Stuart MacMillan interim CEO of a “nonexistant business”
In the last few months of its Ponzi scheme operations, TelexFree took in a staggering fifty million dollars.
And despite being provided with legal advice indicating that they were running a pyramid scheme as far back as August of 2013, management still went ahead and paid themselves in excess of $10,000,000.
When it became clear that regulators were going to shut down TelexFree for being a Ponzi scheme, owners Carlos Wanzeler and James Merrill began to implement their exit strategy.
At the time TelexFree owed $5 billion in Ponzi ROIs to affiliates, had no significant retail revenue source and new affiliate investment, amid rumors of a pending compensation plan change, had dried up.
The initial stages of the exit-strategy saw the need for the removal of Carlos Wanzeler and James Merrill from the public eye. This resulted in the then unknown figure Stuart MacMillan being appointed “interim CEO”.
Shortly after MacMillan’s appointment, TelexFree, looking to beat US regulators to the courts, filed for Chapter 11 bankruptcy.
Before the bankruptcy was shifted to Massachusetts and placed in the control of the Department of Justice via a court-appointed Trustee, MacMillan fronted a panel of Judges in Nevada.
Having only been appointed at the last-minute, MacMillan was to be presented as “clean” and detached of any wrong-doings. Wanzeler and Merrill would remain out of the public-eye during TelexFree’s attempts to escape liability.
Perhaps the most bizarre aspect of MacMillan’s appointment as interim CEO was his testimony in support of TelexFree’s bankruptcy application.
MacMillan (was not a) VOIP specialist, could not identify any of (TelexFree’s) competitors or whether (TelexFree’s) product was competitive and
did not know how much of (TelexFree’s) stated revenue was actually cash versus back office non-cash bookkeeping entries.
This was the guy who, on paper, was in charge of TelexFree at the time.
Not surprisingly TelexFree’s bankruptcy proceedings were soon-after demolished, with control of the company passed over to the Department of Justice.
Remarkably, despite his complete ignorance of TelexFree’s operations, MacMillan is now demanding
payment of fees in the amount of $88,333.51 and expenses in the amount of $18,755.94 for the period from the (bankruptcy) Petition Date to
the date of appointment of the Trustee.
The Chapter 11 Trustee, Stephen Darr, naturally opposes MacMillan’s claims.
In an opposition to MacMillan’s claims filed on the 15th of September, Darr writes
MacMillan seeks payment of more than $100,000 for presiding over a nonexistent business.
MacMillan has not provided any detail or description of services that he allegedly provided or benefit ostensibly conferred upon the estates from these services.
To the extent that MacMillan was involved or directed (TelexFree) in their opposition to the government’s efforts, to the Trustee Motion, or to the Venue motion, then not only did MacMillan not confer a benefit upon the estates but indeed his actions harmed the estates through the additional costs incurred in litigation and the attendant delay in appointing an independent trustee to assume control of (TelexFree’s) liquidation.
Certainly, with respect to services rendered between the time venue was transferred on May 9, 2014 and the appointment of the Trustee on June 6, 2014, which fees totaled approximately $50,000, MacMillan’s services provided no discernible benefit to (TelexFree’s) estates.
It is unclear to whom MacMillan, as interim chief executive officer, was reporting to or whose services he was directing.
With respect to his reporting obligations as chief executive officer, it seems unlikely that he had significant responsibilities because Merrill was incarcerated and Wanzeler was a fugitive from justice.
With respect to MacMillan’s responsibility to manage personnel, it does not appear that any employees remained after the
Restraining Order entered and Asset Seizure was effected, nor does it appear that there were any business decisions to be made since there was no business.
Under these circumstances, MacMillan’s request to be paid approximately $88,000 in fees and approximately $18,000 in expenses should be disallowed in their entirety or substantially reduced, as MacMillan has failed to satisfy his burden respecting allowance of his fees and expenses.
The Fee Request filed by Impact This Day, Inc. should be disallowed as duplicative of the MacMillan Application.
During his short-lived tenure as interim CEO to date, MacMillan has not been seen or heard from by affiliates or the general public. Not once.
Infact his only appearance was at the aforementioned Nevada hearing, and his name being signed on a declaration he provided in support of TelexFree’s bankruptcy application.
That was the extent of MacMillan’s role in Wanzeler and Merrill’s ill-fated exit-strategy.
Was it worth a hundred thousand? Maybe. Does MacMillan deserve it? Clearly not.
Nothing MacMillan did benefited TelexFree as a business in any shape, way or form. He was Wanzeler and Merrill’s puppet. A final attempt at draping the thinnest veneer of legitimacy over a bulbous cesspool of fraud.
To add further insult to injury, Darr also reveals that despite all that has happened, MacMillan still refuses to surrender the $180,000 retainer he was paid to cover Wanzeler and Merrill’s asses.
MacMillan held a retainer of $177,576.81. Despite multiple requests by the Trustee, MacMillan has not turned over the amount of the retainer he holds in excess of fees and expenses sought in his application.
A hearing on the matter is currently scheduled for September 23rd. MacMillan will then be able to explain to the court why he saw fit to retain $177,000 in stolen investor funds, despite no court authorizing him to do so.
Ditto on why he’s entitled to over $100,000 for doing little more than signing a declaration and demonstrating how little he knew about TelexFree’s operations.
Footnote: Trustee Stephen Darr’s objection to Stuart MacMillan’s “Application For Allowance Of Administrative Expense Claim” can be viewed over at Kurtzman Carson Consultants.