans. In several cases, judges have acted to prevent Martin from moving assets outside of the state courts' reach. In no case reviewed by ABC News did Martin admit wrongdoing.

In one such case, Ellsworth McKee, the chairman of Chattanooga-based Little Debbie snack foods is currently suing Martin for $8 million for defaulting on a 1998 loan made out to one of Martin's waste disposal companies, Four Seasons Environmental firm. The suit alleges that with interest, Martin owes McKee $20 million. Martin has said that he doesn't owe money because McKee canceled the loan.

In the suit, McKee, formerly a close business associate, asked the judge for a temporary order blocking Martin from selling his $2 million Tennessee house, in an effort to keep Martin from moving his assets out of state. The court granted the order.

Another suit filed in Tennessee in 2005 also alleges Martin breached his contract by defaulting on a loan and tried to move his assets beyond the court's reach. Dr. Scott Hodges sued Martin for $800,000 after investing in a new subdivision outside of Chattanooga that Martin was planning to develop. The suit alleged that Martin "carried out a premeditated plan and design to defraud plaintiff, to misappropriate funds."

When Martin didn't respond to the lawsuit, Dr. Hodges claimed that Martin "has removed himself from this state in an effort to avoid creditors including plaintiff." Without admitting wrongdoing, Martin recently settled the suit with Hodges for an undisclosed amount.

In separate filings, former employees of Martin's businesses have also sued Martin and his former businesses, variously alleging fraud, breach of contract and discrimination. Martin settled one out of court without admitting wrongdoing; a judge ruled against Martin in another. The plaintiff alleging discrimination told ABC News he dropped his suit because he did not have the money to pursue it.

Martin's lawyer, John P. Konvalinka, told the Washington Post that "for a man engaged in 1,000 transactions a year, he doesn't have near the amount of litigation that some of my clients do."

Kate McCarthy contributed to this report.