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VOL. 123 | NO. 153 | Wednesday, August 6, 2008

Lee Drops MLGW Suit, Begins Image Revamp

By Andy Meek

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PURSE STRINGS: If the Memphis Light, Gas and Water Division board of directors approves the payment of a large legal bill that Joseph Lee, the company’s former president and CEO, is asking MLGW to pay, the Memphis City Council will still have to approve the decision. -- PHOTO BY BILL DRIES

Joseph Lee, the former president and CEO of Memphis Light, Gas and Water Division, has dropped a breach of contract lawsuit he filed against the utility company last year.

Lee filed suit last summer against his former employer after he was indicted on federal bribery and extortion charges and after MLGW informed him he would no longer receive certain executive perks. One of those benefits involved the utility company picking up his legal fees.

Lee filed a motion in Shelby County Chancery Court July 16, however, stating his intention to voluntarily dismiss his lawsuit over the matter. That move came only a few weeks after federal prosecutors announced they were dropping the charges against him.

Reversal of fortune

The federal probe that focused on Lee stemmed from revelations that former Memphis City Council member Edmund Ford Sr. had been allowed to rack up some $16,000 in unpaid bills to the company without an interruption in utility services. Prosecutors believed that leniency was the result of Ford’s support of Lee’s selection by the City Council in 2004 to head MLGW, among other things.

Joseph Lee

But now, in the space of about two months, Lee has gone from being a man under indictment to a business consultant with new-found leverage. The leverage comes from the fact that prosecutors in June announced without warning they were abandoning their case against him.

In turn, Lee reportedly dropped his lawsuit to smooth the way for MLGW to pay the six-figure bill covering his legal expenses from the utility scandal. The expenses were amassed over 18 months starting in early 2007.

Lee has worked for the last month or so as a business consultant for CDA, a company in Memphis that provides security services for government agencies and private groups.

Memphis Mayor Willie Herenton told members of the media last month that he’d be happy to have Lee back in the ranks of city government, where Lee served as director of finance before he moved over to MLGW. And that prospect could materialize sooner rather than later.

New beginning

Herenton had no comment about the matter this week. But Lee’s attorney, Robert Spence, said while no job offers in local government have been extended to Lee yet, he expects they will be forthcoming at some point.

“I’m not sure exactly what, but I do anticipate him being invited to return to local government,” Spence said.

When asked if that was only an assumption or based on something tangible, he replied: “It’s tangible. But I can’t really share it with you.”

Spence already has sent MLGW a bill for more than $346,000 in attorney’s fees related to his representation of Lee. MLGW’s board of commissioners could decide as early as its regularly scheduled meeting Thursday whether the utility company will pay that bill.

Spence said it is his understanding the matter will be discussed then. An agenda for the meeting had not been prepared by press time, but an MLGW spokesman said that as of Monday afternoon the Lee matter was not scheduled to be addressed Thursday.

But even if the MLGW board signs off on the decision to pay Lee’s legal bill, the decision still must go to one more group for approval. The Memphis City Council, which has oversight of MLGW, must also OK the decision.

“Whether or not it also needs to be approved by the City Council is part of their process, not mine,” Spence said. “If they think that the City Council also needs to approve it, then fine. I’m not involved in that process. But do I think it’s going to be approved? Absolutely.”

Wait and see

City Council member Myron Lowery is one of the four council members who served on the body in early 2007 as the utility scandal unfolded. Nine new council members were elected to the group in October.

Lowery was noncommittal when asked how the council might handle the decision or even the discussion about whether to approve paying Lee’s legal expenses.

“This will go before the Light, Gas and Water board,” he said. “If the Light, Gas and Water board approves it and thinks it’s justified and sends it to us, I don’t know if there would be any major objection or not to pay it.

“My initial thoughts are that the charges were in connection with his position and the charges were dropped, which means the government didn’t feel they had a good chance of winning or that it wasn’t valid. The council will just have to wait and see what the Light, Gas and Water board says first.”

PROPERTY SALES 41 308 2,265
MORTGAGES 47 379 2,607
BUILDING PERMITS 128 1,018 6,068
BANKRUPTCIES 53 255 1,787