Karate studio's owner takes hit

Butturinis, accused of giving alcohol to minors, file for bankruptcy

By Matt Lakin knoxnews.com

When his daughter’s prom party blew up, Jack Butturini says it nearly took his business with it.

The Farragut businessman owns Martial Arts America, a karate studio offering programs that tout character-building for children.

He and his wife, Katharine, filed for bankruptcy last week, saying their arrest by Loudon County deputies on charges of giving alcohol to a houseful of teenagers wrecked their reputation and drove away customers.

Butturini called it a little party that “blew up.” He said he’s struggled in the months since but plans to keep his karate studio open.

He estimates enrollment at the karate studio dropped from 400 students to 186 after the arrests, and income ultimately dropped from about $50,000 per month to $11,000.

“We lost 62 students within a month,” he said. “Our gross income went down $25,000 that month. When your income drops by $25,000 per month, you can survive for a while but not for long. It’s really unfortunate after 25 years of work.”

His bankruptcy filing holds out the possibility of a lawsuit against the Loudon County Sheriff’s Office.

Chief Deputy Tony Aikens said his officers just did their job.

“Our officers went over there and saw kids drinking and acted accordingly,” he said. “They probably saved somebody’s life.”

The couple made the news in May when officers accused them of providing alcohol at an after-prom party for their daughter, then a senior at Farragut High School, and about 50 other teenagers at their waterfront home near Lenoir City. The family owns another home in Knox County, which allowed them to send their daughter to school there.

Deputies cited about 20 teens on charges of underage drinking and charged the Butturinis with contributing to the delinquency of a minor and providing alcohol to minors.

Prosecutors granted the couple pretrial diversion, which means the charges against them could be dismissed if they stay out of trouble until next June. Butturini still denies the charges and said the deal came too late to take the tarnish off his business’ name.

“Not only did people quit, they didn’t renew their memberships,” he said. “We enrolled zero students in June, July and August. We got a stack of letters from people saying they weren’t going to give us money to give kids liquor, which we never did. They can’t prove we did, because we didn’t.”

Butturini says the teenagers crashed the party while he slept and brought their own alcohol. He says overzealous deputies singled out him and his wife as examples.

Authorities called that accusation “ludicrous.”

The Butturinis’ petition in U.S. Bankruptcy Court seeks protection under Chapter 7 of federal bankruptcy law. Chapter 7 bankruptcy allows the dismissal of debts in exchange for the forfeiture of certain assets, subject to a judge’s approval.

The couple wrote in court records that their total debts exceed $1.4 million, compared to total assets of about $705,000. The biggest drain came from the lease for the karate studio building on Kingston Pike, Butturini said.

He’s moved since then to a smaller building near Outlet Drive and said he still hopes to hang onto the business. A location in Bearden closed earlier this year and merged with the Farragut studio before the arrests.

“I’m still here,” Butturini said. “I wouldn’t miss a day of class. We’re going to survive. That’s what bankruptcy is about — a fresh start.”

Butturini said he previously filed for bankruptcy about 12 years ago after a divorce. Bankruptcy court records list an earlier filing from the 1980s as well.

The couple’s list of assets includes their homes in Knox and Loudon counties and a “potential lawsuit against Loudon County Sheriff’s Department (not filed, value unknown).”

Butturini didn’t want to talk about that. “We’ll see what happens,” he said. “There were some fine lines that were crossed.”

Authorities said they’re not worried. “If he files it, he files it,” said Aikens, the chief deputy. “You can claim anything, but proving it’s a different matter.”