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HomeNewsArchivesAnalysis: Prosser Bankruptcy Case Complicated by Disowned Lawyers

Analysis: Prosser Bankruptcy Case Complicated by Disowned Lawyers

Oct. 23, 2007 — Most of the small army of lawyers in the bankruptcy case of Jeffrey Prosser, former owner of Innovative Telephone, are solidly tied to their clients.
But two other attorneys, both from the Virgin Islands, have complicated relations — or perhaps non-relations — with the entities they say they represent — or represented. Their presence on the legal scene has complicated an already extremely complex controversy.
The attorneys and the parties they speak for (or spoke for) are Jeffrey Moorhead and the territorial Public Services Commission (PSC), and Adam Hoover and Innovative Communications Corporation, or — in the court's terms — New ICC. Both lawyers have taken positions favorable to Prosser.
In both instances, Stan Springel, the court-appointed trustee for what had been Prosser's firms, has moved in court against each of the lawyers; both of Springel's motions are pending before the court. To the extent that controversies about these lawyers have absorbed court time — and they have — they postpone the consideration of other issues.
The more drastic and earlier of these actions is an effort by Springel to cite Moorhead for contempt of the U.S. Bankruptcy Court. (See "Brief Calls for PSC's Moorhead to be Cited for Contempt of Court.")
The more recent and milder effort by Springel is a motion seeking to deny Hoover any right to speak to the court on behalf of New ICC unless he can, to the satisfaction of the court, disclose under what authority he is operating. That motion was filed Oct. 12.
Moorhead, in the role of hearing examiner for the PSC, had appeared at several bankruptcy court hearings to — among other things — protest the appointment of Springel as inappropriate without the consent of the PSC. Moorhead also issued orders telling the employees of Prosser's operating companies, such as Vitelco, not to cooperate with the court-appointed trustee.
Subsequently the territorial Attorney General replaced Moorhead as the PSC advocate, and the PSC withdrew the two non-cooperation orders.
The PSC issued an order Oct. 16 billing Vitelco for half a million dollars in special "docket-specific" assessments. Listed as Order 2008/1, the order was signed by outgoing PSC chairwoman Alecia Wells. Out of the half million, $470,000 is to pay attorney Jeffrey Moorhead for his services as a hearing examiner this year. Those services are listed as "Docket no. 571, In Re Change of Control- Vitelco."
The Source has not yet determined whether Vitelco is being billed for those unauthorized court appearances. Under V.I. law, the PSC has wide latitude in make special assessments on regulated utilities.
At the PSC's Oct. 9 meeting, Commissioner Joseph Boschulte asked if there was a detailed account of the expenses that make up the $470,000 bill. PSC staff said at the time there was a detailed account in the form of Moorhead's itemized bill. When the Source asked to see that account last week, PSC officials referred all questions regarding these docket-specific assessments to Moorhead, Wells and PSC attorney Tanisha Bailey-Roka.
Wells and Moorhead have neither taken nor returned calls from the Source in months. Bailey-Roka told the Source last week she is no longer speaking to the press.
Claudius F. Moore, the PSC's accounts maintenance officer, testified during Senate budget hearings in July that Jeffrey Moorhead is paid $250 an hour and had billed the V.I. government $287,000 in consulting fees up to that point in the fiscal year.
At the Oct. 2 hearing of the bankruptcy court in Pittsburgh, there was a discussion as to whether the contempt of court hearing should proceed, in view of the PSC's recent rescinding of Moorhead's orders. At the moment, the contempt motion is slated for argument at the next hearing before Judge Judith Fitzgerald on Oct. 31.
Meanwhile, Springel has filed his petition against Hoover's appearance on behalf of New ICC, an entity the court recently put under Springel's authority. At the Oct. 2 hearing, Hoover contended that New ICC appointed him as counsel before the court's decision to place Spingel in charge. Since Springel had not appointed a board of directors for New ICC, and since territorial law required that such a corporation had to have at least three directors, his appointment by the old board was still valid, Hoover said.
Springel countered that he has been given full authority over New ICC by the judge and that he had not hired Hoover to be its lawyer.
The judge has expressed concern about Hoover's role at two of her hearings, but has let him speak his piece. It is not clear when she will hear formal arguments on his status, or rule on Springel's motion.
Another filing with the court showed that some lawyers with solid connections to their clients have large outstanding and unpaid legal bills.
Three Mainland firms working for Prosser are owed a total of more than half a million dollars by Prosser, he reported in another filing earlier this month. The firm of Robert F. Craig is owed $246,251; Shulman, Rogers, Gandal, Pordy ahd Ecker is owed $264,897; and Philips, Goldman and Spence is owed $26,059. The report would suggest, by not mentioning them, that Prosser is up to date on his payments to his V.I. lawyers.
In addition, Prosser has an obligation to pay the court-appointed examiner and his lawyers and accountants. In this case, Examiner Steven A. Felsenthal (a retired federal bankruptcy judge) is owed $193,123, while the examiner's mainland law firm, Stutzman, Bromberg, Esserman and Plifka, is owed $302,483. His mainland accounting firm, Litzler, Segner, Shaw and McKenney, is owed $425,953, and his V.I. law firm, Nichols, Newman, Logan and Grey, has unpaid bills for $69,044.
All this adds up to $1,527,810 in unpaid bills.
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Oct. 23, 2007 -- Most of the small army of lawyers in the bankruptcy case of Jeffrey Prosser, former owner of Innovative Telephone, are solidly tied to their clients.
But two other attorneys, both from the Virgin Islands, have complicated relations -- or perhaps non-relations -- with the entities they say they represent -- or represented. Their presence on the legal scene has complicated an already extremely complex controversy.
The attorneys and the parties they speak for (or spoke for) are Jeffrey Moorhead and the territorial Public Services Commission (PSC), and Adam Hoover and Innovative Communications Corporation, or -- in the court's terms -- New ICC. Both lawyers have taken positions favorable to Prosser.
In both instances, Stan Springel, the court-appointed trustee for what had been Prosser's firms, has moved in court against each of the lawyers; both of Springel's motions are pending before the court. To the extent that controversies about these lawyers have absorbed court time -- and they have -- they postpone the consideration of other issues.
The more drastic and earlier of these actions is an effort by Springel to cite Moorhead for contempt of the U.S. Bankruptcy Court. (See "Brief Calls for PSC's Moorhead to be Cited for Contempt of Court.")
The more recent and milder effort by Springel is a motion seeking to deny Hoover any right to speak to the court on behalf of New ICC unless he can, to the satisfaction of the court, disclose under what authority he is operating. That motion was filed Oct. 12.
Moorhead, in the role of hearing examiner for the PSC, had appeared at several bankruptcy court hearings to -- among other things -- protest the appointment of Springel as inappropriate without the consent of the PSC. Moorhead also issued orders telling the employees of Prosser's operating companies, such as Vitelco, not to cooperate with the court-appointed trustee.
Subsequently the territorial Attorney General replaced Moorhead as the PSC advocate, and the PSC withdrew the two non-cooperation orders.
The PSC issued an order Oct. 16 billing Vitelco for half a million dollars in special "docket-specific" assessments. Listed as Order 2008/1, the order was signed by outgoing PSC chairwoman Alecia Wells. Out of the half million, $470,000 is to pay attorney Jeffrey Moorhead for his services as a hearing examiner this year. Those services are listed as "Docket no. 571, In Re Change of Control- Vitelco."
The Source has not yet determined whether Vitelco is being billed for those unauthorized court appearances. Under V.I. law, the PSC has wide latitude in make special assessments on regulated utilities.
At the PSC's Oct. 9 meeting, Commissioner Joseph Boschulte asked if there was a detailed account of the expenses that make up the $470,000 bill. PSC staff said at the time there was a detailed account in the form of Moorhead's itemized bill. When the Source asked to see that account last week, PSC officials referred all questions regarding these docket-specific assessments to Moorhead, Wells and PSC attorney Tanisha Bailey-Roka.
Wells and Moorhead have neither taken nor returned calls from the Source in months. Bailey-Roka told the Source last week she is no longer speaking to the press.
Claudius F. Moore, the PSC's accounts maintenance officer, testified during Senate budget hearings in July that Jeffrey Moorhead is paid $250 an hour and had billed the V.I. government $287,000 in consulting fees up to that point in the fiscal year.
At the Oct. 2 hearing of the bankruptcy court in Pittsburgh, there was a discussion as to whether the contempt of court hearing should proceed, in view of the PSC's recent rescinding of Moorhead's orders. At the moment, the contempt motion is slated for argument at the next hearing before Judge Judith Fitzgerald on Oct. 31.
Meanwhile, Springel has filed his petition against Hoover's appearance on behalf of New ICC, an entity the court recently put under Springel's authority. At the Oct. 2 hearing, Hoover contended that New ICC appointed him as counsel before the court's decision to place Spingel in charge. Since Springel had not appointed a board of directors for New ICC, and since territorial law required that such a corporation had to have at least three directors, his appointment by the old board was still valid, Hoover said.
Springel countered that he has been given full authority over New ICC by the judge and that he had not hired Hoover to be its lawyer.
The judge has expressed concern about Hoover's role at two of her hearings, but has let him speak his piece. It is not clear when she will hear formal arguments on his status, or rule on Springel's motion.
Another filing with the court showed that some lawyers with solid connections to their clients have large outstanding and unpaid legal bills.
Three Mainland firms working for Prosser are owed a total of more than half a million dollars by Prosser, he reported in another filing earlier this month. The firm of Robert F. Craig is owed $246,251; Shulman, Rogers, Gandal, Pordy ahd Ecker is owed $264,897; and Philips, Goldman and Spence is owed $26,059. The report would suggest, by not mentioning them, that Prosser is up to date on his payments to his V.I. lawyers.
In addition, Prosser has an obligation to pay the court-appointed examiner and his lawyers and accountants. In this case, Examiner Steven A. Felsenthal (a retired federal bankruptcy judge) is owed $193,123, while the examiner's mainland law firm, Stutzman, Bromberg, Esserman and Plifka, is owed $302,483. His mainland accounting firm, Litzler, Segner, Shaw and McKenney, is owed $425,953, and his V.I. law firm, Nichols, Newman, Logan and Grey, has unpaid bills for $69,044.
All this adds up to $1,527,810 in unpaid bills.
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.