|
|
|
| Forms and Instructions - Recent Status - Chapter 11 Trustee Reports - Creditor's Comm. Updates - Contact Information |
August 9, 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 August 9, 2002 For additional information contact R. W. (Bill) Cuthill, Jr. R. W. (Bill) Cuthill, Jr., Chapter 11 Trustee for Evergreen Security, Ltd., filed suit against Windels Marx Lane & Mittendorf, LLP, James P. Conroy, and William J. Zylka in Orlando, Florida today. Windels Marx is a New York law firm that provided legal services to Zylka and several corporations that he either owned or controlled. Conroy, an attorney with the firm, was Zylka's private attorney and business partner. The suit alleges that Martin Boelens, the president of Evergreen's outside management company, was introduced to Zylka and Conroy while attempting to raise private investment capital for Evergreen during the late fall of 1999. Zylka and Conroy claimed that Zylka was a wealthy investor with family interests in various mining assets located throughout the world, and agreed that Zylka would provide financial backing for Evergreen, which owed investors more than $180 million, in return for cash "loans" from Evergreen that would be used by Zylka to finance his mining operations. The suit alleges that Zylka and Conroy made false representations that induced Evergreen to pay $27.7 million to Zylka between December 1999 and July 2000. For example, they represented that one of Zylka's companies owned mineral rights in an active Montana limestone mine worth more than $400 million, when in fact the mine was inoperative and the mineral rights were virtually worthless. The suit further alleges that Zylka and Conroy provided Evergreen with false and misleading geological surveys, valuation reports, and business plans which significantly overstated the value of Zylka's mining assets. The suit, which alleges claims for fraudulent misrepresentation, conspiracy to defraud, racketeering (RICO), negligent misrepresentation, professional negligence, and negligent supervision, seeks more than $27.7 million in actual damages from the defendants. The suit also requests treble damages under the RICO count and unspecified punitive damages under the other counts. Criminal charges were brought against Zylka and Conroy stemming from their involvement with Evergreen. Zylka entered into an agreement to plead guilty to the charges, while Conroy's case recently resulted in a mistrial. The case is expected to be retried later this year. In filing today's lawsuit, Cuthill commented that in addition to his claims against Zylka and Conroy, "Windels Marx must be held accountable for the unlawful actions of Mr. Conroy, who clearly stepped over the line in conspiring with one of his clients to commit a massive fraud that all but wiped out what was left of Evergreen's assets."
Evergreen was formed primarily to operate as an offshore mutual fund. Like a mutual fund, investor dollars were pooled to purchase various investment vehicles denominated as certificates. Evergreen began selling certificates sometime in the early 1990's. Evergreen sold certificates through a variety of lawyers, brokers, and investment advisors. 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. 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 the Evergreen Trust totaled less than $3,000,000. |
|
|
| Official Committee of Unsecured Creditors for Evergreen Security, Ltd. |