80.7 F
Charlotte Amalie
Thursday, March 28, 2024
HomeNewsArchivesProsser Busy in At Least Five Courts

Prosser Busy in At Least Five Courts

July 5, 2005 – There has been a lot of legal activity in three of the at least five courts where Jeffrey Prosser is tangling with former business allies.
Three of the five cases are in various federal district courts; one (preliminarily decided against Prosser) is in the Delaware courts; and on Monday, Prosser's Innovative Communications Corporation opened an arbitration case against the Government of Belize (GOB), the Central American country where he once controlled the phone system. In that case, ICC sought $200 million in damages from the GOB.
Here's the score card of the cases:
July 5
The least complex and fastest-moving case in this set of five was in the federal court in the Eastern District of Virginia, where ICC's longtime bankers, Virginia-based Rural Telephone Finance Cooperative (RTFC), had sued the ICC subsidiary, Innovative Telephone Co., for failing, it claimed, to pay a $4 million loan payment due earlier this year.
That case has been settled, the Source learned Tuesday. According to Jonathan Siegfried, attorney for RTFC: "All amounts due under the line of credit were paid by agreement of the parties." He said the terms of the settlement are confidential, as is often the case in business disputes. There had been a hearing on summary judgment set for this coming Friday, but that has been cancelled because of the settlement.
ICC had previously sought to transfer the case to the federal court in the Virgin Islands, but this motion was rejected by Judge James C. Cacheris. (See "Federal Judge Denies Vitelco Plea to Move Case to V.I.").
The Eastern District of Virginia is well known in legal circles for its "rocket docket," in which the court schedule is arranged to facilitate rapid decisions.
July 1, Miami
Belize, in a move unusual for a sovereign nation, agreed to submit itself to the U.S. District Court in Florida when it floated a loan from a Miami bank so it could buy the controlling block of stock in Belize Telecommunication Ltd., the local phone company, from a British entrepreneur, Lord Michael Ashcroft. The GOB, which the local media reports is in dire financial straits, then sold the shares to ICC for cash plus a promissory note for $57 million. The $57 million was not paid, but ICC argues that the GOB had not lived up to its side of the bargain regarding loosening the regulatory climate for the phone company to make it more profitable. The GOB seized the phone company. ICC then sued for a preliminary injunction, which it won, in the court in Florida.
On July 1, at the instructions of the judge, both sides filed suggested drafts of a court decision in the most recent phase of the court battle. ICC contends that the GOB inappropriately secured control of the company by ousting Prosser's directors, and that it should either be restored to its control of the company or be paid $24,207,000 in damages. Most of this sum was attributed to loss of control of the company ($20.8 million), and the rest was for the alleged loss in the value of the company, thus depressing the value of the shares purchased by ICC.
The GOB replied that the estimated value of the control of the company was overstated; that the company had not lost value (it remains the monopoly phone company in the nation); and that if there had been a loss in value, it would be because of the money taken out by ICC during its period as manager. "In fact, BTL itself determined that over $10,000,000 was taken out by the plaintiffs without any benefit to BTL," wrote the Belize lawyers on page 72 of an even longer draft decision.
Among these charges, according to the GOB, were "aircraft expenses totaling $657,989.07", "undifferentiated credit card bills totaling $839,381.63" as well as the $25,000-a-month salary of Sir Ronald Sanders, a director of Prosser's ICC.
The judge in the case, Ursula Ungaro-Benages, has promised an early decision.
Meanwhile, the Belize Supreme Court may also join the action, as there may be some elements of the Prosser-GOB dispute that are beyond the jurisdiction of the Miami court, but not that of the Belize Court. That court, according to local media, has so far taken care not to step on the jurisdiction of the court in Miami, but has been active on the fringes of this dispute. Unlike the federal courts, in which decisions may be appealed, the Belize Supreme Court acts both as the court of first and of last resort in cases involving the local phone company.
July 4, Toronto, Canada
When it sold the controlling stock in BTL to ICC, the GOB agreed to arbitration with ICC should disputes occur. That arbitration is through a 30-year-old system run by the United Nations Commission on International Trade Law (UNCITRAL).
On Monday, ICC filed a "Notice and Demand for Arbitration" with the UNCITRAL Arbitral Tribunal making pretty much the same charges that it is making in the Miami court. But in this instance it demands $200 million in damages, close to 10 times what it seeks from the U.S. district court. There is no breakdown or detailed justification of the damages in the document filed.
To put the $200 million figure in perspective, Belize, a small and poverty-stricken country, had a national budget of $209 million in 2003, the last year for which this information is available.
ICC has chosen William G. Horton, a prominent Toronto attorney, to be its arbitrator; presumably the GOB will select another arbitrator, and the two of them will select the third. The arbitration process will presumably take place in Canada; the schedule is not known.
Horton is identified in the ICC document as "a Canadian citizen unrelated to any party, and not a national of Belize or the United States." A Google search indicates that Horton has done this kind of work before, and is a member of a large Canada-based, international law firm.
The GOB will presumably have to file a response, but this was not available at press time.
Decided earlier, Delaware
In a decision handed down last year, but not yet converted into a judgment, the Delaware Court of Chancery decided in favor of minority stockholders who sued ICC saying they had been underpaid when ICC's predecessor, Emerging Communications Inc., went private and became ICC. The judge did not move to the judgment phase in the hopes that the parties would settle with each other; a draft settlement was reached, but has not yet been reviewed in a hearing by the judge. (See "ICC Agrees to Pay More than $85 Million in Stockholder Suit").
The judge subsequently agreed to suspend proceedings until the ICC-Belize controversy was settled because $24.5 million of the proposed payments were to be secured by a "Lease-secured note" signed by BTL, which was said to support $500,000 a month payments for 49 months.
In the GOB's draft decision filed in Miami, reference is made to this arrangement in a section headed "Unclean hands." It says: "Through at least February 7, 2005, ICC and Prosser were offering, in partial settlement, $500,000 monthly for 49 months [to the minority stockholders] which was supposedly being paid to ICC from BTL under an equipment lease…. There is no (and has never been) such lease."
The GOB cited a deposition given by Prosser in this connection.
Little movement, U.S. Virgin Islands
Meanwhile, the case filed by RTFC against ICC for allegedly defaulting on its loan obligations – a case revolving around roughly half a billion dollars — was moved to the U.S. Virgin Islands from the Eastern District of Virginia. It has not moved much since, though a hearing is scheduled for September 23.
RTFC has asked U.S. District Judge Curtis Gomez, the newly-appointed federal court judge in the V.I., to recuse himself on the dual grounds that the judge's wife
had previously represented RTFC in the matters before the court, and because of the publicly reported role of an ICC official in helping get the judge nominated.
Gomez has not yet responded to the request.

Back Talk

Share your reaction to this news with other Source readers. Please include headline, your name and city and state/country or island where you reside.

Print Friendly, PDF & Email
Keeping our community informed is our top priority.
If you have a news tip to share, please call or text us at 340-228-8784.

Support local + independent journalism in the U.S. Virgin Islands

Unlike many news organizations, we haven't put up a paywall – we want to keep our journalism as accessible as we can. Our independent journalism costs time, money and hard work to keep you informed, but we do it because we believe that it matters. We know that informed communities are empowered ones. If you appreciate our reporting and want to help make our future more secure, please consider donating.