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Charlotte Amalie
Friday, March 29, 2024
HomeNewsArchivesBankruptcy Trustees Hoping to Claw Back Millions in Illegal Prosser Payments

Bankruptcy Trustees Hoping to Claw Back Millions in Illegal Prosser Payments

Dozens of lawsuits seeking more than $15 million that former Innovative Communications owner Jeffrey Prosser directed the company to spend while he was entering bankruptcy may move faster now because two bankruptcy court trustees have agreed to work in concert, court documents suggest.

Prosser is in involuntary Chapter 7 bankruptcy, and ICC, the parent company of Vitelco, which he formerly owned, is in Chapter 11 bankruptcy. An arm of Prosser’s biggest creditor, the National Rural Utilities Cooperative Finance Corporation, has since taken ownership of Vitelco and Innovative.

Hoping to recoup millions of dollars of company money misspent by Prosser, court-appointed Chapter 11 Trustee Stan Springel filed nearly 80 separate suits since 2008 dunning companies and individuals on St. Croix, elsewhere in the Virgin Islands and around the world. Chapter 7 Trustee James Carroll filed a similar number of suits, frequently seeking the same money from the same individuals, but to serve a different set of creditors.

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.

Companies that provided services to Prosser in good faith may now have to pay his bankruptcy estate because Prosser paid for them with funds that properly already belonged to other creditors. Both trustees filed to get many of those questionable payments clawed back out of the pockets of the people and companies Prosser paid for goods and services. Since filing, several of the suits have been settled or dismissed, but most remain pending.

Global Bank of Commerce, in Antigua, is one of the biggest 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 received from ICC 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 included 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. Alternatively, Prosser’s personal creditors argue the funds spent on Prosser’s behalf should be disgorged and given to his personal creditors.

Here are the largest remaining claims:
— $3.9 million, Global Bank of Commerce Ltd.;
— $2.4 million paid for unspecified services to former Innovative board member John Raynor;
— $1.5 million paid to John Tutein of St. Croix for unspecified services;
— $1.3 million, K&E Construction of St. Croix;
— $733,000, Natural Builders and Quality Developers, of St. Croix;
— $668,000, Instrument & Control Systems, a St. Croix firm;
— $552,000, William R. Nash V.I., a plumbing/air-conditioning contractor;
— $521,000, former St. Croix Police Chief Oakland Benta purportedly as cash payments for "security" expenses;
— $491,000, Artisan Stone & Woodworks, LLC, St. Croix;
— $418,000, Peter R. Ross of St. Croix;
— $410,000, Jerry Mann, of St. Thomas;
— $324,000, Charlie Weaver of St. Croix;
— $320,000, Dudley, Clark & Chan, a St. Thomas law firm;
— $308,000, Chalgub/Lanio Architects. a V.I. firm;
— $213,000, Tropical Shipping & Construction Co. of St. Croix;
— $165,000, Poolworks, a V.I. business;
— $120,000, Creative Landscaping of St. Croix;
— $101,000, Charismatic Equipment, a V.I. firm;
— $84,000, 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;
— $60,000, Cruzan Gardens of St. Croix;
— $59,063, Heavy Materials of St. Thomas;
— $55,300, All Points Construction of St. Croix;
— $42,000, Seven Seas Water Corporation, a V.I. firm;
— $42,0009, JWM Painting, Repair & Maintenance, St. Croix;
— $40,000, Caribbean Hydro-Tech of St. Croix; and
— $36,000, Gallows Bay Hardware, of St. Croix.

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