|
|
|
| Forms and Instructions - Recent Status - Chapter 11 Trustee Reports - Creditor's Comm. Updates - Contact Information |
July 26, 2002 Press Release Evergreen Security, Ltd. R.W. (Bill) Cuthill, Jr. Trustee 1031 W. Morse Blvd., Suite #200 Winter Park, FL 32789-3750 Telephone: 407-644-7455 Facsimile: 407-628-5277 Email: rcuthill@cuthilleddy.com PRESS RELEASE July 26, 2002 For additional information contact R. W. (Bill) Cuthill, Jr. R. W. (Bill) Cuthill, Jr. (Cuthill), Chapter 11 Trustee for Evergreen Security, Ltd. (Evergreen), filed suit against Averett, Warmus, Durkee, Bauder & Thompson, P.A. (Averett) in US Bankruptcy Court in Orlando, Florida today. Averett is a CPA firm located at 201 E. Pine Street, Orlando, Florida, which provided services to Evergreen as its CPA. The suit alleges that Averett compiled a balance sheet for Evergreen as of May 31, 2001. The balance sheet included a $190 million promissory note and guarantee given to Evergreen by KBZ Investments, Inc. (KBZ), a company owned or controlled by William J. Zylka or his daughter Kristyn Zylka. The suit alleges that Averett knew that the balance sheet would be utilized by BJM International Services, Inc. (BJM), Evergreen's management company, to demonstrate that Evergreen was in good financial condition and that it would be shown to and relied upon by investors and the Board for that purpose. Averett further knew, or should have known, that Evergreen was woefully insolvent during the entire time period reflected in the balance sheet, with investor liabilities exceeding its total assets by approximately $190 million during the time period reflected in the balance sheet. The suit further alleges that the assets of Evergreen were significantly overstated because the note was improperly classified as an asset of Evergreen despite the complete lack of any reliable evidence of KBZ's intent or ability to pay. The suit, which alleges professional negligence and negligent misrepresentation, asks for: 1. the actual damages suffered by Evergreen as a result of Averett's professional negligence and/or negligent misrepresentations; 2. punitive damages in an amount to be determined at trial; 3. prejudgment interest; 4. court costs; and 5. such other relief as the Court deems appropriate. Cuthill was appointed Trustee in this case on or about March 14, 2001. Evergreen was formed primarily to operate as an offshore mutual fund. Most funds invested in Evergreen were nominally held in the name of various trusts including Intrados, SA, a Costa Rican corporation, Ansbacher (Bahamas) Limited, a Bahamian corporation, and Surety Bank & Trust Company Limited, a Bahamian corporation. Like a mutual fund, investor dollars were pooled to purchase various investment vehicles. Accordingly, the individual investors did not own the investments. Evergreen created a wholly owned trust entitled Evergreen Trust to pool investor funds and purchase certain investments. From the supposed investment earnings, the investors in Evergreen would be paid periodic interest. Additionally, the Evergreen Trust utilized the services of certain investment advisors including West Side Advisors ("West Side"), Atlantic Portfolio Analytics & Management, Inc. ("APAM"), and International Portfolio Analytics ("IPA"). Evergreen also utilized certain custodians, including Bank of Butterfield and Bear Stearns. Evergreen began selling certificates sometime in the early 1990's. Evergreen sold certificates through a variety of lawyers, brokers, and investment advisors. A company known as Investment Services International Limited ("ISIL"), a Bahamian company, provided registration and transfer agent services. ISIL also provided investor relations and broker seminars. By the end of 1995, the liability for investments within Evergreen totaled approximately $45,000,000. As of December 30, 2000, the liability for investments within Evergreen totaled approximately $214,000,000. By the end of 1995, the cash and investment assets in the Evergreen Trust totaled approximately $26,000,000. As of December 30, 2000, the cash and investment assets in Evergreen Trust totaled less that $3,000,000. Included in the liabilities for Evergreen are the liabilities from certain affiliated companies including Coastal International Life Insurance Company ("CILIC"), Life Invest, Inc. ("Life Invest"), American Bond Partners I ("ABPI"), and American Bond Partners II ("ABPII")(collectively, CILIC, Life Invest, APBI, and ABPII, hereafter referred to as "Affiliated Entities"). From 1991 through approximately 1996, the Affiliated Entities sold various forms of investments. In April 1998, the assets of the Affiliated Entities were purportedly merged into Evergreen in return for forgiveness of certain debts owed to Evergreen for loans to the then owners of the Affiliated Entities. From inception, Evergreen has been externally managed. Evergreen had no employees, and certain outside managers directed the operation of Evergreen. Evergreen has a board of directors consisting of three non-United States citizens. As of Petition Date, the board of directors consisted of Mr. Patrick Thomson, Mr. Hernan Castro-Gehrels, and Mr. Edgar A. Rohrmoser. Evergreen is 100% owned by Evergreen Holding Investment Corporation, a Bahamian Holding Company ("Holding"). Until 1999, Mr. Greg White, a citizen of the Bahamas, owned Evergreen. Sometime in 1999, Mr. White transferred his shares to Holding, which were later transferred to True Investments, Inc., a Bahamian corporation, owned or controlled by Mr. William J. Zylka ("Zylka"). Prior to April 1998, Evergreen and the Affiliated Entities were managed and directed, through various management companies, by certain individuals, including Mr. Thomas S. Spencer ("Spencer"), Mr. Robert W. Boyd ("Boyd") and Mr. Thomas A. Coyle ("Coyle"). The primary management company was American Bond Partners, III, a/k/a ABP International Services, a Bahamian partnership ("ABPIII"). In April 1998, BJM International Services, Inc. ("BJM") became the outside manager of Evergreen. Mr. Martin W. Boelens, Jr. ("Boelens"), Mr. Jeffery A. Stanley ("Stanley"), and Mr. William H. Blankenship, Jr. ("Blankenship"), each own one-third of BJM and are officers of the company. Most of the marketing and promotional literature used by the various managers solicited investments in 5-year certificates or bonds that paid a periodic, fixed interest rate. Typically, the interest rate was either 10% or 12%. The investments were to be "fully secured" by U.S. mortgage-backed securities. Upon the purchase of an investment, a certificate would be issued, and the certificate was typically in the name of a trust or a numbered account. Although most of the marketing material indicated that the investments were in U.S. mortgage-backed securities, in fact, almost all funds were placed in mortgage-backed securities derivatives ("MBS Derivatives"). MBS Derivatives are highly risky, and, over time, Evergreen did not make enough profit on its investments to pay the interest on the certificates, much less other operating expenses. In addition to the financial problems of Evergreen caused by the poor return from the MBS Derivatives, additional serious problems were created by the direct withdrawal of investors' money by or for the benefit of the various managers and owners. Messrs. Zylka, Boelens, Boyd, Spencer and one of the brokers, Mr. Micciche, have entered into agreements to plead guilty to federal and/or state charges relating to their actions with Evergreen. |
|
|
| Official Committee of Unsecured Creditors for Evergreen Security, Ltd. |