'Longtime Friend,' Thompson Adviser Has Rap Sheet

Records show Philip J. Martin sold drugs, took bets and stole liquor.

Nov. 4, 2007 — -- Since March, Philip J. Martin has traveled around the country on behalf of GOP presidential candidate Fred Thompson, flying the former senator to events and working to raise more than $6 million for Thompson's campaign.

In the 30 years prior, Martin raised hell, according to public records and numerous lawsuits reviewed by ABC News, as a bookie, drug dealer and accused double-dealer.

Police files show Martin was convicted of or pleaded guilty to multiple felonies in the 1970s and 80s and started and folded dozens of businesses in the 1990s. More recently, former investors have been chasing millions they say they are owed by Martin's former companies.

A longtime friend of Thompson's, Martin helped raise money for both of the candidate's Senate bids. But this year he appears to enjoy unparalleled roles at the heart of Thompson's campaign organization: as head of the "First Day Founders," a Thompson campaign fundraising group which secured millions in pledged donations prior to Thompson's official announcement, and as the unofficial aviation service to the candidate. Through July, the Thompson campaign has paid Martin more than $140,000 to use his private jets, according to campaign finance records.

Those flights have saved Thompson's campaign more than $100,000, the Washington Post reported Sunday, because of a campaign finance rule, since changed, that allowed candidates to pay a fraction of the usual price of such chartered flights.

In a television appearance Sunday, Thompson, a former assistant U.S. attorney who for several seasons played district attorney Arthur Branch on the popular television show "Law and Order," affirmed his friendship with Martin but said he first learned of his criminal past on Saturday. However, Thompson said, Martin had "paid his debt to society" and he would not "throw him under a bus" because of the revelations.

Thompson did not say how long he has known Martin, or how the two men met. A spokeswoman for the Thompson campaign said she was "not going to expound beyond" Thompson's comments or information already reported. Neither Martin nor his lawyer responded to requests for comment.

Answering questions from an ABC News producer covering a Thompson campaign stop in Nashville in June, Martin denied he was a member of Thompson's inner circle, but described himself as a volunteer, "just a friend" of the former Tennessee senator who has raised more than $6 million for his presidential campaign.

"It's just been really exciting," Martin said.

Martin's history is as colorful as it is long. In 1977, police arrested the Tennessee native, then 19-years-old, after they said he sold 11 pounds of marijuana to an undercover cop in Florida, state criminal records show. He pleaded guilty to that felony and to one count of bookmaking, the documents indicate.

In December 1982, police arrested Martin for what they said were several parole violations, including illegal gambling on Christmas Day, those same records show. He was also accused of stealing liquor from a Florida county sheriff's office. Three of the gambling charges and the theft charge were later dropped.

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.