Nov. 21, 2008 — Jeffrey Prosser has siphoned more than $156 million dollars out of ICC and by extension, out of Vitelco and Innovative Cablevision, it's only component companies worth anywhere near that amount, according to Prosser's financial disclosures.
This sum is separate and distinct from, though interconnected with, Prosser's vast outside debts.
The almost a billion dollars ICC owes its corporate creditors has been discussed at length in the media and many millions of dollars in highly questionable company spending by Prosser has been documented in a piecemeal fashion in numerous Source articles. (See Prosser: The $6 Million Wine Man and "Least of Prosser Mansions Sells for $3.55 million)
The $156 million figure has been available in court documents, but due to the technical nature of the legal and accounting terminology, it was largely overlooked by the press until court testimony Thursday drove home its relevance.
Prosser is in involuntary Chapter 7 bankruptcy and his former company; ICC, the parent company of local telephone provider Vitelco and cable television company Innovative Cablevision, is in Chapter 11. Ingrid Christian, a forensic accountant hired by the Chapter 11 trustee overseeing ICC during the bankruptcy proceedings, has been testifying all week on in U.S. Bankruptcy Court for what are called turnover adversary hearings. The court is to decide whether or not tens of millions of dollars spent by Innovative on Prosser and his family members were improper and if some of it can be retrieved and turned over to Prosser's creditors. (See "Court Gives Prosser 3 Setbacks as V.I. Hearings Open" and "Almost $1 Million Credit-Card Rebate Asked in Prosser Case").
To that end, Christian has compiled an extensive list of ICC company payments for all manner of luxury items, services, travel expenses and the like for Prosser and his family, which on their face appear to have no legitimate business purpose. Most, though not all, of the disputed expenses were culled from a single ICC account ledger variably called the "Contra Equity Account," and the "Due from Shareholder Account."
In an apparent effort to show the items on Christian's list were not fraudulent transfers but legitimate business transactions, Karin Bentz, attorney for Prosser's wife Dawn, asked Christian if anything on her list was actually listed as an asset of the company.
"Everything in 'Due From Shareholder' as a receivable is itself an asset of the company," Christian said. "It is a receivable the company would expect to collect on. A receivable is an asset of company."
In other words, if a company loans money, it expects to be repaid with interest. If the company were sold, the purchaser would get the repayment, so on its books, the anticipated repayment is an asset. But since the money has left the building, it still reduces equity in the company.
"When auditors prepare external audit reports, they take that amount … as a reduction to equity," Christian said. "But with the company it is an asset, a "due from account" due to the company from shareholder."
In this case, the only "shareholder" is Prosser, so the account is simply money owed by Prosser personally to the company.
James Lee, attorney for the Chapter 11 trustee, asked Christian how much was "due from shareholder."
"I don't know the exact amount but it is in the hundreds of millions of dollars," Christian said.
A court opinion from February of 2007 cites company documents showing Prosser already owed ICC "in excess of $156 million" when he advanced himself $13 million in 2004 and 2005 and "over $14 million" in 2003. On his personal financial disclosures, Prosser lists personal debts of $164,661,843.26, but without access to the details of the report it is impossible to determine if all of that is owed to ICC.
There were no regular payments and few payments at all toward that ever growing debt, Christian said.
Bentz and Leigh Goldman, attorney for Prosser's adult children, pressed Christian on whether Prosser made any payments toward his debt that should be counted as repayment for goods and services Dawn and the adult children were given.
"I don't think this company made any payment which were for offsets," Christian said. "They were such a rarity to see. It was not anything that occurred normally in the course of events."
"Do you deem the payments by Prosser toward the contra equity to be significant?" asked Goldman.
"I believe there were about, just over $2 million, of which $1.5 I could clearly identify what it was for," Christian said.
Prosser's income to pay that debt would have come principally from Virgin Island telephone and cable television, with the larger share coming from Vitelco.
"Would it be fair to say 85 to 90 percent of New ICC revenues came from Vitelco?" Bentz asked.
"A significant portion, whether a majority or not," Christian said.
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