Predatory Lending

William “Boots” Del Biaggio seemed like a godsend for a local investment group when he contributed nearly 30 percent of the funds needed to buy the Nashville Predators. When the successful San Jose venture capitalist from a monied family with a love of the good life strutted into town, he was hailed as a hero.

According to a lawsuit filed in a Santa Clara County Superior Court last week by DGB Investments, Del Biaggio obtained a $3 million loan from the investment firm by making bogus claims and drumming up some phony documents—and now he can’t repay it. DGB claims that in November 2007, Del Biaggio borrowed—or as the court filing states, used “complete deceit” to steal—$3 million for an unspecified “commercial venture.” Yet when the loan was due in April, Del Biaggio didn’t pay.

The suit strikes at the heart of Del Biaggio’s character. DGB claims that when he secured the loan, Del Biaggio and his broker at Merriman, Curhan, Ford & Co., also named in the suit, claimed to have millions in a Merriman account. “The truth was otherwise,” the lawsuit states.

The account never belonged to Del Biaggio in the first place, DGB claims. And according to the suit, Del Biaggio and his broker Scott Cacchione “used the account of another—doctored to make believe that the account statement belonged to Del Biaggio—to induce DGB Investments into extending the...loan.” The lawsuit says Merriman and Cacchione falsified paperwork to help Del Biaggio procure the loan.

Now DGB is seeking “exemplary damages to ensure that these same wrongs will not be perpetrated upon others.”

If that weren’t enough of a blow to Del Biaggio and the Preds, he is also the target of a second lawsuit filed by a San Jose bank founded by his father. It claims similar shenanigans as the DGB suit, this time over a $4 million loan.

Given that Metro has already agreed to a generous taxpayer-subsidized lease that will pump millions of dollars into the organization each year, the city needs the ownership group to be financially stable. The way the deal is structured, Metro is on the hook for more money if the team struggles in any way. Having the minority owner in the middle of a toxic lawsuit makes the city’s investment with the group even riskier than it was before.

What’s worse, Del Biaggio’s boots are made for running. Last week, he resigned from Sand Hill Capital, the investment company he co-founded, citing personal reasons. The lawsuit says Del Biaggio claimed he had “significant issues” precluding him from repaying his debts.

But the Preds say there’s no need to fret. In a press statement issued last week, the organization says that Del Biaggio’s “departure from Sand Hill Capital has no impact on the Predators organizational operations as we are focused on ticket sales, building long-term business partnerships in Middle Tennessee and improving our team for the 2008-09 season.”

But Steve North, the only member of the Metro Sports Authority to cast a dissenting vote against the agreement in March, has been dubious about the deal from the start—mostly because he fears the sweetheart deal will have the city paying more than it bargained for.

Given Del Biaggio’s alleged financial transgressions, North is even less convinced of the deal’s merit. “From the standpoint of the security of the city, it certainly makes me nervous,” North says. “I am really concerned...because the city made a substantial investment in the Predators and stands to lose significantly if the Predators are not successful. Obviously if the financial situation of the Predators deteriorates, that deteriorates the city’s position.”

Preds spokesman Gerry Helper says that Del Biaggio’s legal and financial troubles won’t affect the day-to-day operations of the team. Never mind that Del Biaggio is the second-largest Preds investor.