Hoping to recoup millions dollars of company money misspent by ICC’s former owner, Jeffrey Prosser, court-appointed Chapter 11 Trustee Stan Springel filed 77 suits in September dunning companies and individuals on St. Croix, elsewhere in the Virgin Islands and around the world.
Prosser is in involuntary Chapter 7 bankruptcy and ICC, the parent company of Vitelco, which he owns, is in Chapter 11 bankruptcy. ICC owes the Rural Telephone Finance Cooperative and a family of hedge funds called the Greenlight entities a total of several hundred million dollars. The exact amount is part of the bankruptcy dispute. At one point, all parties agreed on a $524 million settlement, but that collapsed when Prosser was unable to secure the necessary loans to fund the settlement. The real total of all debts is probably close to one billion dollars.
Houses, cars, jewelry and other tangible assets bought with company money have in many cases already been sold off or will be sold when the opportunity arises. But Prosser also spent gigantic sums on mortgage loans, construction work, purported security services, flowers, luxury clothing and jewelry, all on the company dime, and often there is nothing to sell that is worth as much as what was spent.
Springel is filing to get many of those questionable payments clawed back out of the pockets of the people and companies Prosser paid for goods and services.
The 77 claims range from $5.8 million for the largest, against Banco Popular de Puerto Rico, to a little more than $35,000, which appears to be the cutoff for these actions. There were 35 claims filed against V.I. addresses, and 42 off-island.
The total value of the claims was $35.8 million, with $14.4 million against V.I. addresses and $21.5 million against other addresses (mostly on the mainland, but one each in Canada and Puerto Rico). The V.I. claims were largely filed against St. Croix firms because of the location of Prosser’s house on that island.
Of the millions being sought from Banco Popular, nearly $4 million is for credit-card payments made by ICC for credit cards in Prosser’s name. Testimony early in the bankruptcy revealed that all Prosser’s top executives carried such cards and routinely used them to purchase luxury goods ranging from sporting tickets to expensive wine, all courtesy of ICC and its principal source of cash, the Vitelco phone company.
Global Bank of Commerce, a bank based in Antigua, is another big fish, with Springel seeking $3.9 million. In that instance, Prosser made Vitelco borrow more than $3 million from Global Bank, pledging Vitelco assets as collateral. He then used the funds from the loan not for Vitelco, but to pay off a loan he had already caused ICC to give him to purchase a multi-million dollar Palm Beach mansion. Thereafter, Prosser had ICC make all of the payments on the note, in essence using Vitelco money and collateral to buy himself a mansion.
At issue in these particular proceedings is not the house itself, but the money loaned by Global Bank to purchase the house.
With Global Bank and all the other filings, Springel includes the legal phrase: "Upon information and belief, such transfers were for defendant’s legal representation of third parties concerning matters unrelated to New ICC or its businesses. Therefore, the defendant did not provide any consideration to New ICC in exchange for the transfers."
So, the argument goes, because the money was spent by ICC, but ICC did not get anything for the money, only Prosser benefited, there was no exchange of value that would make the transaction legitimate, the transaction was a sham and the money should be disgorged.
Hearings on these adversary proceedings are scheduled from Feb. 1-5 in U.S. District Court on St. Thomas.
Here are the claims filed against persons or corporations with V.I. addresses, starting with the largest claim (all figures rounded to the nearest dollar):
— $3.9 million, Global Bank of Commerce Ltd.;
— $1.5 million, John Tutein of St. Croix;
— $1.3 million, K&E Construction of St. Croix;
— $832,359, Aon Risk Services, an insurance entity with both V.I. and Florida addresses;
— $733,079, Natural Builders and Quality Developers, of St. Croix;
— $667,898, Instrument & Control Systems, a St. Croix firm;
— $551,541, William R. Nash V.I., a plumbing/air-conditioning contractor;
— $521,200, Oakland Benta of St. Croix;
— $490,940, Artisan Stone & Woodworks, LLC, St. Croix;
— $418,088, Peter R. Ross of St. Croix;
— $409,596, Jerry Mann, of St. Thomas;
— $324,132, Charlie Weaver of St. Croix;
— $320,466, Dudley, Clark & Chan, a St. Thomas law firm;
— $308,408, Chalgub/Lanio Architects. a V.I. firm;
— $279,500, Thomas Erhardt, who is listed with addresses on St. Croix and in Richmond, Va.;
— $277,250, North Shore Real Estate Corporation of St. Croix;
— $212,571, Tropical Shipping & Construction Co. of St. Croix;
— $164,642, Poolworks, a V.I. business;
— $163,000, Clarence Blackman Jr. of St. Croix;
— $139,917, Caribbean Property Managements & Investments of St. Croix;
— $120,419, Creative Landscaping of St. Croix;
— $101,029, Charismatic Equipment, a V.I. firm;
— $84,191, Aggregate of St. Croix;
— $82,108, AIMS — VI of St. Croix;
— $64,038, Rooftops Silicone Distributors of St. Croix;
— $63,950, Leisure Days of St. Croix;
— $61,202, Sun Self-Storage & Commercial Center of St. Croix;
— $60,000, Cruzan Gardens of St. Croix;
— $59,063, Heavy Materials of St. Thomas;
— $55,300, All Points Construction of St. Croix;
— $48,392, El Patio Flowers & Gift Shop of St. Croix;
— $41,816, Seven Seas Water Corporation, a V.I. firm;
— $41,790, JWM Painting, Repair & Maintenance, St. Croix;
— $40,137, Caribbean Hydro-Tech of St. Croix; and
— $36,258, Gallows Bay Hardware, of St. Croix.
