Straight, Inc. abused
by Wesley Fager (c) 2003
In August 1985 former Straight client Karen Norton sued Straight, Inc., but by September Straight, Inc. was no longer the program Ms. Norton had been in back in 1982. In fact it was only 26 days old and had no money, no property--absolutely no assets at all. Her complaint was filed against Straight, Inc., but that company was now calling itself Straight Foundation, Inc. and it had all the money and property. The attorney for Michael Daniels, another former Straight client, met with this same confusion, as did the attorney(s) for any other clients who had sued Straight, Inc. on or before September 26, 1985 (if there were still any open cases) and as did any attorney(s) representing clients who would sue Straight, Inc. on or after September 26, 1985. [See Straight Foundation, a shell corporation setup to protect Straight, Inc.'s assets and to protect Mel Sembler from lawsuits and from criminal prosecution. Essentially Straight, Inc. changed its mission to one of education and changed its name to Straight Foundation. Then a brand new organization was created to treat kids for addictions. It was called Straight, Inc. The foundation retained all the money and assets and the treatment company rented space from the foundation.]
According to her complaint Karen Norton had been stripped searched, assaulted, battered, harassed, embarrassed, and mocked by employees bent on upsetting and humiliating her. She had sued for false imprisonment, negligence and intentional infliction of emotional distress. She charged that Miller Newton had thrown her against a wall. She stated that though she had told her captors she was hurting, they continued to make her exercise until she finally passed out. She was rushed to the hospital where an emergency appendectomy was performed.
Her case was finally settled on November 8, 1990. As in the Fred Collins case seven years before the jury agreed with Karen that she had been falsely imprisoned. But unlike the Collins' jury, this jury felt that not only had she been held illegally, but that Straight had intentionally abused her doing the detention. In fact, about the only thing the jury disagreed with Karen on, was on the amount of damages she was requesting. Karen had asked for $666,000 in damages, but the jury increased it by $55,000. $615,000 was for punitive damages for "malice, moral turpitude, wantonness and recklessness." $106,000 was for compensatory damages; Karen Norton was awarded $721,000.
But Karen Barnett, Norton's attorney, had a slight problem collecting all that money. Straight said it did not have it. The Tampa Tribune reported on the Norton judgment in an article on November 9, 1990 (page B1) which correctly started by saying that Ms. Norton had been in Straight, Inc. "eight years ago" but ended the article by writing that "last year, Straight's license to operate in Florida was renewed by HRS for three months." The Tribune had obviously assumed that the Straight, Inc. that Karen was in was the same one that had its license renewed "last year", but they were not the same. And Joy Margolis, who was Straight, Inc.'s spokesperson then, referring to incidents that occurred eight years ago, is quoted as saying, "Straight is a completely different organization from what we were then." But 1990's Straight, Inc. was not "what we were then." 1990's Straight, Inc. did not exist in 1982! If Straight bothered to inform the Tribune of the technicality with names, it is not apparent, because on November 11 the Tribune ran another article, this time saying that a spokesperson for Straight had said that Straight, Inc. [author's italics] will be "financially" devastated unless a $721,000 judgment against the drug treatment program is overturned.
On October 10, 1990 Karen Barnett deposed Anthony Agliardi, chief financial officer for Straight, Inc., who did a good job on pages 8 and 9 explaining Straight's 1985 name change. From the deposition (pages 7, 8 and 9) you can see that Ms. Barnett asked good pertinent questions on Straight's finances and was given absolutely correct answers. But you can also see the obfuscation in anyone truly understanding the name change arrangement. And what about clients who sued the new Straight, Inc. It's assets only went back to 1985.
Certainly Ms. Barnett understood the arrangement because according to the November 11 Tampa Tribune article, she claimed that Straight had property in Cincinnati, St Petersburg, Orlando and Atlanta valued, all total, between $2.1 and $2.7 million. William Rutger, Straight's attorney, countered that Straight did not own the property "outright" and also it wasn't marketable because the properties had been designed as drug treatment centers. In a telephone interview with Ms. Barnett, this author learned that Straight had convinced her that Straight did not have the assets to pay the full $721,000, so it came to pass that Karen Norton ultimately settled for a much lesser, though still sizable, amount. Since Straight did come up with some money, apparently without selling any property, how much had actually been available?
Consider this. During the course of the Norton case, attorney Joseph Garcia, the executive vice president of Straight Foundation, Inc., presented an incredible affidavit in which he explained why Straight Foundation's properties were worth 50% less than their depreciated values! He proffered himself as an expert in real estate law. For now just look at Appendix C to this document. It clearly shows that Straight presented that it has five properties: the national corporate office and the treatment program, both at 3001 Gandy Blvd. in Saint Petersburg, and properties in Atlanta, Orlando and Cincinnati. Now read pages 7 , 8 and 19 of Anthony Agliardi's deposition where he says there are five properties and tells what they are. And now look at this document by the same Joseph Garcia where the foundation sold a sixth property on April 1, 1992 that it had owned at the time of his Norton affidavit. This property sold for over $200,000 including the interest. Furthermore, as I interpret the Garcia-Norton affidavit, the Saint Petersburg properties would only be worth $315,000. But less than two years after the Norton trial the foundation got $895,000 for them. Did Karen Norton get a fair shake? Read the story of Straight's real estate deals and decide for yourself.