U.S. Bankruptcy Court has ordered Jeffrey Prosser, the former owner of Vitelco, Innovative Cable TV and Virgin Islands Daily News, to pay more than half a million dollars to his estate’s trustee as part of civil contempt of court sanctions, court documents show.
The order issued Jan. 18, 2013, brings the total dollar value of sanctions imposed on Prosser in that contempt ruling to nearly $1 million.
In September 2012, U.S. Bankruptcy Judge Judith Fitzgerald found Prosser in civil contempt for the suspicious disappearance of hundreds of bottles of wine worth hundreds of thousands of dollars which the court had ordered them to preserve – and for the destruction of the remaining wine. [Memorandum Opinion re Motion for Contempt]
Under pressure from creditors and with several lawsuits against him, Prosser declared bankruptcy in 2006. In 2007 he and his wife, Dawn Prosser, were ordered to preserve a multimillion dollar wine collection at the Prossers’ homes in St. Croix and Palm Beach, Fla., pending a final resolution of the bankruptcy proceedings.
A court appointed trustee arranged for an inventory of the wines in 2008 and found the Prossers’ wine safely stored inside a temperature controlled wine cellar on St. Croix. But upon coming back to check on the wines in 2010, the trustee’s agents people found much of the wine missing and the rest ruined by neglect.
Trustee James Carroll filed a motion for civil sanctions against both Prossers in August of 2011.
Fitzgerald found the Prossers knew the court had given them orders to preserve the wine and "flagrantly disobeyed them" by allowing about half the wine in both properties to disappear and failing to make reasonable efforts to protect the expensive wines in temperature controlled storage.
"Thus we find Jeffrey Prosser and Dawn Prosser in civil contempt of court," Fitzgerald wrote at the time, continuing to say “their violation of three orders of the court is so egregious that sanctions are warranted.”
The court imposed sanctions in the form of damages against Prosser for the value of the lost wine at a dollar value of $434,875, minus whatever the remaining wines fetch at auction.
Fitzgerald also imposed sanctions "an as yet undetermined amount in fees and costs" for the court appointed trustee’s expenses for experts and legal counsel, for preparing and litigating the contempt case. Her September 2012 order said those additional fines for damages will be assessed in a supplemental order.
In December 2012, Fitzgerald issued an order directing Carroll to submit a new statement of expenses, disallowing some investigation costs. Carroll submitted those in January, and the court approved the fees on Jan. 18.
Fitzgerald’s order states that the court grants Carroll fees "incurred in connection with the filing, investigation and litigation of … (Carroll’s) motion to enforce the turnover order, for contempt and for sanctions," and "the Prossers are directed to pay to the trustee an amount of $528,086.17, reflecting the fee award, within 30 days of the entry of this order."
That brings the total judgment against the Prossers in the contempt case to $962,961.
The court also issued orders in February allowing the Prossers to claim an unlimited exemption for roughly $400,000 in equity the couple holds in Estate Shoys, Plots 168-171.
The court ruled that the couple owned the property as tenants by the entirety, meaning as a couple and not individuals, because it was purchased after they were married. For that reason, only joint debts – held by both Prossers and secured by joint property – could be attached against the couple’s joint equity in the property. As a result of the court’s ruling, the couple may retain that property.
The same order denied the Prossers’ requests for bankruptcy exemptions on a $50,000 Hermon Hill property and the Prossers’ $2.1 million mansion and guest house at Nos. 4, 4A, 5, 10A and 10AA Estate Shoys.
The Prossers claimed the $2.1 million Shoys property should be exempt as a homestead. In the court’s order, Fitzgerald wrote that V.I. law capped the homestead exemption at a maximum of $30,000, and then denied the $30,000 exemption, saying Prosser improperly tried to hide his interest in the property.
"Prosser’s mischaracterization of his interest in the Shoys Estate as merely ‘possessory’ was done in bad faith and for purposes of preventing the inclusion of a multimillion dollar asset in his bankruptcy estate. Furthermore, despite denying an ownership interest in the Shoys Estate, a jury found that Mr. Prosser fraudulently conveyed the funds to his wife with which to make improvements to the property," Fitzgerald wrote in a Feb. 14 memorandum opinion.
Prosser’s "bad faith conduct relates directly to the claimed exemption in the Shoys Estate … and warrants denying the $30,000 exemption," Fitzgerald concluded.