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Bankruptcy Hearing Reveals Info on Prosser Real Estate Holdings

Sept. 10, 2006 — A review of the transcript of a recent court hearing on the Jeffrey Prosser bankruptcy filings has shed a little light on his finances and those of his companies — information that he has routinely fought to keep private in the past.
The Aug. 23 hearing, which was before U.S. Bankruptcy Judge Judith K. Fitzgerald, took place in her home courtroom, in Pittsburgh, Pa. The question being discussed was what U.S. Bankruptcy jurisdiction should be used for these cases – that of Delaware, where Prosser's creditors have sought to push him and his companies into involuntary bankruptcy; or in the Virgin Islands, where Prosser and his firms had filed for voluntary bankruptcy. Each side wanted the case to be heard on its own turf.
Oddly, regardless of which jurisdiction is used, Judge Fitzgerald will preside, as she sits in Wilmington, Del., and St. Thomas, as well as in Pittsburgh.
Arguing that the case should be heard in St. Thomas was Carol Rich of the St. Thomas firm Dudley, Clark & Chan. In the course of her oral presentation, she said that the properties of interest were primarily in the Virgin Islands. To support this position she referred to the decision of a Delaware State court saying: "It was clearly stated in that opinion that Vitelco's revenues represent 88 percent, I think, was the figure Judge Jacobs used of the revenues of the companies …."
Observers have long sensed the centrality of Vitelco to Prosser's holdings but the 88 percent figure had not previously surfaced (except in the Delaware opinion.)
A little later in the hearing, Gregg Galardi, a Delaware-based attorney for the Greenlight group (former minority stockholders in Emerging Communications, the predecessor company to Prosser's Innovative Communications Company) argued that Prosser really did not spend much time in the Virgin Islands because: "…he [Prosser] testified specifically that for the last two years he spends nine months of the year in Florida because that's where his kids go to school. He spends two months a year in Lake Placid, N.Y., because that's where he vacations. And if I add nine and two I get 11, there's not a whole lot of months left to live in the Virgin Islands."
The reference to Lake Placid led the Source to the tax records of Essex County, where Lake Placid is located. These records, which are available on the Internet, show that Jeffrey and Dawn Prosser own a house there assessed at approximately $1.78 million, which created a yearly property tax bill of $21,480.96 in 2005. Since Essex County limits the increase in value of its real estate assessments to 12 percent annually, people in the real estate business would assume that the $1.78 million assessment is lower than its actual value.
The value of the house in New York is well below that of the Prosser house in Florida, but roughly equivalent to a house owned by Dawn Prosser in Annas Hope on St. Croix. That house, again according to governmental tax records, is (along with an adjacent lot) assessed at approximately $1.95 million. This produces an annual tax bill of $14,604.41, or about two-thirds of the New York tax bill.
The Prosser house in Palm Beach carried a price tag of $5.65 million when Prosser bought it in 2000.
The Lake Placid assessment rolls provide more detail than those in the Virgin Islands. One can tell from them that the Prosser house has a large waterfront lot (.82 acres), with an estimated value greater than neighboring lots in the immediate vicinity.
The Aug. 23 hearing is the first one involving actual legal arguments since the involuntary filings in February. Court records indicate that the judge has held a number of status conferences, sometimes involving as many as a dozen lawyers, but no actual hearings until this one.
Fitzgerald announced that she would probably rule on the question of venue before the end of September. She also stated, as she has frequently, that she hoped the warring parties would settle the case, without proceeding to trial, in the near future.
An earlier deal acceptable to both Prosser and the creditors (including the Rural Telephone Finance Cooperative) failed in July when the expected financing collapsed. This led Prosser and two of his companies to file for voluntary bankruptcy (See "ICC, Prosser File for Bankruptcy").
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