V. OMISSIONS IN TUREK’S PERSONAL BANKRUPTCY
51. On May 14, 2002, Turek filed for chapter 11 relief in the U.S. Bankruptcy Court for the Northern District of Florida. Case No. 02-20411-LMK. After entry of a Final Decree, his case was closed on September 13, 2006.
52. The pleadings, schedules, statements, and Monthly Operating Reports filed by Turek in his personal bankruptcy contain numerous omissions.
53. In Schedule F, Turek claimed that Wicklund Holding Corporation owed him $500,000, while Plasticon’s 2004 Form 10-K states that Plasticon owed Turek at least $2,139,122 at all relevant times from 2001 through 2003. Exhibit 1 at F-12; James N. Turek, Petition, Schedules, and Statement of Financial Affairs, attached hereto and incorporated herein as Exhibit 19.
54. Plasticon’s 2004 Form 10-K states that Turek “and a related party” had subscribed to 43,904,912 shares of common stock in 1995 which were eventually issued on December 31, 2004. Exhibit 1 at F-16 to -17. Turek omitted this right to receive shares in his Schedules. Exhibit 19.
55. Plasticon reported issuing 567,664,082 shares valued at $72,478,628 during 2004 for services, Exhibit 1 at F-4, the great majority of which were issued, upon information and belief, to Turek. Turek omitted this income in the Monthly Operating Reports for 2004 in his personal bankruptcy.
56. In addition, TelcoBlue, Inc. filed a Form 8-K with the Securities and Exchange Commission detailing its reverse acquisition of Promotional Container Manufacturing, Inc. (“PCM”). TelcoBlue, Inc., Form 8-K (filed Feb. 10, 2004), attached hereto and incorporated herein as Exhibit 20.
Attached to the report is a Plan of Reorganization to effect this acquisition through a tax-free stock exchange which indicates that Turek is the CEO, President and sole shareholder of PCM. Id. Turek failed to seek bankruptcy court approval for his disposition of his shares in PCM.
Argument and Authorities
MOTION OF THE UNITED STATES TRUSTEE FOR APPOINTMENT OF A CHAPTER 11 TRUSTEE
Doc 156
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Bankruptcy Petition #: 02-20411-LMK
Debtor JAMES N. TUREK
Chapter 11
Previous chapter 11
Voluntary
Asset
Date Filed: 05/14/2002
Date Terminated: 09/13/2006
Extracted from Doc. No. 285
Filed & Entered: 02/23/2005
Amended Disclosure Statement
II. HISTORY OF THE DEBTOR AND REASONS FOR FILING PETITION
International Plastic Corporation, Inc. (IPC) was a privately held Kentucky corporation formed by Debtor in 1988 and Wicklund Holding Company (WHC) is a Delaware corporation created by the Wicklund family and went public in 1981.
In June 1997, WHC, although a non reporting NASDAQ shell name, was dormant, merged into IPC and the Wicklund name was retained. As a result of this merger, IPC’s shareholders ended up with 80% of the shell stock as IPC had assets valued by appraisal at nearly $15,000.000.00 (molds and patents). At the time, IPC had 124 shareholders and Wicklund had approximately 800 shareholders. After the merger, Wicklund issued approximately 5.6 million of its 20 million shares of Treasury Stock.
On June 30, 1997, WHC looked to acquire or merge with other companies, as it only required sales and SEC approved audits to again be trading on NASDAQ and initiated negotiations in 1998 for the acquisition of Florida Curbing, Inc. (FC) and Laser Engineering, Inc. (LE) (sister companies with same owners) and acquired these companies in 1998.
The acquisition occurred through a reverse triangle “A” merger in which a company is created to put the acquired companies into so that they supposedly cannot carry “baggage” with them into the merger (i.e., back taxes, payables, fraudulent transactions, etc), and in the event that fraud was subsequently discovered. To accomplish this merger Wicklund’s lawyers created Wasalooski Inc., which merged with FC and LE in December 1998, at which time Wasalooski ceased to exist by operation of law with the survivor being Wicklund with FC and LE as its two subsidiaries.
In order to be trading in NASDAQ, WHC was required to have Securities and Exchange Commission (SEC) audits covering three years (2 years prior to the merger, and 1 year after the merger) and initial audits of FC and LE were started in early 1999. WHC with its assets arranged for funding against FC & LE receivables.
During the period December 1998 through Wicklund’s recission of the merger in November of 2000, at various times, Town Finance, Wicklund, through First National Bank of Barnesville, Emerald Coast Bank and Export Finance Network served as factors for FC & LE receivables.
Upon the initiation of the audits, LE’s CFO disappeared. The auditors told WHC and Debtor that LE and FC were not auditable as their books were loaded with fraud (un-reported receivables and receivables reported current that in some case were 6 months old), just to start. FC had the same problems as LE but much worse and included fraud related to a clandestine and fraudulent relationship between the original owner of FC (who remained as its operations officer and president by contract) with an unknown minority contractor and operated out of the offices of FC.
Three SEC approved and insured Auditing firms concluded that LE & FC were not auditable. Letters from the various auditing firms are attached as Composite Exhibit “A.”
During this relationship with FC, Debtor’s signature stamp was stolen from his accounting and bookkeeping firm in Florida. Turek’s signature card at Nations Bank/Bank of America was changed without his permission resulting in $1,500,000.00, plus, being drained, WHC and Debtor believe, by the original owner of FC & LE Rudy Poselli. Payroll checks normally signed by him as President of FC were stamped with Debtor’s stamped signature beginning in May of 2000.
WHC and Debtor did file a criminal Complaint in Broward County, Florida in June 2000, which is still pending. The Broward County Sheriff’s Department also suggested Debtor file a lawsuit as it would help them. Unfortunately, Debtor had used all his means to continue moving forward and subsequently filed to reorganize under Chapter 11. As a result of this fraud, Debtor lost valuable real property in Bay County, Florida, as well as his significant equity in his pleasure boat and fishing boat. Wicklund is now known as Plasticon International, LLC.
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The present value of these creditors claims is approximately 93% of the claims for 5 years and 84.5% as to the balloon. Class 19 administrative class shall have their claims satisfied in full without interest by quarterly payments for one year. The present value of these creditors claims is approximately 99 % of the claims.
Class 20 unsecured creditors, will have their claims against Debtor paid in full by transfer of stock with a present value approximating 11 % of their claims being issued by Wicklund Holding Company upon confirmation of Debtor’s Plan, at which time Debtor will be released from liability and Wickland will remain liable for the balance of the joint debt secured by the Wicklund stock until the Wicklund stock is sold, at which time any balance owed by Wicklund will be deemed satisfied and paid in full and the terms of any stipulation between Plasticon and/or debtor with members of this class shall control to the extent inconsistent with the plan.
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XI FEASIBILITY AND BEST INTEREST TESTS
For purposes of determining whether the Plan meets the feasibility test, Debtor believes that he has the ability to meet his obligations under the Plan and that same is feasible. Debtor is now employed as Managing Partner of Show Me Ink, LLC, a company that dates to 1906. The Debtors salary of $175,000.00 and 10% of sales and commissions (minimum of $50,000.00 annually based on historical records) allow him to meet his obligations as presented in this Plan.
Additionally, Debtor is waiting for final FDA approval of the “Sports Patch” whose inventors predict first year sales of $25 million dollars. They have entered into an agreement with PC, Inc., an affiliate of Wicklund for PC Inc.’s marketing and distribution of patch and products in exchange for which the inventors will receive ten percent of PC Inc.’s net sales. This device measures and predicts when an individual is about to have a stroke or heart attack. It has been tested successfully on a nationally ranked Florida football team and upon final FDA approval, the marketing of same will begin.
In addition to the sports patch referenced above, a WHC affiliate has recently completed a several million dollar acknowledgee sale, the proceeds of which will be received over the next several years. This information has recently been cleared for release to the public and should be released in the immediate future.
Debtor’s personal Wicklund Holding Company stock, while having the same value as any shareholders, is regulated by Rule 144 of the 1934 Security Act. This Rule provides the means by which debtor or a control person or officer, can sell their stock. Specifically, debtor can only sell a small percentage based on current trading volumes or a small percentage per month based on ownership. This control prevents the debtor or others from benefitting at the expense of other stockholders.
Wicklund’s offering in the Plan of WHC Treasury Stock as a legal consideration in trading company debt for stock, provides for a reasonable release of stock and provides a means to settle WHC debts and Debtors guaranty of those Wicklund debts. So long as WHC debt is cancelled in exchange for WHC treasury stock and pursuant to SEC Rule 144(e) the treatment provided in Debtor’s Plan of Wicklund providing its stock for satisfaction of its debt and Debtor’s guaranty of those debts is permissible.
In summary, Debtor’s annual income of $175,000.00, and minimum of $50,000.00 in bonuses as well as his wife’s salary of $43,000.00 (she contributes her share), together with the prior assumption of some obligations and his or his wife’s payment of others allows him to make the payments in this Plan.
Debtor has attached a chart at Exhibit “A” which covers the period January 1, 2005 through December 31, 2006 and which consists of a budget showing projected revenue per month and
personal expenses per month. A review of the chart indicates that Mr. Turek will have the ability to meet the payments required under his Second Amended Chapter 11 Plan. The attached chart may be modified prior to confirmation due to changes in amounts of claims attributable to interest accruing and to correct any errors which may be discovered prior to confirmation.
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