Lt. Gov. Gerard Luz James II took to the airwaves Wednesday to attack the Daily News for "fabricating" a story about $8 million in uncashed checks allegedly found in a box at the Division of Corporations and Trademarks.
The V.I. Daily News reported Tuesday that "approximately $8 million in uncashed checks were discovered last week in a box in the Division of Trademarks and Corporations." The story said one check was for $750,000.
James called Radio One's Sam Topp show to defend his office and to demand a retraction of the story.
"They didn't call to ask for the facts," James said.
The facts, he said, were that due to a June 30 deadline for payment of franchise taxes, coupled with Fourth of July holiday weekend, there was an accumulation of checks. The department put people on overtime to work through the following weekend to process the payments, according to James.
On Wednesday, the newspaper ran an editorial saying that the Lieutenant Governor's Office attempted to cover up the incident.
James told Topp, "They can call me anytime."
The Daily News story said the paper did call and was told James was at a meeting at Government House, and that he didn't return the call.
Lorna Webster, Director of Corporations and Trademarks, said in a statement that "all the allegations in the newspaper, including the alleged check for $750,000, are false and without merit."
In an interview Thursday, Webster said she never received a call or a message from anyone at the Daily News prior to publication of the story.
However, J. Lowe Davis, executive editor of the Daily News, told Radio One that two attempts were made to reach Webster and reporters were told she wasn't available. Davis said she and the Daily News stand behind the story.
On Thursday, Webster showed reporters a copy of her message book, saying she keeps all of her messages that arrive in her office.
A review of the records at Division of Corporations and Trademarks indicate that under normal circumstances checks are received, recorded, given to the cashier and deposited within three to five working days.
However, at the end of June and facing a deadline of June 30 for franchise tax payment, some 15,000 to 20,000 corporations line up to pay their taxes, according to Webster.
Sometimes corporations even pay with two checks, she said, one for the tax and one for penalties, she said.
A review of the transmittals for July indicate a lapse of about 10 working days from receipt of checks to deposit.
As for as the alleged $750,000 check Webster said, "When we get a big check in here everyone knows because we have a party."
A big check would be in the area of $30,000 she said.
"We get bigger checks sometimes. We had one for about $210,000 recently—it was for back franchise taxes."
The basis for franchise tax payment was changed during the Schneider administration by then Lt. Gov. Kenneth Mapp when he declared that the franchise taxes had been miscalculated going back to 1971.
The change left several large corporations owing franchise taxes going back as far as 17 years. In order to obtain a certificate of good standing, which allows corporations to do business in the V.I., several businesses paid the back taxes under protest. A lawsuit pending in Territorial Court will determine whether the government's recalculation is legal.
The Virgin Islands Telephone Corp., owned by businessman Jeffrey Prosser—who also owns the Daily News—is one of those companies seeking to recover taxes.
Currently Vitelco and Innovative Communication Corp., Prosser's umbrella corporation, are looking to recoup more than $1.2 million in back franchise taxes from the V.I. government in District Court. Factoring in penalties and interest calculated by the Division of Corporations and Trademarks, Vitelco owed $1.1 million for 20 years. ICC, formerly known as Atlantic Tele-Network, owes $83,320 for 10 years. The two companies, represented by attorney Kevin Rames, and the V.I. government are now in District Court over the disputed franchise tax calculations. Although the companies protested the recalculated taxes, they paid under protest in September of 1998.
