Label Investment Called a ‘Heartbreak Hotel’

MANHATTAN (CN) - A new federal lawsuit describes an investor "all shook up" by revelations that the record he paid $101,000 does not really own valuable intellectual property behind Elvis Presley's label Sun Records.

Sanford Ross, of Okatie, S.C., says his $101,000 investment into Sun Records stemmed from boasting in the 1980s by Shelby Singleton about Sun's valuable name and logo, and "its ownership of priceless master tapes of the great Sun recordings."

Founded in 1952, Sun Record's founder Sam Phillips changed music history with his discovery of "the King of Rock and Roll."

"Using Elvis' smooth voice and rotating hips, Sam created the 'Sun Sound': rockabilly combining country with rhythm and blues to create the unique sound that became the basis for rock," the May 15 complaint states. "Sun's stable of artists form a who's who of rock nobility, such as: Johnny Cash, Jerry Lee Lewis, Roy Orbison, Carl Perkins, and Charlie Rich."

Singleton allegedly bought the Sun label from Phillips in 1969 and died in 2009.

"Yet recently investors were shocked to find out, in the context of a corporate buyout by Mr. Singleton's family, that the entity in which they invested does not, in fact, own the very things that make Sun Records what it is, and gives it any value," the complaint states. "Instead, in a cram down vote, the family, owning 63 percent of the Sun, bought out the investors for 10 Canadian cents per share."

Ross says Singleton lied to him and other investors about the ownership of Sun's trademarks and master tapes.

Terry Lashman, the director of the holding company that owns Sun, allegedly informed Ross on Oct. 9, 2014, "for the first time that Sun Records really wasn't Sun Records: it neither owned its own logo, trademarks, or valuable collection of master tapes."

Lashman is not a party to the action, which names as defendants only Sun Entertainment Holding Corp., Singleton's estate, the Singleton Family Trust #1, Shelby Singleton Enterprises Inc., and John A. Singleton.

Ross says these defendants "routinely" deceived investors in their press releases and "flyers," Ross says.

These materials appear as exhibits to Ross' complaint.

Ross says the Singleton family has attempted to keep the valuable assets for themselves in separate entities.

"Investigation reveals that these assets were owned by other entities controlled by the Singleton family," the complaint states. "Sun's logo and trademarks? Owned by Sun Stuff, LLC, a partnership owned in part by Andsome [Management], which in turn is owned 50 percent by John Singleton and 50 percent by the [Singleton Family] Trust. The master tapes? Owned by [Shelby Singleton Enterprises Inc.], which upon information and beliefis controlled by [Shelby's brother] John A. Singleton." (Brackets added)

Alleging fraud, Ross wants Singleton's corporations, estate, trust and brother to pay him damages under the Securities Exchange Act of 1934.

He is represented by Houston-based lawyer Jonathan Ross of the firm Susman Godfrey LLP.

Singleton's brother did not immediately respond to a request for comment.

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