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Trustee Wants to Know Who Is Paying Prosser's Lawyers

What compensation do Jeffrey Prosser’s lawyers get, and where does it come from?

These are questions asked in yet another lawsuit in the bankruptcy trial of Prosser, former owner and CEO of Innovative Telephone.

Stan Springel, the court-appointed trustee handling Prosser’s former corporate interests, brought the action, a “Motion to Compel Compliance” with the U.S. Bankruptcy Code.

Springel’s brief notes that Prosser and his wife, Dawn Prosser, have previously testified that they are not employed and that they do not have significant liquid assets at their disposal, nor do they have property that is exempt from the bankruptcy case.

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“Nonetheless,” the brief argues, “Prosser has retained numerous law firms to represent him … during the course of the bankruptcy cases and other proceedings Prosser and his counsel have filed countless motions, objections, notices of appeal, appellate briefs, complaints, and other pleading. Despite the exhaustive nature of their litigation strategy and the fact that Prosser’s counsel appear to practice in small firms (which presumably would be unable to carry significant receivables….) Prosser’s counsel have repeatedly represented that they have not been compensated for any legal service.”

According to his brief, Springel “finds these representations incredible, particularly in the light of … the amount of travel expense alone associated with attending hearings, trials, depositions and other proceedings.”

Springel attached a long list of court proceedings “that required Prosser’s counsel to travel and presumably incur expenses for flights, hotel accommodations, food.”

Most of Prosser’s lawyers have mainland offices in such places as New York City, Toledo and Omaha, and must travel to either Pittsburgh, usually, or St. Thomas, sometimes, for court appearances. Only one of Prosser’s current lawyers, Jeffrey Moorhead. who practices in the Virgin Islands, can avoid travel, but then in only some of the proceedings, Springel noted.

Citing a provision in the Bankruptcy Code, Springel demanded that Prosser’s lawyers reveal the actual financial situation.

The only surprise about Springel’s motion was its timing. The same situation has prevailed for the last couple of years, and observers have wondered why such a motion was not filed earlier.

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