The SEC is playing tough with alleged penny stock scammer Michael Metter and his Business TalkRadio Network. The Securities and Exchange Commission filed court documents Thursday adding the radio business, which includes Greenwich station WGCH, as a relief defendant in the fraud case against Meter and his pump and dump stock Spongetech. The federal regulator says because Metter has entered a letter of intent for WAY below market value for the stations that the business basically can’t be trusted to sell itself and thus should be named as a defendant to ward off buyers not willing to pay market price. You see the reason the stations were suddenly put up for sale this summer is because the SEC says BTRN owes Spongetech shareholders millions.
I reported in September for DealFlow Media, the SEC alleged that Metter and his partner Moskowitz had basically embezzled Spongetech funds into BTRN, in 2009, and helped it pay off a $5 million debt. As a result the SEC was able to get a partial asset freeze on the radio stations checking accounts and Mr. Metter had to turn over financial signing power to this right hand man Jeff Weber. Weber just happens to also be president of the Greenwich Chamber of Commerce. Since then, Weber and Metter’s job has been to keep the stations afloat until a buyer can be found. The proceeds from the stations sale (they own 4 in Greenwich, Vegas, Pittsburg and Boston) would go to the SEC, if they win or settle their case against Meter and Spongetech, who in turn would turn over proceeds to the Spongetech victims.
The SEC stated last week in court documents they’d seen deal terms to sell BTRN stations (sans the Boston one) to an unnamed buyer for only $50k cash and a $950k unsecured, non recourse, 3-year promissory note that is expected to close at the end of January. There is also a letter of intent on the Boston station the SEC says is for way below fair market value. You see earlier last year Metter’s attorney swore in court documents there was an appraisal that showed the BTRN stations were worth more than $6 million. So you can kind of see why the SEC is a little pissey about a Metter orchestrated below market, no security to pay it back, deal going down. That would mean they let him take a $16k a month salary this whole past year to do what? Doesn’t look good for the recovery of dollars for the Spongetech victims-does it? So the regulator told the court this kind of sale isn’t getting approved by them.
Well according to a letter Metter’s attorney filed with the federal court last month, Weber (who isn’t being sued by the SEC) was also doing some funny business. Metter’s attorney, Miranda Fritz wrote, Weber was using his advantage of signatory power to force BTRN to keep his current salary and benefits for the 1st six months of 2012 while the company was trying to cut expenses. When Metter said no – he quit. Metter on his part has agreed to cut his salary from about $240k a year to $165k. His attorney filed a motion at the end of December stating Metter will take bi-weekly payments of $6,875 and supposedly the station owes him another $9,938 in expenses.
But the SEC apparently got pissed when they saw Metter blow off the rules of the court. Since Jeff Weber quit on Metter last month, and he’s the only court appointed signee of the radio biz accounts, Metter has gone back to signing checks and managing money this month — a move that technically isn’t allowed by the court. So the SEC filed a motion to also cut off his bi-weekly salary.
To be fair Metter’s attorney did tell the court, last month, he’d found a CPA with Hegen Streiff Newton & Oshiro, Marc Johnson, to take over as an independent signatory of the radio biz accounts. Remember there is no way in hell the SEC is going to let Metter have power over checking accounts with cash in them. Still the court hasn’t approved any of this, so legally BTRN shouldn’t be using its cash to you know pay staff or bills. (Which would suck for the 40 or so people the company employs.)
Paul Kisslinger, SEC attorney, wrote the court on January 12th, “Given that BTRN has continued to operate in this fashion, apparently at the direction of, or with the approval of Metter, without the entry of an order by the Court, the SEC withdraws its consent to subsections 2(d) and (e) of the Proposed Order which allow Metter to continue to draw a salary or receive any other disbursement from BTRN.”
Metter’s attorney obviously wrote a nasty reply back to the court that the SEC’s move to cut off her criminally charged client was, “inappropriate, irresponsible, and should be rejected by the court.”
Stay tuned because it’s up to Judge Dora L. Irizarry, of the Eastern District of New York Federal Court, to decide what the heck to do about Metter’s salary and the friendly deal he set up to sell the stations.