"ICC is insolvent or is in immediate danger of becoming insolvent…"
"…the use of $28 million of Vitelco's funds for Prosser's Belizean venture… may result in increased rates to Vitelco's customers and/or decreased taxes to the U.S. Virgin Islands."
Oct. 7, 2005 These are two key statements made by the Rural Telephone Finance Cooperative (lender of more than half a billion dollars to ICC) in the lawsuit it filed against the individual directors of the Innovative Communication Corporation last week in U.S. District Court, Division of St. Thomas and St. John. (See "'Nicey, Nicey' at PSC Meeting Covers Deep Differences").
In June, the cooperative bank sued ICC in the U.S. District Court for the Eastern District of Virginia (See "Cooperative Sues ICC and Says it owes $530 Million").
The new suit seeks to hold the individual directors responsible for "breach[ing] their fiduciary duties by authorizing and/or acquiescing in Vitelco's sale of $81 million of Preferred Stock…which unnecessarily burdened Vitelco with redemption premiums and a ten percent interest rate on stock."
The suit was filed for RTFC, a non-profit, cooperative wholesale bank for rural utilities based in Herndon, Va., by Hunter, Cole & Bennett, a St. Croix law firm.
On the question of ICC's finances, the suit stated, "Upon information and belief, ICC is insolvent or is in imminent danger of becoming insolvent and has been so continuously since at least January 1, 2002."
In addition, "the defendants compounded their breach of fiduciary duty when they allowed more than $28 million of the Vitelco offering proceeds to be loaned on an unsecured basis to a Belizean entity affiliated with Jeffrey J. Prosser, ICC's Chairman, to enable Prosser to acquire the Belize Telephone Company, a venture that has nothing to do with the legitimate purpose of Vitelco,". the filing stated.
"This transfer of Vitelco funds… was made at the same time that these defendants claimed to the Virgin Islands Public Service Commission and to the Economic Development Commission that Vitelco was in need of tax breaks and rate increases because it lacked necessary funds to finance upgrade to the Virgin Islands telephone system," the filing stated.
Not noted in the filing was the fact that ICC had secured three loans totaling more than $66 million from two different federal agencies last winter to allow ICC to upgrade the Virgin Islands phone system. (See "Suit Seeks More from ICC: Loan Details Made Known").
The suit alleged that several ICC and Vitelco financial transactions, such as the floating of the preferred stock, should have happened only after securing permission from either the PSC, or the cooperative bank, or both. In filings in the Virginia-based law suit ICC denied that it had such obligations.
The defendants named in the suit include two brothers, two British knights, one former general, a key Kennedy White House staffer, two other individuals, ICC and Vitelco. The brothers are Jeffrey and Michael Prosser, the knights are Sir Shridath Ramphal (former head of the Commonwealth of Nations) and Sir Ronald Sanders, the former Lt. General is Samuel E. Ebbesen, and the former Kennedy speech writer is Richard N. Goodwin. The other two are John P. Raynor, long-time lawyer for Prosser, and David Sharp, an officer of ICC.
The suit explained that "RTFC has not made demand[s] on the Boards of ICC and Vitelco… because such demand[s] would be futile and useless." It went on to say that "each of the Board members of ICC and Vitelco receive cash payments of at least $100,000 a year as compensation for their board services as well other valuable benefits…. such as trips on Prosser's corporate jet and luxury accommodations in the U.S. Virgin Islands. As a result, each of the…. Defendants [is] incapable of exercising independent business judgment…."
At press time, it was unknown whether ICC had replied to these allegations.
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