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Court Filing Accuses Prosser of Misconduct on Several Fronts

Jan. 9, 2008 — A brief filed with the U.S. Bankruptcy Court accuses former Innovative Telephone owner Jeffrey Prosser of several different kinds of misconduct, including attempting to defraud his company's creditors.
Prosser has "engaged in … making false oaths, refusing to obey court orders (and) … concealing assets," according to the filing by West Coast business executive Stan Springel, the court-appointed trustee of Prosser's former corporate holdings.
The brief continues, "Prosser engaged in a systematic process pursuant to which he siphoned funds from New ICC and its affiliates to, and/or for the benefit of, himself, his family, and his friends. This conduct … (was) an attempt to defraud New ICC's creditors."
The charges are contained in a complaint filed for Springel by Daniel C. Stewart of the Dallas law firm of Vinson and Elkins, counsel to Springel as Chapter 11 trustee in the case. The complaint was filed in response to an effort by Prosser's lawyers to get Springel discharged from the bankruptcy case.
Stewart's brief argues that the misconduct was such that the court should disregard the discharge petition.
"Prosser's actions (which continued even after the commencement of this bankruptcy case) evidence his disregard for the bankruptcy laws and the orders of this court and his intention to utilize this bankruptcy case as yet another roadblock to recovery by his creditors on their claims," the brief says.
The charge is that Prosser, sole owner of the holding company the court calls New ICC, misused his position at the corporation in the ways described above. Many of these charges have surfaced individually in the past, but observers say this was the first time they were presented to the court in one comprehensive package.
Among the specifics cited in the brief :
— "Valuing his clothing at only $2,500 … despite purchases on his behalf of $550,000 (a significant portion of which were for men's clothing) at Bergdorf Goodman, a luxury department store (in New York City) …";
— "Failing to identify three liens that had been filed against real property in Lake Placid, New York …";
— "Failing to identify one or more life-insurance policies relating to Prosser …";
— "Failing to report all of his claimed income or sources of funds …"; and
— "Initially testifying that substantial advances to him and to ICC-LLC by New ICC were never intended to be repaid and then, at a subsequent hearing, testifying that such advances were intended to be repaid through a merger of certain companies that was not effectuated …."
The latter set of transactions involved tens of millions of dollars, according to previously filed court documents.
The brief also lists numerous instances in which Prosser failed — despite a court order on the subject — to provide court-appointed officials with information requested about his finances.
Another subject covered at some length is a series of "wrongful and fraudulent transfers" of property from New ICC to himself; his wife, Dawn Prosser; and to others.
The Dec. 31 filing was signed by both Stewart and the local counsel for Springel, Benjamin A. Currence, a St. Thomas attorney.
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