UPDATE 4:45pm: The head of the Greenwich DTC, Frank Farricker, tells me he’s been try to reach BTR’s receiver, Michael Craven, and his Delaware attorney at Morris James LLP to make an offer on the Greenwich Radio station but so far they’ve refused to call him back. Craven has also refused to return multiple request for comment.
The Greenwich Radio Station, WGCH, run by alleged penny stock fraudster Michael Metter has been sued for eviction after racking up over $140k of unpaid management company bills. Court documents filed this week show Metter, who was arrested for criminal fraud in 2010, has racked up near a million of unpaid debt while the courts allow him to run the radio stations after he was released on bail.
Metter was removed as CEO of the Greenwich station last month and the former COO, Jeff Weber, was rehired as a consultant to run the stations while they are trying to be sold. A receiver, Michael Craven, was appointed to monitor the assets of WGCH’s parent Businesstalkradio.net. The stations were forced into sale after the SEC was able to claim BTR as a relief defendant in the securities fraud suit against Metter and his penny stock company Spongetech because the regulator claims Metter used the station for money laundering in his Spongetech scam.
Since Metter’s arrest he’s loaded up BTR with so much debt that they are also behind on paying Connecticut state taxes, federal taxes, the stations’ vendors, and even some employees–but court documents show Metter continued to pay himself between $16,000 to $18,000 a month over the last two years.
The total bill for BTR vendors and creditors is $991,900 of which the Greenwich Broadcasting Company owes $195,362.
The Greenwich station landlord served a notice to quit the property as a result of nonpayment on July 24th asking WGCH to vacate their station at 71 Lewis St in downtown Greenwich, Conn by the end of the month. WGCH didn’t do it. The landlord stated the monthly rent was $5,647. Harrison Management Company then sold the overdue 10-yr lease, signed in August 2006 to 100 Maison St LLC, on September 7th. Harrison is listed in court records as being owed over $140,000. The new landlord filed suit on September 26th to evict and BTR’s receiver says he is now trying to negotiation with them to stay in the property. A fact the Greenwich Time reporters could have easily picked up on when they reported that Jeff Weber had been brought back after Metter was removed as CEO the first week of October– but they didn’t.
Weber is also the president of the Greenwich Chamber of Commerce. The receiver’s creditor spreadsheet, filed in court, shows the Chamber is owed $950 and even Weber has a claim of $24,000 against the radio company he’s working for again.
I previously reported on some of the BTR assets finally being sold at trade publication Growth Capitalist. This money is intended to go to the SEC for victims of Metter’s penny stock fraud. The Brockton Mass. station sold for $250,000 but after deal fees and cost the deal only netted $100,268 which has been placed in a court escrow account. Now BTR’s receiver is asking he court for $50,000 of the sale proceeds to pay some back rent so the radio stations aren’t forced out by their landlords.
There is also a sale contract signed, but not closed, for the Vegas station (KNUU) in the amount of $950,000. But that station is also facing eviction because Metter didn’t pay the rent. The Greenwich and Pittsburg stations have no sale offers. Metter has previously stated in court documents filed in the SEC’s case against him that he thought BTR assets would be worth around $6mn and the Greenwich station was listed for sale at $1.25mn. It’s unclear how Weber or Metter ever thought the Greenwich station would fetch a million sale price considering WGCH was unable to operate during Hurricane Sandy’s power outages because Metter had not bought the station a working back-up generator.
Unfortunately, the SEC’s plan to use money from the sale of the four BTR stations as restitution for mom and pop Spongetech investors has hit a big snag. BTR receiver, Michael Craven, hired a forensic accountant to validate a third-party secured claim against the assets of BTR by a New Jersey hard money lender Solutions Funding LLC. Last week Craven filed court documents stating Solutions Funding claim of $3.08 million is valid–this means the third-party lender will get paid before the SEC can collect any money for investors. Craven actually settled with Solutions Funding for $2.5 million and is waiting court approval to make them the senior secured creditor.
Court documents show the Vegas station has the most assets so it’s not likely the Greenwich or Pittsburgh station would generate a $950,000 price tag like the Vegas station has (a deal that still isn’t closed). So far the net proceeds to pay off Solutions Funding from the sale of the Brockton, Mass. station is only $50,000. So it’s not looking like SEC’s move to get any dollars out of Businesstalkradio.net is going to work out. The regulator did succeed in forcing Metter to sale the stations but now we see the beneficiary is going to be a high-interest hard money lender. What’s unclear is why did the SEC not inspect how Metter was using cash flow at BTR till it was too late. Why was he allowed to receive a six-figure income while rent wasn’t paid? Isn’t it their job to weed out people who habitually abuse the markets and securities laws?