Old scandal surfaces at Duck trial

BY TIMOTHY O'HARA

Citizen Staff

KEY WEST — A long forgotten political scandal reared its head in court Thursday, as the man who bribed a city commissioner while cooperating with authorities in the mid-1990s testified in an anti-trust case involving the city, Historic Tours of America and Duck Tours Seafari Inc.

Attorneys for Duck Tours sought to tie the bribery and federal plea deal of the late city Commissioner Emory Major to an organized attempt by the city to keep certain businesses from conducting sightseeing tours or limiting the ability of some companies to do tours.

An attorney for the city tried to exclude the testimony, calling it "highly explosive" and "highly inflammatory." When that move failed, attorney David Audlin moved for a mistrial. Visiting Circuit Judge Howard Harrison denied the request.

Attorneys for Duck Tours used the testimony to lay out a case that showed there was corruption on the Key West City Commission when Duck Tours was trying to obtain the proper licenses to conduct tours of Key West Harbor using amphibious military vehicles. Duck Tours is suing the city and HTA, its largest lease holder and operators of the Old Town Trolley and Conch Tour Train. Duck Tours owner John Murphy claims he was unjustly run out of business and is asking for $14 million.

Jim Beaver, who attempted to start a company offering tours of Old Town in two pink Cadillacs, testified that he was solicited for a bribe in order to gain a franchise license for a sightseeing tour. Beaver was attempting to obtain an occupational license about the same time Duck Tours was trying to get a license.

In 1994, Beaver went to the city to request a franchise license to run a business that would charge between $200 and $300 for a convertible pink Cadillac tour of Old Town. Beaver testified that city officials told him that "HTA had all the licenses" and that the city was "not interested in issuing any new licenses."

Following the meeting, Beaver said, Major had a friend approach Beaver to talk to him abut working out an arrangement. Major met with Beaver at a local funeral home and told him if he paid Major, the commissioner would arrange for Beaver to obtain a license. Major told Beaver that he had to "learn how to dance," a slang term for bribery, Beaver said. Beaver immediately went to state and federal authorities with the information.

Beaver wore a wire for investigators and paid Major "thousands of dollars" in bribes, he said. Beaver told jurors that he was in the room when Major talked on the telephone with other city commissioners about pay-offs. Major told Beaver that he would have to have a "partner," Beaver said.

FDLE agents recorded discussions between Beaver and Major, tapes that eventually led to Major's indictment on federal bribery charges and removal from the City Commission. Major pleaded guilty to a charge of conspiracy to commit bribery.

Before the scandal broke, Major sponsored an ordinance that would set up a franchise agreement with Beaver's company and the city, similar to the agreement the city has with the Conch Tour Train and Old Town Trolley. The city receives 5 percent of ticket sales from the two businesses.

According to his testimony Thursday, Beaver made a presentation and the City Commission took public comment during the 1995 meeting. The commission then took a break at the meeting and then-Commissioner Joe Pais took Beaver to the back of the commission chamber and introduced him to HTA owner Ed Swift and HTA attorney Hugh Morgan, who is currently litigating the case on behalf of HTA.

The two men offered to allow Beaver to "partner" with HTA and run the Cadillac tours under HTA's franchise agreement with the city, Beaver said. Beaver declined, he said. The commission reconvened and Major called for a vote. He did not receive a second on his motion and the ordinance failed.

Pais said Thursday that he could not recall the conversation.

"I don't remember Mr. Beaver. I might have spoken to him. I may have introduced them, but I don't remember working out a deal," Pais said.

Beaver left town for several months and never again attempted to start the business. Major died in 2002.

The Duck Tours trial continues today at the federal courthouse on Simonton Street. Duck Tours is accusing the city of creating a monopoly for HTA and running the rival tour company out of business. City officials claimed the company was running its tours on land, which was not allowed under the company's license. The city received added pressure from HTA to remove the Ducks from the streets, records show.

tohara@keysnews.com

Economist says Duck Tours could have been profitable

BY TIMOTHY O'HARA

Citizen Staff

KEY WEST — Duck Tours attorneys presented testimony Friday intending to show that the company lost hundreds of thousands in revenues in the mid-1990s because the city and a competing tour company made it impossible for the rival tour company to survive.

Friday was the seventh day of testimony in the civil suit brought by Duck Tours Seafari against the city of Key West and its largest leaseholder, Historic Tours of America, owner and operator of the Conch Train and Old Town Trolley.

Economist Thor Bruce testified in court Friday that the owner of the Duck Tours, which went out of business in 1996, could have seen his profits grow by 30 percent a year. The company is asking for $14 million in lost revenues and attorneys fees, dating back to 1996. Company tax returns showed a $185,000 loss in 1995 and $10,300 loss in 1996. Bruce forecasted that the tour company could have started to show profits by 1997 and could have earned close to $180,000 in gross revenues that year.

Bruce called his profit estimates "conservative." He said that a similar tour in Boston has had substantial growth and now has 544,000 riders a year.

The company had $700,00 in capital and assets and less than $15,000 in the bank in September 1996, records presented in court showed. The company was still paying down $161,000 in loans, city trial attorney David Audlin said. Audlin has argued that the business was not run out of business by the city, but couldn't make it. The company also did not have the proper licenses, Audlin said.

A jury will eventually decide whether the city unjustly ran Duck Tours out of business or the business just failed and its owners violated city laws.

Audlin played up the company's lack of cash in the bank and outstanding debt. Bruce contended that many large companies don't have a lot of cash in the bank. Most of the funds are either tied up in capital or used to pay off debts, Bruce said.

"It's not uncommon to keep little cash in the bank, and instead, pay off creditors," Bruce said.

In his cross-examination, Audlin crafted a case showing that Duck Tours owner John Murphy had a lack of business smarts. Audlin asked Bruce if it was smart to start a company and put vehicles on the streets when an operator does not have the proper licenses. Murphy's attorney Scott Perwin countered with objections and said the company was issued the proper occupational license.

Bruce called Murphy a "pretty sharp" business man who researched other amphibious tour companies before starting his business. Bruce said he doubted that Murphy would put vehicles on the street without the proper licenses.

Bruce also compared the salaries and business expenses of Duck Tours to an amphibious tour company in Boston and to the Conch Tour Train, which is owned by the city's biggest lease holder, Historic Tours of America, also a defendant in the case. Boston Ducks paid higher taxes and similar salaries to Duck Tours' captains. Records presented in court showed that Duck Tours captains were paid $1,000 every two weeks, but also made tips.

Bruce did add some depreciation because the vintage World War II vehicles were used in saltwater and they were made to mostly be used in freshwater. The vehicles may have had to be replaced or repaired. The vehicles in Boston are used in freshwater.