Nearly two years before she became the target of a massive lawsuit, Robin Grindstaff Costa knew the Maddox Foundation was in trouble.
"We are also so far over budget it's ridiculous right now," the foundation president wrote in a February 2003 e-mail to one of her staff members.
Three months later, the Maddox Foundation Corp. began transferring hundreds of thousands of dollars to prop up two flailing minor league sports teams in Memphis. Costa purchased the pair a year earlier, allegedly against the advice of the foundation's advisers and lawyers. According to court papers, the two franchises have together lost more than $2 million—paving the way for a far-reaching lawsuit from Davidson County District Attorney Torry Johnson. Among other matters, the suit seeks to remove Costa from any position of authority with the foundation and to return it from Hernando, Miss., back to Nashville.
An attractive, likable executive, Costa learned at the side of Dan Maddox, the megawealthy, hard-charging Nashville executive who was killed with his wife Margaret in a tragic boating accident in 1998. For more than 13 years, Costa had been an intensely loyal employee at the Maddox Companies, which were involved primarily in real estate and oil and gas exploration. After the Maddoxes died, she became the head of his charitable foundation and, with the consent of the other remaining director, moved the trust to Mississippi, just over the Tennessee state line from Memphis.
It was there that Costa shaped a new life for herself. As the head of the newly formed Maddox Foundation Corp., which was spun off from the trust, Costa made $275,000. A graduate of the Nashville School of Law, Costa is also asked to be compensated $525,000 for her role as the co-executor of Dan Maddox's estate and another $875,000 for serving in the same capacity for Margaret Maddox's estate, according to the lawsuit. A court will review both both fees.
Today, even while Costa is snared in a pair of unpleasant legal battles, she lives in a spacious, stylish home fronted by a fountain and reflective pond in an exclusive subdivision in the Hernando area. Outside her door hangs what appears to be a UT Flag.
By 2002, three years after Costa moved to Mississippi, the foundation underwent changes that would ultimately subject it to the legal challenge from the Davidson County District Attorney's Office. According to court papers, the foundation's assets were down more than $8 million from the prior year—even though its contributions increased by a little over $1 million. Its operating expenses, however, jumped 47 percent.
In September 2002, the foundation purchased the Memphis Xplorers, an arena football team, for $630,000. It made even more of a splash two months earlier when it purchased the Memphis RiverKings, a minor league hockey team that plays its home games in Mississippi, for $1.7 million. Costa later explained in a press release that she "fell in love with hockey and with the RiverKings." As a new owner, she promised, "You'll see a lot of me."
Costa's new group of hockey players seemed to love her. On two occasions, she even rode with them on the team bus. Khalil Thomas, a former RiverKing, told the Scene that she was the "perfect owner" and that whatever charges have been leveled against her are sexist in nature.
But if Costa and the RiverKings were a good fit, Maddox and hockey were not. Soon after the foundation bought both minor league teams, its struggles became apparent. On Dec. 12, 2002, Costa's assistant sent her an e-mail about a man who seemed to be inquiring about a donation for a local nonprofit.
"The only reason he is calling is to ask for money and since we don't have any to give away, you can just tell him we do not have any additional funding for 2003 for their project," she wrote in a February 2003 e-mail reviewed by the Scene. "Why don't you just call him back and get rid of him."
A few months later, Costa again touched on the state of the foundation. In February 2003, in an e-mail to one of her staff, Costa writes: "MF (Maddox Foundation) is strapped to the gills right now, as you well know."
Defenders of Costa say that at the time of her e-mails, the foundation was struggling to meet commitments that had been made years earlier—including an ongoing scholarship program at Belmont University. (Costa also serves as a member of that school's board of regents.) But it certainly didn't help that Costa committed foundation assets to the minor league franchises. According to court papers, the foundation began transferring hundreds of thousands of dollars from the foundation to the football and hockey holdings in May 2003, three months after Costa wrote about the foundation being "strapped to the gills." According to the lawsuit against Costa, the two teams, the Memphis RiverKings and the Memphis XPlorers, have lost more than $2.2 million since the foundation acquired them in 2002.
Nonprofit foundations don't typically buy money-losing sports teams, but there's nothing typical about the Maddox Foundation. Unlike the Frist Foundation, none of Dan Maddox's children have any say in how the foundation is run. Sources close to the family say that Maddox had a falling out with his children around the time he divorced his first wife. Shortly after, he married Margaret, his secretary, who was 20 years his junior. Everyone expected that she would run the foundation after he died. But when they were both killed in the boating accident, Costa and Tommye Maddox Working, Dan Maddox's step granddaughter, were the only two left on the foundation's board. Working looked up to Costa, who was her friend, and initially agreed to move the foundation to Mississippi, where the Maddoxes had few, if any, ties.
The lawsuit against the foundation says that Costa and Working needed to obtain court approval to move the trust out of Nashville. Working, who is represented by Waller, Lansden, Dortch & Davis, is actually on the prosecution's side here and has joined the lawsuit. Right now, Costa's lawyers have introduced a vigorous defense that, among other things, states that Nashville's district attorney doesn't have jurisdiction over a Mississippi nonprofit.
Laws that govern foundations are necessarily complex, and it might take years before the courts rules on whether Costa had the right to relocate the Maddox Foundation to Mississippi. But that issue aside, it's clear that since leaving Nashville, Robin Costa has tarnished the foundation's once spotless image by engaging in a series of questionable expenditures and business decisions.
Obviously, the purchase of both minor league teams draws the most scrutiny—but there are other smaller transactions that are similarly vexing. In 2002, shortly after the Maddox Foundation bought the RiverKings hockey team, it spent $200,000 on an outdoor roller hockey rink in Hernando, Miss. And that's according to the foundation's own press release. A document reviewed by the Scene shows that Don Parsons, the captain of the foundation's hockey team, was paid $23,000 to run a three-and-a-half-month-long youth hockey league at the new rink. Sources say the Maddox Foundation picked up that salary. Aubrey Harwell, the attorney for the Maddox Foundation, says the foundation did pay Parsons weekly facility fees for overseeing the construction of the rink, saying the amount was in the neighborhood of $20,000.
Meanwhile, as a possible show of gratitude for his generous remuneration, Don Parsons and his wife named their son Maddox.
While the Maddox Foundation—under Costa's leadership—has awarded millions of dollars in grants to important nonprofit ventures in Nashville and Mississippi, it has also spent money carelessly. In some cases, these expenditures are small compared to the foundation's overall net worth, but they do offer a glimpse into the culture of the Maddox Foundation.
For example, the foundation spent $900 on a saltwater aquarium for its corporate secretary, Paul Morris. It spent nearly $2,000 on billboard advertising for its youth hockey camp. One invoice the Scene reviewed was for a roundtrip chartered jet trip from Memphis to Oklahoma at a cost of $4,093.15. Apparently, the trip had to do with arena football.
A Jan. 10, 2003, e-mail the Scene reviewed talks about a visit Costa took to Las Vegas. A staff member questioned her about the trip and suggested it was purely a vacation. Costa replied, "Vegas is a work-play trip. It's with Uncle Brad and Merrill Lynch, but I am going to a Garth Brooks concert. I'm really excited about it since I know it will be tons of fun."
Uncle Brad is apparently a friend of Costa's. People close to Costa say that the foundation paid for part of the trip, and that she attended some nonprofit conferences. Merrill Lynch covered the rest. The Garth Brooks concert she attended was a private affair.
Meanwhile, another messy controversy has already cost the foundation thousands of dollars. Costa is currently being sued for sexual harassment by Kevin Brooks, a former subordinate. According to allegations in the lawsuit, Costa had a physical relationship with Brooks while he was working as the assistant general manager of Maddox Hockey. Costa made certain promises to Brooks and then subsequently terminated him, the lawsuit says. Shortly after the lawsuit was filed, sources say, a private investigator named Charles Saums began asking colleagues of both Brooks and Costa if the two ever had a relationship. Saums is the founder of Security Support Services, a Jackson, Miss., company that has worked for the Maddox Foundation's law firm, Neal & Harwell, in the past. At least one person told Saums when he came snooping that Brooks and Costa were involved. Costa has since vigorously denied Brooks' claim of sexual harassment. She did concede in court papers, though, that the two had a "brief but consensual relationship."
The district attorney's lawsuit against Costa also alleges a series of outlandish expenditures by the foundation. According to the complaint, Costa chartered jets to Knoxville to catch UT football games in 2000 and 2001. She used the foundation to pay for her babysitter and house sitter. She charged home office equipment and furniture, flowers and $4,000 worth of expenses at a resort and spa to the foundation. It also footed the bill for Costa to fly to the Virgin Islands, and picked up the hotel charges as well.
Finally, the lawsuit alleges that foundation employees and officers went to the Gold Strike Casino in Tunica, Miss., seven times in one year and charged $8,000 in expenses.
It's not clear how much, if any, Costa reimbursed the foundation for these purchases. Right now, the lawsuit seeks an accounting for the foundation's operations, which could take a long time.
