Sept. 14, 2007 — Public Services hearing examiner Jeffrey Moorhead has ordered court-appointed trustee Stan Springel not to take control of Innovative Communications Company or its phone and cable subsidiaries, and has ordered company officials not to cooperate with the trustee — actions Moorhead has testified under oath he has no authority to do.
Jeffrey Prosser’s V.I. companies, Innovative Communications and Emerging Communications, filed for bankruptcy in August 2006. They have been in dispute with the Rural Telephone Finance Cooperative and with the New York hedge fund Greenlight Capital, which are together owed $650 million. ICC is the owner of a number of companies in the Caribbean and elsewhere. Its holdings in the Virgin Islands also include TV2 and the V.I. Daily News. All the ICC companies are owned by Jeffrey Prosser. They employ more than 400 people in the territory.
On Sept. 7, U.S. Bankruptcy Court Judge Judith Fitzgerald passed down an order giving Springel broad powers over ICC, authorizing him to “remove the current board of directors and officers … if necessary.” That hearing was in response to an emergency motion filed in July by Springel’s attorney, Craig Rasile, asking for power to remove management officials. Prosser specifically “should be removed from management,” Rasile wrote.
In making her ruling, Fitzgerald cited ICC’s failure to pay at least $10 million into the employee pension fund over the past several years as one of several compelling reasons to wrest control of the company away from its current management and place it in the hands of a trustee. (See "Judge Strips Prosser of Power Over Company Operations.")
Moorhead issued his order to the PSC Tuesday. He writes that U.S. Bankruptcy Judge Judith Fitzgerald “granted the motion of the trustee to … take control of Innovative Communications,” and Innovative “is the immediate parent company of both Innovative Telephone (Vitelco) and Innovative Cable TV — designated public utilities by the Virgin Islands Code.”
The PSC has complete authority under V.I. law to rule on the transfer of control — “whether or not the transfer is indirect” — of public utilities, Moorhead writes, ordering the “parties … not to effect or cooperate in any change in control of the Virgin Islands public utilities" unless the PSC takes further action.
It is not clear Moorhead has the power to issue such an order, nor that Moorhead actually believes he has that power. Testifying as PSC legal counsel before a Nov. 2, 2006, meeting of the Committee of the Whole, Moorhead said he could not.
“I’m under oath,” Moorhead said. “The Public Services Commission speaks only through its orders, not letters, not phone calls, not emails. It has to be an order from the PSC. … The Public Services Commission speaks only through its orders, and orders are only generated after duly called meetings.”
The order, made by Moorhead on the authority of the PSC, was not voted on by the PSC, which has now twice canceled scheduled meetings with Springel: one in May and a recent follow up meeting scheduled for this month. Meanwhile, it has met numerous times for other purposes. (See "PSC Cancels Another Meeting with Trustee in Prosser Bankruptcy Case.")
Moorhead also testified to the senate last year that neither he nor the PSC had any authority over the trustee, and could not interfere with his actions.
“If the bankruptcy court appoints a trustee, that trustee, with the approval of the bankruptcy court, can do anything it wishes," Moorhead said. "They don’t even have to come to the Public Services Commission to ask for permission to do anything. Because federal law supersedes anything this body passes.”
Moorhead was testifying to the Senate about a previous controversial document written by him. (See "Attorney Asks PSC to Subpoena Key Players in ICC Bankruptcy Agreement as Signed Letter Comes to Light.")
Moorhead has also represented the PSC before the U.S. Bankruptcy Court, another action for which he may not have authority. Under V.I. law, only the attorney general or an attorney he or she designates can appear in court on behalf of a government institution. In March, Attorney General Vincent Frazer wrote PSC Chairwoman Alecia Wells about Moorhead’s court appearances.
“It is our understanding that Attorney Jeffrey Moorhead has been making appearances before Bankruptcy Court on behalf of the Public Services Commission,” reads a letter from Frazer to Wells, dated March 27 of this year. “Since we have no record of Mr. Moorhead being designated as a Special Assistant Attorney General, this practice and Mr. Moorhead’s appearances should cease.”
Yet as recently as Sept. 7, Moorhead appeared before the U.S. Bankruptcy Court in Pittsburgh on behalf of the PSC.
The RTFC, ICC’s biggest creditor, filed a motion with the PSC March 30, formally asking that Moorhead be replaced as hearing examiner. Among many concerns, the RTFC cited Moorhead’s lack of standing to appear in court for the PSC. The PSC last addressed ICC at its March 23 meeting. Having delegated authority in this area to Moorhead, and having canceled subsequent meetings on the subject, the PSC has left the motion to dismiss Moorhead in the attorney's hands until such a time as commission members choose to place it on the agenda.
Several calls were made seeking Moorhead’s input, and several messages were left at his office over the past week. He has not returned the calls.
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