It seems like there ought to be money around somewhere, but what about their activities has suggested that there is a hidden pile of cash?
Consider what could have been done, if there were lots of money/gold bars in a vault somewhere:
a) Fox would have assumed a new identity somewhere else
b) started a new life with whatever funds pilfered during the scheme’s salad days
c) would have disappeared or attempted to look like he’d been killed or something (vaguely plausible given how many people were mad at him!)
d) perhaps engaged better counsel
e) bought a home / primary residence in one of the few states that make those bankruptcy remote (Texas, Florida I think, maybe more)
Perhaps they have stashed the money somewhere, but they never seemed to have had any exit strategy for getting to it.
I just think they were reckless/insane businessmen (no audited financials…wtf?) who were bleeding money on their operations for a decade, and funded it with ever increasing ‘futures’ sales, i.e. unsecured borrowings from lenders who had zero surveillance of what was happening. They probably did some improper co-mingling as well along the way (the taste in flashy cars, houses etc.) and likely paid their staff far too much to keep them quiet as to the true state of affairs.
But now that the FBI is involved, there will be some forensic accounting done on the taxpayers dime rather than the bk estates, and we’ll see what happened eventually. I suspect they’ll find actions in the final year were outright fraudulent and that may end up cooking their goose.
Under the logic that buyer-labeled wine is effectively in the legal possession of the buyer, the store would say that the buyer would solely absorb such casualty loss.
If the trustee were to do so unilaterally, the BK court would not be happy.
The eventual distribution of estate assets among creditors will depend upon
liens (unpaid taxes), security interests (building mortgage), and seniority
(trustee expenses, unpaid wages), not just physical labeling or segregation.
It seems like there ought to be money around somewhere, but what about their activities has suggested that there is a hidden pile of cash?
I agree with Arv’s observations, this is why I don’t believe there is a hidden nest egg of any appreciable size. Nothing about the slow bleeding out of the business or Fox’s actions seem consistent with that view.
Somebody who knows what they are talking about please comment on California Commercial Code Section 2401 and 2501 and their applicability to all this wishing and hoping about wines put in boxes with labels, and then follow that up with an analysis of the bankruptcy law on the issue. I have other work to do so I do not have time to do the research.
I think this is the case - no quick exit strategy. While steps were being taken to sell houses and probably other assets and raise cash quickly with multiple daily offers, it did not give them enough time to escape before the house crumbled down on them.
Taking a few minutes to fathom how one moves $70M and keeps it hidden makes me believe they can’t have done so. As its been assumed this has been building over a decade or two, that still turns into a quarter million or more per month. Its not like some small business owners I know that raid the till for cash. So somehow they would have to get credit card transactions into cash. With bank reporting requirements on withdraws and deposits, I don’t see how they move this to cash directly without being flagged. So if there is a hidden nest egg, there has to be another entity involved such that the transfers appear to be normal business expenses.
Of course since I have never thought about laundering money before, maybe its not as difficult as I think.
Al–The only way we will know for sure is when there is a thorough examination of PC’s books & records, including credit cards and banking records. It seems highly unlikely to me, however, that PC for years was selling wine futures it didn’t own/source just to keep afloat a business that was otherwise losing money.
Easy as very very large salaries/dividends/interest free loans from the company to the CEO. Once it’s in your account you can pull it to cash, wire to offshore etc. Maybe findable, maybe not.
I still think the speed at which the house of cards fell probably surprised them (once it started to fall) but I’m sure they probably also have some money squirreled away. Hard to believe that he has less than $50k in assets (car, wine, watch, investments etc…)
Hello everybody,
I’ve just heard the Bankruptcy yesterday… i called the FBI at Oakland and they gave me an email to do a complain…
Pffff i bought for 25500$ of pre arrival wines ( in july 2013)…and of course i haven’t received anything…
Is there anything else to do ? I’m in France…it’s not easy…
He/they had plenty of time to escape to a faraway land without an extradition treaty, it that had been the plan. Instead, he frantically scurried around, desperately trying to raise revenue, mortgaging the property to the hilt, skipping tax payments, selling the house to (partially) pay the bank, borrowing an employee’s credit card to buy $25k of stock to sell, thinking that if only they could make it through this crunch, all would be well. And now they sit in the middle of the financial mess and are the subject of an FBI investigation.
Bruce, it seems that’s exactly what happened, and why they’re in bankruptcy and being investigated for fraud. I still maintain that they took customer’s money and were making investments for years, then if a deal at auction came up they’d fulfill some orders. Part of that theory says that they made a few bad investments when the market took a downturn, desperation led to even riskier investments at a time when risk was NOT rewarded, and the spiral kept going further and further down. PC was probably doing this for years, maybe decades, but when the market went south their business model crashed.
Doesn’t that sound more logical than secret stash of $70,000,000 dollars hidden in suitcases on an island without extradition somewhere?
Yes, it will take a thorough examination of their books, financial transactions, and personal assets, all of which I’m sure will be done. But, they had to know that was coming if they went to bankruptcy with the numbers in the filing. So, they’re either lousy at business, or truly horrible at crime.
It depends on what one considers hidden. I was thinking about avoiding the paper trail that there was a siphoning off of assets in the first place, not the ability to move cash to a place that may not be found while leaving a paper trail that proves the fraud.
Yes, I think opening a federal Ponzi scheme investigation is pretty significant. Not new, but can’t imagine he’s going to see much bankruptcy ‘protection’.
100+ people have packages ready for delivery with their names on them - better move quick!
Yes, it appears it might be both. To clarify my comments about, I certainly think the principles were paying themselves far too much while running a business that was losing money. I also think it’s likely that Fox has assets he didn’t list in his incomplete personal bankruptcy filing. I just don’t think any appreciable fraction of the money owed to creditors is out there waiting to be discovered.