A three-judge panel of the U.S. Eighth Circuit Court of Appeals threw out a lawsuit Thursday by Jeffrey Prosser's former partner, John Raynor, claiming a massive criminal conspiracy by the Cooperative Finance Corporation to defraud the U.S. Government. Prosser, the former owner of Vitelco, the Innovative cable companies and the Virgin Islands Daily News, has been in bankruptcy since 2006. Raynor, once a director of one or more of Prosser's corporations, has been a party to a number of failed lawsuits attacking the bankrupt Prosser's creditors and alleging a wide range of criminal conspiracies.
In this particular case, Raynor sued the National Rural Utilities Finance Cooperative, claiming violations of the federal False Claims Act. The Rural Finance Cooperative is part of the same company which loaned Prosser more than half a billion dollars. And it ultimately wound up owning Vitelco and the Innovative cable television companies after he went bankrupt and the companies failed to fetch enough at auction to pay the debts Prosser racked up.
Judge William Benton wrote the decision denying Raynor's appeal on behalf of the panel, saying the case lacked merit and was properly dismissed when it was first heard in U.S. District Court. Affirming the ruling by District Court Judge Laurie Camp, Benton quoted Camp, writing "Though Raynor’s allegations are numerous, none of them sufficiently set forth specifics regarding the fraudulent nature of any of the alleged acts of any defendant."
Meanwhile, the trustee appointed by U.S. Bankruptcy Court to oversee Prosser's former corporate properties is suing Raynor for $1.7 million that Prosser allegedly had his companies give Raynor. The lawsuit alleges there is no record of any legitimate business purpose for the payments. And that the payments were made "at Prosser's direction – with an actual intent to hinder, delay, or defraud present or future creditors" of Prosser's former companies. That amount is somewhat less than the $2.4 million in fraudulent transfers originally sought when the case was first filed in 2009 (See related links below).
Raynor filed a motion in June asking the court to dismiss the suit against him. On Aug. 9, U.S. Bankruptcy Judge Mary Walrath dismissed that motion and the lawsuit against him will proceed.