Another odd development is that the company had reduced its CPFF borrowings from $1.1 billion to 0, as it "has achieved the funding it needs from other sources, including member and dealer commercial paper, at lower costs."
One additional oddity arises upon listening to the company's January earnings call (replay #: 877 919 4059, pin: 56664948). At approximately 29 minutes 45 seconds into the call a John DiAntony (sp) from Network Technologies asks a pointed question about potential RICO (Racketeering Influenced and Corrupt Organizations Act) litigation against the company to which Steven Lilly gave a terse and angry response that the caller is "probably on the wrong call." Upon some further diligence, it seems that Mister DiAnthony was on the right call, however his question may have been one that the company had no desire to answer.
A little background: some time ago Jeffrey Prosser, who used to be the owner of now defunct Innovative Communications Corp, and to which NRUC had lent substantial money ($485 million outstanding at November 30 and against which NRUC recorded a $126 million loan loss provision in the three months ended November 30 as ZH previously reported) had filed a lawsuit in which NRUC (and surprisingly David Einhorn's Greenlight Capital) were named as defendants. Prosser himself is the target of two lawsuits filed in District Court in the Virgin Islands by Stan Springel, the trustee overseeing the bankruptcy of ICC in which Springel "has identified about $60 million in non-business transfers of property to pay for the Prosser family's luxurious lifestyle over the last decade." Based on the allegations filed against Prosser, the man has good taste: among the "transfers" itemized in the suit are:
- $3.4 million for non-business purchases such as fine wines and liquors;
- $3.1 million to American Express for non-business purchases including clothing, jewelry luxury goods, dining, airfare and hotels;
- $984,997 for various insurance policies with AIG Private Client Group;
- $757,421 for luxury clothing and jewelry from retailer Bergdorf Goodman;
- $722,387 to Michael Connors Inc. art dealership;
- $144,294 to Audio Advisors Inc. for audio and video products and services;
- $216,416 for custom-ordered art from Aleksander Popovic Studio;
- $138,000 to Sutka Productions for party planning related to the wedding of the Prossers' daughter.
And while that lawsuit is one we will be following with great attention, the countersuit filed by Prosser (and his wife Dawn) against NRUC is also of great curiosity (among others, it also names Sheldon Peterson, CEO, John List, GC, and Steven Lilly, CFO, Greenlight Capital, Ernst & Young and Deloitte & Touche as defendants) which presents a variety of serious allegations against the company including:
- Accounting Fraud;
- Mail & Wire Fraud;
- Money Laundering;
and a variety of other charges. While it is feasible that Prosser's countersuit against National Rural is merely an attempt to deflect attention from the company's allegations against himself, a close reading of the amended RICO suit filed February 9, which Zero Hedge has obtained, indicates that Prosser does have an intimate familiarity with the events and operations at NRUC and at first glance is likely worthy of some credibility.
Either way, we present the Prosser suit in its entirety here, as we believe that this situation promises to be even more interesting going forward and we intend to follow its mudslinging development very closely in the coming months.
Some curious developments in the ICC bankruptcy situation.