The sale of Scarecrow Video will take place as scheduled next week despite efforts by its owners to stop it, a U.S. Bankruptcy Court judge ruled Thursday.
The owners of the University District video store, George and Rebecca Latsios, tried to block the sale after recently learning of the buyer's criminal history.
William Carlysle Holmes' family owns Directors Ltd., the company purchasing Scarecrow. Holmes was convicted in 1993 of defrauding the U.S. Department of Housing and Urban Development (HUD) of nearly $1 million through his company, Trustee Services. The company had been contracted to collect money on foreclosures on HUD-owned property.
"If he shows up with the money we'll have to sell it to him," said Rebecca Latsios yesterday, "but we have other buyers lined up, and they're not convicted felons. Our first concern is the store and our creditors."
Holmes pleaded guilty to conspiracy and mail-fraud charges and served two years in prison. He remains on probation through June and still owes more than $900,000 in restitution, according to Holmes and court documents.
Holmes' probation agreement stipulates that he cannot be self-employed, unless approved by the probation office.
The Latsioses contended Holmes, a Seattle businessman, was in violation of his parole agreement when he helped negotiate the purchase of Scarecrow for Directors Ltd. last year. Recent court documents requesting a summons for Holmes state he has not complied with the terms of his parole "by acting as a controlling partner in Directors Ltd." and "by working in a company owned by his mother, Roma Holmes." Roma Holmes is president of Directors Ltd., which also owns Wallingford Video and On 15th Video.
Denying the Latsioses' motion, Judge Thomas Glover ruled that there was nothing in the sales contract that would require "disclosure of his (Holmes') past conviction." If Holmes was in violation of his parole agreement, he said, it was a matter for the criminal courts and not the Bankruptcy Court.
Reached yesterday at the Scarecrow store, Holmes said he has been summoned for a hearing in May regarding his alleged parole noncompliance. He said he was confident he would be cleared of any wrongdoing.
Donald Bailey, the Latsioses' attorney, called Glover's decision "surprising."
Bailey said the Latsioses do not plan to appeal the ruling, and the sale will take place Tuesday, provided the buyer can come up with the $430,000 in closing costs.
Kenneth Weil, attorney for Directors Ltd., refused to comment.
With nearly 34,000 movie titles, many of them impossible to find anywhere else in the area, Scarecrow, at 5030 Roosevelt Way N.E., is one of the largest video stores in the country. Gross receipts were more than $1 million a year, but the Latsioses were more than $500,000 in debt, including $140,000 in taxes.
The sales price for Scarecrow, according to Bailey, is nearly $1.4 million, with $225,000 to be paid after 28 months and $100,000 in yearly installments for the next six years. The remaining $145,000 is debt that will be assumed by the buyer.
The original sales date for the store was Nov. 24, 1997, but Directors Ltd. requested several extensions as it sought time to put together financing for the purchase.