Nov. 6, 2007 — There's a "liquidity crisis" at Vitelco, (Virgin Islands Telephone Co.), according to the trustee in the Jeffrey Prosser bankruptcy case.
It was caused by "millions of dollars of extraordinary, personal, non-business expenditures at new ICC and Vitelco levels … for the personal benefit of insiders and affiliates …." according to the court-appointed trustee in the bankruptcy case of Jeffrey Prosser, former CEO of Innovative Telephone.
This statement is included in the monthly report of Stan Springel, the trustee handling the management of Prosser's former properties for the U.S. Bankruptcy Court. The amount of money spent for the non-business expenditures during the bankruptcy proceedings was determined to be "tens of millions of dollars."
These payments were made over "the past year, while bankruptcy proceedings (were) in effect" and "while creditors have gone unpaid," Springel said.
Meanwhile, at a Public Services Commission meeting on Oct. 30, Vitelco President David Sharp never mentioned the personal expenditures out of the Vitelco coffers. He claimed a combination of disruptions caused by the bankruptcy and a decrease in revenues were the culprits in what he called Vitelco's "short term" cash flow issues. (See "ICC Bankruptcy Weighing on Phone Company Operations, Vitelco President Says").
The trustee's report, though largely lacking in detail, did include one example: "With access to 727 (jet) denied, Prosser charters Cessna Citation at cost of over $130,000, charged to New ICC and Vitelco, for Labor Day weekend trip to Lake Placid" (in New York, the site of one of Prosser's three residences).
The report of the Cessna chartering followed a notation regarding the non-payment of $10 million by Prosser's companies into pension plans.
The report, written in a cryptic fashion, also included these dated entries:
"Oct. 2, 2007: Evidence of serious depletion and improprieties during the bankruptcy administration period begin to be detailed as due diligence and investigation continues."
"Oct. 3-4, 2007: Access (to financial records) finally obtained by Trustee… Trustee determines that for the last year, while bankruptcy proceedings and stay are in effect, tens of millions of dollars have been spent out of New ICC and Vitelco for the personal benefit of insiders and affiliates, with the result of Trustee inheriting a liquidity crisis at every level, including Vitelco."
"Oct. 3-4, 2007: Emergency discussions and meeting with New ICC creditors, Attorney General, PSC representatives, Vitelco creditors, and others."
There have been other recent developments in the bankruptcy case. Judge Judith Fitzgerald issued summons to Jeffrey Prosser, his wife, Dawn, and four of their children in connection with the controversy over art and jewelry that the trustee says were largely purchased with corporate funds. (See "Temporary Restraining Order Slapped on Prosser Jewels, Art.")
Over the objections of Prosser's lawyers, the judge issued an order shortening the period in which Mr. and Mrs. Prosser, Samuel Ebbesen (a former director of Prosser's companies), and J'ada Finch-Sheen, long an attorney for various Prosser interests, have to produce documents demanded of them by the Greenlight companies, one of the creditors.
John Raynor, a long-time Prosser ally and one of the lawyers whose right to appear in court has been challenged by the creditors, took the case of another similarly challenged attorney, Adam Hoover, into the federal district court of St. Thomas. (See "Analysis: Prosser Bankruptcy Case Complicated by Disowned Lawyers.")
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