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Court Documents Reveal Prosser Still a Well-Paid 'Frequent Flyer'

Jan. 11, 2007 — Newly filed court documents show that Jeffrey Prosser, owner of Innovative Communications Corp., is drawing a combined quarter of a million dollars a month for his salary and for plane rides – from one of his firms now in bankruptcy.
Paying these sums is Emerging Communications, Inc., corporate grandparent to Vitelco (also known as Innovative Telephone); the data came from monthly financial statements that the bankruptcy court had demanded be filed. The statements covered the five full months the firms have been under bankruptcy — from July to December 2006.
Emerging is a holding company owned entirely by Prosser and is funded by what Prosser calls "New ICC." That firm, in turn, owns, among other things, Vitelco, which produces 85 percent of the assets of New ICC. So, in effect, V.I. telephone subscribers are largely funding Emerging's reported expenditures.
The five monthly reports show that Prosser was paid a total of $782,692.35 in salary for the five months. Additionally, the reports indicate airplane costs of $558,983.29 in the same period. This means that, on average, Prosser's monthly salary during the period was a little more than $156,000, while the aircraft costs work out to a little more than $111,000 a month, again on average.
The extent, if any, that Prosser drew salaries from his other companies was not noted; nor were the total aviation costs to all the Prosser entities.
Interestingly, in November — the one month in which there were no aircraft charges — Prosser's salary took a leap upwards. During four of the five months, Prosser was paid $142,307.70 monthly, but in November he was paid $213,461.55. Whether these two patterns of expenditure had anything to do with each other was not discussed in the otherwise lengthy reports.
While Prosser's salary was clearly identified as such, the use of the plane or planes was described as "monthly aircraft charges for aircraft services provided by Atlantic Aircraft, Inc., formerly known as I-COM Holdings Inc., a non-debtor affiliate of Emerging," i.e., the operator of the corporate jet.
According to the court documents, the total costs of Emerging for the five months came to roughly $3.06 million.
In addition to the salaries and the aviation expenses, there was, in July, a one-time $500,000 "payment made by New ICC to a third-party financial institution (the identity of whom has been revealed to the Court under seal ….in connection with a proposed financial transaction.)"
This apparently was a payment made to the unnamed financial entity that has been trying, so far without success, to raise enough money to pay off the debts of Prosser and his firms.
The financial reports give other glimpses into the complexities of high finance, Prosser-style.
For instance, even though Emerging handled more than $3 million in income and expenditures during these five months, it did so without writing a single check – that was done by other corporate players. In the words of the report: "Emerging is a holding company that maintains no bank accounts and had no cash or other liquid funds on hand during this reporting period."
Further, the money that flowed to Emerging from New ICC is not characterized as income, it is described as follows:
"The amounts listed herein as 'Loan Payments' have been nominally booked by non-debtor ICC New as 'loans' with corresponding contra-equity treatment, with the effect of increasing the shareholder deficit equity account. As such, these nominal 'loan amounts' are not intended to be repaid, and the mere facial recording of such transactions does not make ICC New a creditor of any of Emerging, ICC-LCC or Jeffrey J. Prosser."
So there were more than $3 million worth of non-repayable loans. (The documents seem to use the terms 'New ICC" and "ICC New" interchangeably.)
In addition to the salary payments to Prosser, payments for aviation services and the fee to the unnamed financial institution, Emerging also made these allocations:
–$750,000 to ICC New salaries;
–$166,666.65 for "business-related expenses" of ICC New employees;
$75,000 for "allocation of salary expenses for Sir Ronald Michael Sanders, Executive Director for International Relations and member of Board of Directors of ICC New"; and –$198,442.69 for legal expenses.
Most bankruptcy legal expenses have been paid directly by New ICC and thus were not reported in these documents. As reported previously, those legal fees have totaled close to a million dollars. Prosser's creditors have filed objections with the court, not yet ruled upon, claiming that only the debtor firms, such as Emerging, should be paying the legal bills.
Judith K. Fitzgerald, the presiding U.S. Bankruptcy Judge, forced the filing of the monthly reports by a court order issued on Jan. 7 (See "Prosser Fails to File Financial Reports with Judge").
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