About.Ag


All About Silver - ... the buck stops here ...
Republic Metals Corporation (RMC) filed for Chapter 11 bankruptcy - $90M gone, significant inventory discrepancy
Rust Rare Coin accused of $170M Ponzi scheme



[Summary: In Chapter 11 bankruptcy (reorganization) after reports of 6+ month delays, $55.8M owed creditors]
[Threat Level: I have received no legal, verbal, written threats or subpoenas at least as of December 12, 2018]
[Related Pages: court documents, mailing list, tips, Bullion Dealer Data, 341 Meeting]
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Hearing Summary

December 11, 2018 8:05AM EST
In my last post, I went through the entire ~3 hour hearing nearly point-by-point. It was a long hearing, so a very long post. So let me try to summarize the 'meat' of it (the 2-hour audio).

First, the background. The bankruptcy professionals (Chapter 11 Trustee Mark Calvert, his attorney Michael Gearin on behalf of K&L Gates, Calvert's company Cascade Capital, and the UCC (creditor's committee) attorney Mark Northrup on behalf of his firm) were there because they have billed ~$5M and want their share from the ~$2M cash that NWTM has. Judge Alston has to approve their fee applications before they can get paid, or he can deny parts (or theoretically all) of them. One member of the UCC and one former member recently wrote to the court with concerns (serious allegations), as did I.

Judge Alston did not consider my letters (as he does not consider me to be a creditor, which I essentially am not), but did consider the others. And he has many, many questions. Some appear to have their origin in the letters, others are issues he seems to have come up with himself. The judge is requiring all the professionals to file declarations stating facts, reasons for why things were done, and supporting information. He is requiring a lot.

So is this a good outcome? I definitely think so. The judge is not ignoring the allegations. He is basically telling the professionals it is time to 'put up or shut up' (my words, not his!). They have referred to letters as a scurrilous attack against nearly all the parties, and referred to them as falsehoods and baseless innuendo. This has been a theme all along: attacking letters saying they are false, but not pointing out what is false. So now the professionals are forced to address many of the allegations that have been brought up.

What could have gone better? Well, I would have liked to have seen Sierra Mint's usage of NWTM assets addressed. And I would have loved to have seen Calvert required to state in a declaration why he sent $80,000 of cash via UPS (which prohibits cash shipments), and why Calvert didn't report the loss of a $250K uninsured package (this appears to have been hidden from the court, so Judge Alston may not have known -- although Martin Smith from the U.S. Trustee's office who was there knew).

About the December, 2018 Hearing

December 10, 2018 8:35PM EST
I have finally finished listening to the audio and making notes.

The first main portion of the audio (#1959, 44 minutes) was basically a background by Gearin and Northrup about the case, as part of a justification for fee applications. The next main portion was #1960, 18 minutes. This is just about administrative claims (not fee applications). The final main portion was #1963, 2 hours.

The final portion started with Mr. Smith from the U.S. Trustee's office stating that his office has met with Calvert and Gearin (but did not say when), regarding fees and allegations. He said that the U.S. Trustee's office has already either taken actions or not taken them, as deemed appropriate given the case and circumstances, and the resources of his office. I find this odd, as just a few hours before that statement, Smith found out (unless he already knew) about the $250K loss Calvert did not report. Maybe that not insuring a $250,000 package is a simple business decision.

Judge Alston then mentioned that there are a lot of questions, and he is going to have each party file declarations responding to many of the questions. He said that he is considering the letters of the former and previous member of the UCC, but not considering my letters (as he does not consider me a creditor), a decision which I respect. The main takeaway of the hearing was that Calvert, Gearin, and Northrup are going to have to file declaration(s) with statements as well as some documents to back up their positions. Calvert and Gearin need to re-file their fee applications broken down by category.

Among the declarations needed are:

  • In October, 2017 fee applications were filed, but Gearin said that they would be addressed when the value of the company was more certain. But no value was conferred. How should fee applications be viewed then?
  • Calvert needs to declare whether he auctioned or consigned goods, which would have required reporting in the monthly operating reports (MORs), and court approval.
  • Calvert needs to explain why he reimbursed $31K of expenses that were not disclosed on the MORs, and the authority on which he did that.
  • Calvert needs to explain the store inventory, where it is, when it was acquired.
  • Calvert/Gearin need to explain why they said that the estate was administratively solvent, when they said that it was insolvent, and why they made certain statements related to that.
  • Calvert/Gearin need to supply non-privledged emails regarding the resignation of the UCC co-chair in March, 2017.
  • Gearin needs to explain why the Trustee went after Diane Erdmann for the AmEx claims, rather than AmEx (who is solvent and would have fewer defenses).
  • Calvert needs to address whether he knew of Wagner's plan to take over the China business in 2016, and to include a copy of the plan. Calver also needs to address what his concerns were in March, 2018 when he asked K&L Gates how to best manage Sierra Mint.
  • Calvert must address the issue with the dies, and how he said there were 400,000 (Gearin said that they could not find any contract showing that the China dies are property of NWTM). Calvert also stated that Lin-Jung Feng (a/k/a Yong Tuo) sells goods to NWTM.
  • Calvert must explain why if he said this was a Ponzi scheme, no avoidance actions were taken. Alston mentions payments of $45K, $500K+ and others to individuals.
  • An explanation must be provided as to why the Dayton lease was assumed, which Calvert said was an above market lease, and substantial fees were billed for that.
  • Calvert has to explain extraordinary expenses, as required by 2016-1(a)(7). These include photography, a garbage container, that sound like Calvert fronted money with short-term loans (reimbursing himself before admin claims.
  • Calvert must explain why he paid Amicus Law Group, who Gearin said were Calvert's personal tax attorneys.
  • Calvert must address payments to two employees/consultants, including a $6,000 even payment for "meals-travel" after a $310.80 payment was made for meals.
  • Calvert must address a $1,000 cash payment to an employee of his, and why it was not disclosed as a payment to a professional, why the box wasn't checked on the MOR.
  • Calvert must address why in August, 2016 $26,000 of payments were made to Edgar Chacon as "Exp. Reports". Calvert stated at the hearing that he, um, doesn't recall what those were.
  • Professionals must include in declarations all payments to lawyers, auctioneers, consultants, and any other professionals not approved by the court, with date and explanation of each payment, and copies of any documents or agreements with them, and emails/communications requesting them.
  • They must address all payments made to Calvert's Cascade Capital and employees, with date and reason for payment.
  • They must address all payments made to Wagner and Chacon, with date and reason, except for normally salary.
  • They must address all payments made to Ms. Fleet and Ms. Johnson (except for salary payments), and Mr. Mannelly
  • Northrup must include why there was no forensic audit
  • Northrup must include whether the UCC approved the omission of a paragraph in a motion.
  • Northrup must address a call about a settlement agreement with Mr. Bressler, after the judge denied a settlement agreement.
  • Northrup must address whether the UCC wanted him to take action to have Calvert removed as Trustee, and if so, why no action was taken.
  • Northrup must include in his declaration a copy of his email response to the UCC co-chair that requested Northrup to take action to remove Calvert.
  • Northrup must reconstruct what happened with a settlement agreement that needed to be kept from Ross Hansen, and why it was not promptly brought before the court as the agreement required.
  • Gearin and Northrup must check to see if Northrup sent Gearin the email that the co-chair sent, and confirm or deny that they received it at any time.
  • Northrup must address whether he authorized Gearin to contact UCC members about disclosures to Ross Hansen.
  • Gearin must produce a copy of the Wagner contract that Gearin reviewed
  • Calvert needs to explain why the Dayton lease was assumed. Calvert tried answering that they studied another option, liked it, but didn't have the money. But Judge Alston said he already did not accept that with a prior decision.
  • Calvert needs to address why Cascade is billing for things that ppear to be Trustee duties, such as backing up videos, and why someone from Cascade should be paid to come to the court (unless as a witness).
  • Calvert needs to address why Cascade was billing for reviewing Proof of Claims in July 2017.
  • Calvert needs to address why a solvency analysis was necessary.
  • Calvert needs to explain why categories for billings changed from the October, 2017 fee application to the 2018 fee application. He should redline what categories changed.
  • Calvert needs to address some extraordinary expenses, such as the fee to the outfit in India that did data entry, not a normal business expense.
Calvert said that he saw a plan by Wagner to reorganize NWTM just around the China operations, and the profitability of it. Calvert reviewed it, his assessment is that it would be a small operation that would not provide the return creditors desired, and dismissed it, but asked Wagner to stay, and that Wagner has done an outstanding job.

Gearin said that in May, 2018 there were discussions with Wager regarding having Sierra Mint help liquidate the China inventory, and there was a draft of a contract at that time, but Calvert said nothing was finalized.

When Northrup was asked if the UCC voted for a forensic audit of Calvert's books, he said "not formally." Northrup said that the financial advisor was to test projections in a reorganization plan, and that none of the Seattle-based advisors were willing to take the engagement. Barrick was proposed by Petteys. When Judge Alston asked Northrup if he discussed the resignation of the UCC co-chair with the U.S. Trustee's office, Northrup said "I don't remember if I did, I think I did, if I didn't Gearin probably did or may have."

The UCC co-chair resigned, apparently because he leaked confidential information to Ross Hansen. However, Judge Alston points out that the information (that a settlement agreement was signed) does not seem that it could have been confidential, since in the agreement Calvert says that he will promptly apply to the court for approval of the agreement, which would make it public. When Northrup was asked why it needed to be kept from Ross Hansen, Northrup couldn't respond, saying he would "need to re-construct this".

Neither Gearin nor Northrup could recall if Northrup emailed Gearin a copy of the letter that the UCC co-chair sent to Northrup asking him to take action to remove Calvert. Judge Alston stated "I'm concerned [Northrup] ratted out a client".

Judge Alston pointed out that it appears that Gearin may have been contacting people represented by counsel without authorization (violating basic rules of professional conduct). Gearin couldn't remember if he got permission ("I cannot remember is if I got an affirmative sign-off from Northrup or not." at 1:17:45ish), but then his memory goes from failing to crystal clear at 1:19:10ish: "I'll have to go back to look at the records. I believe I had a conversation with Northrup before I sent that, in fact I am sure I did, I had a conversation before I sent that email and I told him what I was going to do, so he was aware that I was going to send this email to each of the committee members. I copied him on that, I requested that they each produce a packet of information and they complied, including [the UCC co-chair]."

The hearing ended with everyone agreeing to have supplemental declarations by January 18, 2019 for a February 1, 2019 hearing.

Hearing Audio Available

December 10, 2018 2:15PM EST
AUDIO ONLINE: listen here (#1959). I am starting to review it now. NOTE: link fixed. That one is ~45 minutes. Mostly Gearin/Northrup justifying their expense applications. Judge Alston did say at around 26:30 that he would not be considering my letters.

NOTE: There were a bunch of audio files, this appears to be the first legitimate one. I will update later.

Next is an 18-minute #1960 audio. This is just about administrative claims (not fee applications).

Last up should be 2-hour #1963 audio. This is about fee applications. I have just started reviewing: Judge Alston says at the beginning he has some concerns, and will ask them to file declarations rather than ask in court today, giving him time to think about it.

It seems that Alston is asking for declarations about quite a few issues, including copies of some emails and agreements.

Did a 2-Character Typo Destroy NWTM?

December 7, 2018 3:00PM EST
It now appears clear that NWTM suffered a nearly $250,000 unreported loss in August, 2017, after having to buy roughly $240,000 of gold to replace an order that was shipped uninsured to the wrong address.

There was 1 misplaced digit in the address, and a wrong letter. The package was addressed to "221 W [Street Name]", but should have been "222 E [Street Name]". Those two wrong characters caused it to be shipped to a hotel 1/2 mile away.

This may have been was the single largest custom order NWTM received since the bankruptcy began. Oops! NWTM had significant cash flow issues towards the end; imagine if hey had $240,000 more cash?

It also appears that Calvert did not include this $240K expense in the monthly financial reports! For August, 2017 (the month the $240K of metal was purchased), the only expense categories that high are COGS (which does not include the $240K amount) and salary (which should not include bullion!). It appears that for "Total Sales", Calvert entered $803,277 when in fact the total sales were around $1,043,277. Maybe that is an accounting trick he learned when getting his Certified Fraud Examiner certification. I am sure he was not trying to hide the $240,000 loss from the U.S. Trustee, the Unsecured Creditors Committee, and myself.

200oz of Gold Stolen in 2017?

December 6, 2018 6:20PM EST
This information is quite fitting coming to me a day before Calvert asks the court for $953,889.20 (plus a bit over a million dollars for his Cascade Capital).

A company placed an order in March, 2017 for its 50th anniversary. I believe the order was for just under 200oz of gold medals. The total order appears to have been about $260K, with a $122,500 deposit. In April 2017 the order was shipped to the customer via UPS. The customer never received the order, and contacted NWTM around August 1, 2017. It turns out NWTM had the wrong address, and the package was shipped to a hotel across the street, which accepted the package, then returned it to UPS after 30 days according to hotel policy (without making an entry in their security log). That is the story, at least. At least one NWTM employee believes that it was stolen.

Wagner became aware of the issue on August 1, 2017. By August 4, 2017, someone decided that NWTM would replace the order.

I cannot find a record of what whether NWTM was reimbursed for this loss through any type of insurance, or if the contents were ever recovered. I assume that Calvert was aware that this occurred, but cannot confirm that. If it was not covered by insurance (remember, UPS insurance doesn't cover bullion) or recovered, then it sounds like NWTM may have lost about $250,000. And no, I don't see any reference to this in the financial statements or court records.

Calvert Feared Wagner Would Compete

December 5, 2018 8:35PM EST
In April, allegations arose (in court documents) that Wagner was planning to take over the China business with his newly created Sierra Mint.

Judge Alston was aware of this, and asked Calvert at the May 4, 2018 hearing if he was aware of anyone planning to use the dies in China. Calvert said no, that Wagner did not want to buy any assets of the estate. Calvert has made it sound like he did not know of Wagner's intentions until March, 2018.

I need to be careful here, so let me say that I believe that Wagner stole assets from NWTM, based on the NWTM Amazon seller account showing the Sierra Mint phone number, the Sierra Mint website only showing NWTM products (which I do not see how it can create without permission from NWTM), the Sierra Mint using images that are copyrighted by NWTM, and emails in court documents showing Sierra Mint offering to create products using NWTM designs.

Last night, we found out (p5) from Northrup that yes, in 2016 Calvert was aware that Wagner "had a plan to take over the China business." Further, Northrup explains that Calvert "was concerned that Wagner ... might therefore be free, as a matter of law, to approach the Mint’s Chinese suppliers on his own," and that is why Calvert kept Wagner as an NWTM employee.

WHOA! Calvert knew very eary on that Wagner was planning to take over the China business. Calvert could have fired him (saving $170K/year): sure, Wagner could have competed with NWTM, but could not legally use NWTM designs, so he would barely be able to put a dent into NWTM's business. Instead, Calvert promoted him from CIO to President/CEO, and Wagner did indeed end up taking over the China business just as Calvert (and UCC members) predicted. Not only that, but it really looks like Wagner stole NWTM assets to do so. And just a couple weeks ago, Calvert declared "Based upon my dealings with Mr. Wagner over the past two and one half years, I believe him." (that he would not use estate assets).

Calvert/Gearin Respond

December 5, 2018 8:10PM EST
Calvert and Gearin have responded.

Gearin is fairly succinct, saying that I "[do] not offer admissible evidence relevant to the Court’s inquiry." And boy is he right! I assumed my letter itself would not be admissible evidence. But things like Calvert's declaration are admissible evidence (OK, I'm not a lawyer, I could be wrong about that!). And just like Calvert and Wagner before him, Gearin sticks out his chest and talks about my misinformation: "His letter is full of factual inaccuracies, hearsay, innuendo, and irresponsible speculation." Here I put all that time into the footnotes documenting all the facts, and he must have missed them. All that work for nothing. And just like Calvert and Wagner before him, nothing pointing out a single inaccuracy.

Calvert goes into a bit more depth. He states "His letter is full of factual inaccuracies, hearsay, innuendo, and irresponsible speculation." I'm sure it was a coincidence that both Gearin and Calvert wrote the exact same words. Calvert also took out his Private Investigator toolkit and came up with the amazing revelation that I "attempted to artificially create creditors status": I had only placed an order for 2 coins at $2.60 each! Oh wait, in docket 1579, my first letter to the court, I stated outright "I made a token $5 order the day before the bankruptcy filing solely for the purpose of becoming a creditor." But guess what? Calvert claims he returned the money order I sent, but I never received it, or any communication that he was returning it.

Both Gearin and Calvert also point out that the Trustee did a lot of work.

Northrup Responds to My Nov. 27 Letter

December 4, 2018 8:40PM EST
I strive to be as accurate as possible in my reporting.

For those of you who read my letter to the court dated November 27, 2018, you should read UCC attorney Northrup's response, to help gain a balanced view of the situation.

I do have another letter that arrived at the court today, that also mentions Northrup and Gearin. I sent that letter before Northrup filed his response (so I could not use information from his response, nor could he respond to my letter).

Regarding my letter, he points out:

  • I said that he wrote that "There is at least one Committee member who apparently swallows this garbage", and implied that it was referring to rumors discussed in the email. He correct me, and states that he was referring not to rumors, but instead to a potential reorganization plan based on one created by Ross Hansen.
  • He says that I "inaccurately or incompletely" describe that in 2016 Northrup told a UCC member that Wagner had a plan to take over the China business. He then goes on to state that that is true, that Calvert kept Wagner on because Calvert was afraid that without a non-compete Wagner would just quit and start a business.
  • My letter also stated that the UCC had a unanimous vote to audit Calvert's books, which never happened. Northrup points out that after the Medallic litigation concluded, "the cry of some Committee members for an “audit” of the Trustee’s work abated"
  • My letter also suggests that the UCC's attorney might assist a UCC member who feels the need to write to the court. His explanation is that the UCC member never approached him. I would have expected that after the first letter, the UCC's attorney would discuss the situation with the UCC member, and come to a resolution.
  • My letter stated that Gearin forced a UCC co-chair to resign. Northrup claims that he himself forced the UCC co-chair to resign, despite the UCC co-chair stating twice in court records that it was Gearin that forced him to resign.

Hearing Friday

December 3, 2018 2:00PM EST
On Friday, December 7, 2018, there will be a hearing primarily regarding the expense applications of the professionals. They are requesting:

ProfessionalFeesExpensesTotal
Cascade Capital Group$926,742.20$27,147.00$953,889.20
Trustee Mark Calvert$1,020,365.00$35,389.66$1,055,754.66
($906,310.00 cap)
K&L Gates (Gearin, Neu, et al)$3,080,791.51$172,745.23$3,253,536.74
MNGD (Northrup)$384,137.00$0.00$384,137.00
Total$5,412,035.71$235,281.89$5,497,872.94
(capped amount)

Calvert's application shows they were previously reimbursed $31,710.30, and Cascade was reimbursed 110,338.70 but returned 100K in 2017. MNGD previously received $59,990.18.

The hearing may be quite interesting, given the letters recently filed by myself and two UCC members.

UCC's Attorney Responds to Expense Applications

December 1, 2018 9:30AM EST
The attorney for the Unsecured Creditors' Committee, Mark Northrup, has filed a response to the expense applications.

He points out the recently filed letter by a UCC member (that covers serious issues with Calvert), and quotes an email from another UCC member who wrote that Calvert "failed to do anything he stated he could and would do. Incompetent and unprofessional in every aspect of his operation, attitude, procedures. His forensic accounting skills were non-existent. ... while never accomplishing the most basic of his required tasks: that of finding the money or where it went." Northrup also points out that much of what Cascade Capital (Calvert's company) did is what a Trustee normally should, and therefore should be limited as the Trustee's payment might.

Northrup seems to feel bad for Gearin (K&L Gates), who "Ironically, as a reward for all its work for the Trustee, K&L Gates now finds itself as one of the largest—and most exposed—creditors of this estate, facing the stark reality that much if its $3.25 million in work will go uncompensated." Poor Gearin, getting paid only $216/hour rather than his normal $540/hour after volunteering for this position, and not having his life savings stolen from him like other creditors. But Northrup does point out how K&L Gates billed $197,724 in an attempt to collect under $150,000, and billed $254,748 to get a $430,000 judgment against Erdmann, who likely won't be able to pay it.

The big irony here is that this is a matter of "robbing Peter to pay Paul" -- if the Trustee's fees are reduced, it gives more money to Cascade, Gearin, and Northrup. If Gearin's fees are reduced, it gives more money to the Trustee, Cascade, and Northrup. And so on.

The real question is why didn't Northrup object to these things as they were going on, as the UCC appears to have wanted?

Read My Letter to the Court

November 30, 2018 3:50PM EST
I encourage you to look through my letter to the Court. It is very long (39 pages with exhibits and ample footnotes), but covers a lot of ground.

My Letter to the Court

November 29, 2018 4:25PM EST
I have written a letter to the court, which arrived yesterday, and hopefully will be filed today.

It has a lot of information in it. The catalyst for writing it was the declarations recently filed by Calvert, Wagner, and Wagner's two employees.

My letter includes evidence that I have uncovered that could help determine whether Sierra Mint used NWTM assets (mostly infringement on NWTM's registered copyrights and NWTM's registered trademark). If they did, it would contradict what the declarations said or implied.

The letter also places the value of NWTM's "China business" at $5M+ as of early in the last quarter of 2017 (based simply on Calvert's valuation of NWTM and the percent of revenue derived from the China business), which contradicts Calvert's statement that "the insinuation that ... the NWTM business operation using Chinese manufacturers [is a] valuable [asset] is false". It points out how I have not seen anything in court documents about the China business being sold, or even mentioned as an asset of the estate. The China business was not sold to Sierra Mint (according to Calvert's declaration).

I also include evidence that I believe proves that Sierra Mint is selling products that are owned by NWTM (NWTM store products). Since Calvert's declaration states that NWTM did not receive any money from Sierra Mint, how could Sierra Mint be selling NWTM-owned products?

The letter further discusses how the attorneys for the creditors' committee appear to have not done anything to address the concerns of fraud and mismanagement. Had the attorneys addressed the concerns when they were first raised, NWTM might still be operating today.

$93K(?) Cash Shipped From Dayton to Washington Missing

November 21, 2018 6:55PM EST
I have found out that on at least 3 occasions after the shutdown, Calvert's company (Cascade Capital) had cash shipped from Dayton to Washington.

In the first instance I am aware of, $80,000.00 cash from a scrap sale was shipped via UPS from Dayton to Washington, in July, 2018. Another package of about $3,000 of cash was shipped via UPS in early August, 2018.

Then, in late August, 2018, another package of cash was shipped from Dayton to Washington, this time via FedEx. And guess what? The shipment was received damaged, and some or all of the cash was missing. No report of this was made in the monthly operating reports. The income statement shows $93K of scrap sold that month, and from what I can see, it looks like that may be the missing cash.

According to the UPS 'List of Prohibited Articles for Shipping' page, "The following articles are prohibited from shipment to all countries served by UPS: ... Bank bills, notes or currency (other than coin)". Yikes!

Compensation Applications Filed

November 20, 2018 4:20PM EST
All of the applications for compensation have been filed. You can find individual expense reports on the documents page. You can look at the Cascade, Trustee, K&L Gates, or UCC attorney applications.

I also have set up a webpage where you can sort and search through all the entries.

UPDATE November 23, 2018 9:50AM: I have updated the page. The K&L Gates billing from January 1, 2018 through April 30, 2018 was missing, and is now there. I have also changed it to include dollar costs for K&L Gates, hours for Cascade/Trustee, and category for Cascade/Trustee. This should make it much easier to go through the expenses. Just type in "Job Costing", for example, and see the $16K in entries for Job Costing.

Nov 16, 2018 Hearing Details

November 19, 2018 5:10PM EST
The November 16, 2018 hearing was intended to be about the WARN Act settlement. However, with Judge Alston requiring Calvert to conduct an investigation and provide details before the WARN Act settlement would be approved, much of the hearing was about that.

Chapter 11 Trustee Mark Calvert's attorney, Michael Gearin, started discussing the investigation by saying that he thought that the catalyst for it (the letter from the UCC member) was based on "falsehoods and baseless innuendo." Yet Gearin was unable to provide any explanation as to why Ms. Baker was saying that Sierra Mint would use existing dies, when Wagner claims otherwise.

Judge Alston made it clear that there are many questions that must be answered. Gearin said that "Wagner said he never appropriated dies or did anything with them. We are telling you, this did not happen."

Most of the rest of the hearing was about a concern about the number of employees in the settlement agreement. There are 100 on the list, but the monthly operating reports make it look like 106 people were laid off. Gearin and Calvert were unable to account for the discrepancy, so Judge Alston continued the issue, until the discrepancy could be addressed.

In the last few minutes, the judge brought up some stipend payments that were made without authorization of the Court, as the judge believes they were not made in the ordinary course of business.

Evidence Wanted

November 17, 2018 10:35AM EST
On Thursday, declarations were filed by Calvert, Colwell, Fleet, and Wagner, all under the penalty of perjury. That is about the closest legal equivalent to "I swear on my Mother's grave." So all the information should be true.

If anyone has any evidence suggesting otherwise, I would appreciate an email or anonymous tip.

UPDATE November 19, 2018 5:10PM: Thank you to those who have been sending information. All information is appreciated.

Wagner Declaration

November 16, 2018 11:15AM EST
Paul Wagner signed a declaration under the penalties of perjury. Among other things, he states:

  • "I informed [Calvert, in March 2018] that I did not believe that Sierra Mint had any need for any assets of NWTM of Medallic Arts Company, LLC..."
  • "Sierra Mint does not and has not used dies that were manufactured by Chinese manufacturers to create product for NWTM or its former customers. For each product ordered by Sierra Mint for a customer, including former NWTM customers, the Chinese manufacturer has created new dies which Sierra Mint has paid for."
  • "Sierra Mint does not possess the art or design files that belong to NWTM ... Fleet does not have access to NWTM's art files, nor does Sierra Mint use them."

Audio of November 16, 2018 Hearing

November 16, 2018 7:35PM EST
I haven't had a chance to listen to much yet, but it is at here. I'll replace this post with a synopsis when I get a chance to listen.

Trustee/Wagner Declaration Issue #4

What is an 'Investigation'?

November 16, 2018 3:25PM EST

Judge Alston required "A statement under penalty of perjury that [Calvert] has conducted an investigation", of the following items. This should have been a piece of cake for Calvert, a licensed private investigator.

  • Investigate that "neither Mr. Colwell, Mr. Fleet, or Ms. Johnson have ever used, or have ever worked for or with a company that has ever used, any assets of the bankruptcy estate". Calvert's investigation? "I have no reason to believe that Ms. Johnson ever set up a company or used NWTM designs or customer lists." Calvert also used his super PI skills to uncover her LinkedIn page (his results: no change since she left NWTM). Calvert did not mention Mr. Fleet at all, and the only reference to Colwell was unrelated. Huh.
  • "the Trustee must address the alleged use of Mint customer lists... ". For this, Calvert had previously been aware that "[Ms. Johnson] was contacting former customers", but said that he had "no reason to believe that Ms. Johnson ever ... used [NWTM] customer lists". And he at one point in time, separate from this investigation, told Wagner not to use the customer lists. Again, huh.
  • "... art servers ...". For this, addressed in paragraph 14, he mentioned that Edgar Chacon (a former NWTM employee) "was going to lock the computers up in the archive room at the Dayton facility", and that the computers were later sold at auction. Interestingly, this investigation only refers to computers in Dayton, 700 miles away from Kent (the location of computers raised by concerns of the UCC member). The concern was that computers in Kent, WA went to Wagner and/or Fleet, yet Calvert only mentions computers in Dayton.
  • "... designs ...". Here, Calvert states that he was informed that "[Ms. Johnson was] offering to create product for [NWTM customers] using designs from NWTM", but that "I have no reason to believe that Ms. Johnson ever set up a company or used NWTM designs". The word "design" does not appear in any references to Wagner, Colwell, Fleet, or Sierra Mint. This is mind boggling, both his declaration, and the fact that his investigation only covered 1 person.
  • "... or dies located in China or anywhere else.". For this part of the investigation, he simply states that he does not know why Ms. Baker stated that Sierra Mint could make product using "existing dies", and that Wagner stated that Sierra Mint pays to have new dies made. Quite the investigation!
  • Finally, Calvert "must also address the emails from the Mint employee in July 2018 referring Mint customers to Sierra Mint to obtain reorders of products from existing dies.". For this, Calvert responded with "I do not know why Ms. Baker stated that the product could be made using “existing dies.” I can only speculate that she was mistaken in her understanding. I have spoken with Paul Wagner who ... is paying to have new dies made to create its product." Again, his entire investigation was asking the accused, who Calvert trusts. And if Wagner is paying for new dies, how is it that Colwell was quoted as saying "you should see no difference whatsoever" between existing coins and freshly produced ones.
So would you hire this private investigator?

Trustee/Wagner Declaration Issue #3

Hiding the Trustee's Knowledge of Sierra Mint

November 15, 2018 8:55PM EST
The 4 declarations appear to be quite well orchestrated. Calvert and Wagner both make it sound like Calvert didn't know about Sierra Mint until March, 2018 (e.g. "In March, 2018, Paul Wagner informed me [Calvert] that he intended to start a business called Sierra Mint to create promotional products" -- adding "March, 2018" is completely irrelevant unless he first learned of this in March, 2018). Being a declaration under penalty of perjury, they were careful not to directly lie.

I have now seen ample proof of Calvert's knowledge of Wagner's plan. For example:

  • In Docket 1901, where the UCC member says that UCC attorney Mark Northrup told her that Calvert found a copy of a business plan on Wagner's desk
  • I have been given a copy of an email to Calvert in 2017 "recapping" that Calvert mentioned a concern early on that Wagner would take over the Chinese business and possibly compete with NWTM.
  • I have been given a copy of an email from Wagner sent from an NWTM computer in January, 2018 (to a vendor, not Calvert) stating that Sierra Mint was interested in custom products, not stock products.
So why isn't Calvert coming out and being forthcoming, stating what he knew when? It's that old saying, if you act guilty, people think you are guilty. Just be honest, tell the whole truth, and we'll believe you.

Trustee Declaration Issue #2

The Wagner Memo

November 15, 2018 3:50PM EST
Starting around April, 2018, allegations surfaced that NWTM President Paul Wagner started Sierra Mint, to "take over" NWTM's Chinese business. Judge Alston heard this allegation, and asked Calvert about it at the May 4, 2018 hearing. Calvert said that he had "great discussion" with Wagner, that Wagner had "no desire to buy any assets from this estate, no desire for any intellectual property", and that Wagner had sent him a memo about this.

Calvert and Wagner each filed a copy of the memo last night.

The first issue is that there are allegations that Wagner had a business plan to do this dating back to around March, 2016, and that Calvert found a copy of that plan. This is not simply a specious allegation; a UCC member reported that UCC attorney Mark Northrup said so. An attorney, with a name; not an anonymous source or gossip. It is quite clear that Calvert knew about these plans, but Calvert declared "In March, 2018, Paul Wagner informed me that he intended to start a business called Sierra Mint to create promotional products." That implies (but does not state) that it is the first time Wagner told Calvert these plans, and implies that Calvert wasn't aware that Wagner wanted to "take over" the Chinese business. That is at the very least deceptive.

The second issue is that this memo says that Sierra Mint "is not so much a mint as it is an import business of promotional products, more akin to an ASI business" -- again, at the very least deceptive (ASI appears to refer to "logoed items like hats, T-shirts and bags"). This also conflicts with an email from before March, 2018 that I got a copy of where Wagner said that Sierra Mint is only interested in products that are made to order, not the stock products (Wagner was also considering buying the NWTM business as a whole at that time).

Also note that Wagner declares "In early March, 2018 ... I informed Mark Calvert of my intentions with respect to Sierra Mint." Note the carefully orchestrated declarations -- both Calvert and Wagner imply that Calvert first heard about Sierra Mint in March, 2018. But it appears that the facts state otherwise.

Trustee Declaration Issue #1

Stipends... for die resolution?

November 15, 2018 12:55PM EST
In the Trustee's declaration, Mark Calvert stated that the $550 monthly stipends to an employee (Ms. Johnson) were "a fixed monthly payment of $550 to cover office expenses while she worked from her home office ... [including] shipping samples, postage, printing supplies, office supplies, internet, utilities and other customer/office expenses to conduct business."

That is all fine and good, and makes perfect sense. However:

At the May 4, 2018 hearing at 58:20, Judge Alston asked Calvert specifically about the $550 monthly stipend payments to Ms. Johnson. Calvert stated that she "was an employee of the company, she is assisting with some of the die resolution issues, and that it is a contractor in substance at this point."

I'll assume that the statement under oath is correct, and that Calvert was just spitballing in court, and got confused between the $550 monthly stipends to Ms. Johnson, and was thinking about the employee who actually did help with die resolution by signing a declaration about die resolution, after stealing customers (per Calvert) and working for MedalCraft (again, per Calvert). But there doesn't seem to be any sign that that employee got paid stipends for her declaration. But that employee did not get paid for her declaration. So how did Calvert confuse the two in court?

Calvert also declares "I have no reason to believe that Ms. Johnson ever set up a company or used NWTM designs or customer lists." To me, this is a very strange declaration, coming in the paragraph after writing "it was brought to my attention that Brenda Johnson was contacting former customers and offering to create product for them using designs from NWTM." How could Ms. Johnson have contacted customers without using the customer list? And how can Calvert state under penalty of perjury that he has no reason to believe that she "used NWTM designs", when she said that she was offering to create product "using designs from NWTM"? I guess it all depends on what the meaning of "is" is.

Trustee Responds to the Judge

November 15, 2018 12:20PM EST
NWTM filed 4 declarations in response to Judge Alston's letter, one each from Mark Calvert, Paul Wagner, and two Sierra Mint employees (1, 2) that used to work at NWTM. The general tone is that everything was done by the book, except for one former employee that was contacting customers inappropriately (to be clear, not someone involved with Sierra Mint).

Judge Alston's letter stated "Before the Court will approve any settlement that provides for payments to [the 3 employees], the Trustee must file the following:", listing 3 items that I recently covered (the hearing is tomorrow, November 16, 2018). Calvert supplied those items.

From what I can tell, two of the items seem pretty close to rock solid: the memo that Wagner provided (although made it sound like he was planning to just provide "promotional products"), and information about stipend payments (to reimburse for office expenses). The other piece, the investigation regarding the use of NWTM assets, well, it reads well, but in my opinion "misses the mark." It can be summarized with one line: "Based upon my dealings with Mr. Wagner over the past two and one half years, I believe him." (after Wagner stated under oath that Sierra Mint is paying to have copies of existing dies created).

For those that are unaware, these declarations were made under the penalty of perjury, meaning that in theory they could go to prison if they lied (to be clear, I am not aware of any direct lies in these statements as I write this).

I will post more later.

The Judge Responds

November 9, 2018 2:25PM EST
On Tuesday, Judge Alston wrote a letter, addressed to the Trustee and his attorney. It relates to the WARN class action lawsuit settlement (which would provide money to about 100 employees terminated when NWTM shut down), which the Trustee hopes the Judge will approve at a hearing on November 16.

The judge points out concerns about the settlement payments going to 3 of the employees named in the recently filed letter from the UCC member, as two now work for Sierra Mint, and one is working for another company that apparently has access to NWTM customer artwork (and received $3,500 in "stipends" in the months before NWTM NWTM shut down -- I use quotes here because with Calvert's accounting, the exact word in accounting descriptions is truly meaningless).

It states that before the Court will approve any settlement providing for payments to those 3 employees, Calvert must file (summarized here by me): [1] a statement that he investigated and found those 3 employees are not at companies using NWTM assets, or state why the employees should still receive a settlement payment, [2] a copy of a memo that Wagner wrote about Sierra Mint, and [3] a statement identifying and describing the stipends that one employee received, explain why he did not receive authority from the Court to make the payments, and attach communications between him and the employee regarding those payments.

CEO has Offered to Speak Up

November 8, 2018 4:10PM EST
I received an email from NWTM CEO Bill Atalla, who said:

"Please let it be known that if the Judge would like to question me on any subject, I will make myself available. I offer this with a view to fill in the blanks and maybe validate or refute various claims."

A lot of people have had a fear of speaking up, whether it be sharing information (such as on my anonymous tips page), writing to the court (the address is at the court website, just remember to include the case number, 16-11767-CMA), or something else.

There has been so much talk of wrongdoing, so it is refreshing to see someone willing to provide the truth.

Damning Letter From UCC Member

November 6, 2018 8:45PM EST
A member of the Unsecured Creditors' Committee (UCC) wrote a 57-page letter (the 57 pages including images, emails, etc., but not the exhibits that add another 13 pages) to the Court, which was filed last week. Remember, this person would be privy to information even I am not.

The letter is on behalf of unsecured creditors, on the subject of "Sierra Mint and other irregularities." It starts by discussing the dies in China, and states what many people have told me: Calvert knew of Wagner's plans to take over the China business going back to at least November, 2016 (despite him saying multiple times in court on May 4, 2018 that he had no knowledge of anyone, including Wagner, planning to use the Chinese dies). It goes on to discuss how Calvert referred to items in storage, yet there are no payments to storage companies. It discusses how the China business and customer list were never disclosed as an asset.

It discusses issues with the dies, and how Calvert never released an inventory of dies (despite having such an inventory), and how information on dies was left out of court documents (e.g. asset sales that mentioned dies, but no estimate of the number of dies in the sale), leaving many dies (albeit mainly "junk" dies) unaccounted for.

The letter states "There is a concerted effort to minimize the total number of dies and the value of what is in China." An email is submitted from Sierra Mint stating that their coins come from the same Chinese vendor that NWTM uses, and that "you should see no difference whatsoever" between the Sierra Mint coins and the NWTM coins. The letter provides evidence of Calvert saying "There's a great margin" in the Chinese business, while his attorney Gearin stated to the court that "We don't view that there is any value in [the China business]".

Also mentioned is a former employee that was contacting NWTM customers, that was being paid a monthly stipend by Calvert, that Calvert told the court was for help with die resolution issues -- yet the employee was in Virginia and had no involvement with dies. And it was mentioned that it was expected that Wagner would depart when the CEO was appointed. And how Wagner's plan "required the dismemberment of the company", suggesting that he may have influenced potential purchasers and/or Calvert's well-known protocol of not responding to potential purchasers (one buyer wrote "[Calvert] doesn't reply to emails or phone messages"). It questions why the investors that signed agreements to buy the company but could not come up with the money were not sued. The letter says that Calvert "enabled and empowered Wagner the whole way." It points out how the CEO attempted to fire Wagner, but Calvert countermanded his order.

Another important point was that the Trustee did not mention a $140,000 loan from an individual that was secured by the dies in China. This was brought up at the Creditors' Meeting in 2016, and Gearin billed the estate for reviewing the claim, so both Calvert and Gearin should have been well aware of this lien. Yet Calvert was contemplating abandoning the dies, apparently without mentioning to the court that there was a lien against those dies. Well, he did say something cryptic: "We have a large invoice [from] a creditor of this estate." Apparently, the Trustee mistook a Proof of Claim form for an invoice (you don't send an invoice for a loan, and you can't even send an invoice in a bankruptcy for pre-petition debts). Was Calvert intentionally trying to deceive the court? And this was at a hearing, so why didn't Gearin correct Calvert's blatant error? (these questions are mine, not in the letter).

The letter suggests that the UCC attorney, Mark Northrup, was influenced by Calvert and Gearin to remove information from a response filed by the UCC (before it was filed). This was in regards to a motion to hire a Production Manager. The order was granted, yet Calvert hired the employee for a different position, and when questioned by the UCC he said "The Trustee can do as he pleases!"

It states that on February 10, 2017, the UCC voted for a full outside audit of the Trustee's books, and that the UCC attorney presented that vote as being a vote to appoint a financial advisor to review the Trustee's business plan. Had the UCC attorney done what the UCC reportedly requested, it could well have saved the company: an audit would have reflected extremely poorly on Calvert, and gotten him replaced by a competent Trustee (this sentence is mine, not in the letter).

The letter points out that the detailed storage inventory that the Trustee promised creditors was never supplied. Examples of serious accounting errors (after the bankruptcy filing) with storage metal were given. And how bullion wasn't accounted for under Calvert's reign.

It points out how Calvert kept claiming that the FBI was present for inventorying and had pictures of everything, but in reality, the FBI was only present for part of the inventory at 1 of 3 locations. The FBI never had any exposure to the 2 most seriously botched inventories, despite what Calvert implied (this sentence is my take, not in the letter). And it points out how the FBI found bullion in document containers provided by the Trustee (yikes!).

The letter ends requesting among other things that the Trustee's $4.8M bond be sequestered on behalf of the creditors, a full audit of the books, and that records be preserved.

'The Trustee Never Responded'

November 3, 2018 1:40PM EST
In the criminal case against Ross Hansen and Diane Erdmann, a joint defense memorandum was filed. Among other things, it states that the public defenders for Hansen and Erdmann requested the password for the NWTM computer system from Trustee Mark Calvert -- and that "The Trustee never responded to the request for the password." We've heard "never responded" quite a few times to describe Calvert.

I understand that Calvert may dislike Hansen, or perhaps feels that it is in the best interest of creditors, victims, or even himself for Hansen not to get the password quickly. But a normal functioning person will at least respond.

Sierra Mint Website Live!

November 1, 2018 4:05PM EST
Halloween seems to have inspired Sierra Mint to have its Grand Opening. The Sierra Mint website is live!

For the geeks out there, I have been told that they are using a shared Apache server at 1&1 with PHP version 7.1.22, and that the "absolute path" on the server for their website is /homepages/1/d719522907/htdocs/. Unrelated (I hope!), the webserver Sierra Mint uses also hosts the shipped-semen.com website.

With no known marketing, they have managed to get an impressive customer list: Busted Halo, Cincinnati Police, Coca Cola, Conoco Phillips, ExxonMobil, The Home Depot, L3, Lockheed Martin, Montana Highway Patrol, NPR, Oregon State University, Regent Seven Seas Cruises, U.S. Central Command, U.S. Department of Defense, and U.S. Department of Homeland Security. Wow. How did they get all those accounts?

If you do business with them and find out anything interesting, be sure to let me know!

Sierra Mint Selling NWTM, Medallic Products

October 30, 2018 10:25AM EST
I have just heard from a realiable source that Sierra Mint (the company started by NWTM President/CEO/CIO Paul Wagner when NWTM shut down) has been selling NWTM and Medallic products, and using some NWTM and Medallic IP (intellectual property).

If true, that should mean that [1] NWTM Trustee Calvert licensed or sold that NWTM IP to Sierra Mint, and [2] Medalcraft licensed the Medallic IP to Sierra Mint, and [3] Sierra Mint obtained NWTM and Medallic products to sell (from Calvert, Medalcraft, or some other source).

This is odd, because Wagner gave Calvert a memo about Sierra Mint that stated that Wagner had no desire to buy assets from the NWTM estate, and had no desire for any intellectual property. Yet I see no way this could be happening unless Calvert and Wagner worked out a deal for the NWTM IP.

At least one of the NWTM products being sold by Sierra Mint was made by dies made in the United States, not China (it was previously believed that Wagner was planning to take over just the China portion of the NWTM business).

Hmmmm.

Customer Orders Funded Operations

October 25, 2018 8:20AM EST
On April 29, 2018, I posted about 1,300oz of sterling silver that the USGA purchased for medals that NWTM was going to create for them. According to the USGA, NWTM was unable to refund the money, return the metal, or make the medals.

I have confirmed that as of early January, 2018, Jeff Goodfellow (NWTM's Production Manager, one of the few NWTM employees remaining on the skeleton crew) searched the Dayton facility for the silver, and was under the belief that the $22K of silver was never received by NWTM. Mr. Goodfellow had "OK'd" the order back in November, 2017.

A-Mark Precious Metals, NWTM's go-to bullion wholesaler, typically delivers metal within 4-8 days after receiving funds (terms similar to most wholesalers). So what happened? Did Calvert make the $22K silver order in November, when USGA locked in the price, or did he hedge the price in November, or did he "self hedge" like Ross Hansen (take on the risk of price changes)? Hedging is unlikely, as there is no sign of hedging payments. And if the silver hadn't been received by early January, 2018, what happened: did NWTM wait months to place the order (like Ross Hansen), or did the wholesaler wait months to deliver the order (which is likely illegal; delivering in over 28 days is considered a futures contract and usually illegal, at least in Washington and California)?

Can someone please explain how NWTM could have done this legally? A prominent customer placed an order for $22K of silver on November 16, 2017 (this is a proven fact), with NWTM promising medals made from them no later than January 5, 2018 (again, a proven fact). The medals were not delivered by January 5, 2018 (again, a fact). The NWTM Production Manager says that NWTM did not receive the silver as of January 10, 2018 (fact). How can this be legal?

Prior Employee to Liquidate Inventory

October 18, 2018 8:20AM EST
The Dayton location is closed, and NWTM no longer has any employees left (although some may provide consulting services). All remaining inventory is now in Washington.

Chapter 11 Trustee Mark Calvert is anticipating filing a motion to allow a former NWTM employee liquidate the remaining inventory, given the "nature and amount" of inventory and how "the value can be maximized with a sale over time".

Of course, we have nearly no idea of what or how much inventory there is. The only information we have is Calvert's guesstimate of its value on the balance sheet -- $354K. That could mean anywhere from a low of about 175,000 items (based on the cost to create them) to about 2,000,000 items (based on the $.25/ea Calvert originally seemed to assign stock inventory products). But, with Calvert, he might be considering Ross' old telescope as inventory. Or precious metals (after all, he usually uses the term "inventory" to refer to the wacky job his company did counting the bullion -- see my "Accounting Nightmares" post on the old NWTM posts page if you don't believe 'wacky').

I'm sure many people would not like to see a former employee taking on the sale of the inventory items (depending on who it was), but there may be as much accountability with this arrangement as there would be if it was all sold as a group at a firesale price.

NWTM Items to be Auctioned

October 17, 2018 3:30PM EST
Someone pointed out to me that Holabird Americana, an auction company run by Fred Holabird (who was planning to work with Rodger May if May bought the NWTM/Medallic assets), has an auction on October 19 with about 100 items from the "liquidation of Northwest Territorial Mint".

I have heard that Holabird paid $1,750 for those items.

UPDATE October 21, 2018 3:00PM: The $1,750 was for one or two scales. A Holabird employee told me that most of the NWTM items being auctioned are part of what Calvert had described in the latest monthly operating report as "NWTM sent miscellaneous collector numismatic pieces from inventory to a dealer for sale on consignment. Anticipated to receive sale proceeds in October." It is odd that Calvert would have referred to items in an auction as consignment (consignment invokes an image of a company selling goods that belong to an individual, later either paying them or returning the item, even though auction houses use the term "consignment").

January Email to Employees

October 17, 2018 2:30PM EST
I just received a copy of an email that was sent by NWTM President Paul Wagner, apparently to all Kent employees. This was sent January 5, 2018, a week after the shutdown (see the old posts page to see what was going on then), and appears to refer to a different possible buyer (likely Tofoya?). I have removed Wagner's phone and email for privacy reasons.

From: Paul%20Wagner <[REMOVED]>
Date: Fri, Jan 5, 2018, 12:35 PM
Subject: update.....
To: <[REMOVED]>

All,

I don't have a lot of news right now. The new buyer has committed to putting up $500k by middle of next week and the remaining balance a few days later. Right now, we do NOT have any funding, but thought we might have a portion of the $500k by today.

If this buyer comes through, the plan is to file an emergency sessions with the court next Friday to sell the company - the belief is that the transaction would finalize with the court agreeing to the sale of the company.

We have no idea if the funding will occur. If you've read the recent about.ag entries, Bill is trying to control the narrative and continues to press that this transaction will occur, similar to the narrative previously pressed with regard to Gary Anderson. Nonetheless, we are progressing the plan for the operational shutdown and liquidation of assets across the company.

You have my email address. My phone is [REMOVED] should you need to contact me.

Best,

-paul

From the tone, it appears to very much be saying "Don't hold your breath that this deal will go through." How in the world do you get a commitment to put up $500K, and "think" you might get a portion of it today? Where was NWTM finding these "Wimpy" ("I'll gladly pay you Tuesday for a hamburger today") buyers? A typical business broker will pre-qualify a potential buyer well before signing an Asset Purchase Agreement.

January Email to Potential Buyer

October 16, 2018 4:15PM EST
I received a copy of an email sent by NWTM's CEO to a potential buyer of the Medallic assets, from January 20, 2018. This was about 3 weeks after NWTM/Medallic shut down. The deal never went anywhere, but the email is interesting.

Some of the interesting lines include:

  • "We are sitting with orders on the desk at a level well beyond what the company has ever experienced."
  • "Our monthly revenue is approximately $1M+. Our break even is $950K. Gross profit on dollars past break even is 50%."
  • "Revenues have been climbing due to marketing programs now coming on board."
  • "sales orders are piling up due to our new products, new verticals, new corporate accounts and marketing programs maturing. We have a backlog of $750K+."
  • "Our main competitor would be Medalcraft Mint"
  • "Archives-- 115 years of pure art and Medallic history. We are just now opening those doors to restrikes"
You can read the full email here.

6,000 Pages of Emails

October 12, 2018 1:20PM EST
I was able to obtain the entire 6,000+ pages of emails from NWTM's Jenifer Baker to customers, that the court ordered Chapter 11 Trustee Mark Calvert to present. I had previously gone through a fair bit of it, but was not willing to spend the $500 or so to download the rest. Now I have had a chance to go through them. These emails all pertain to customers who expressed an interest in having their dies shipped to them.

Calvert took the bogus position that NWTM owned all the customer dies (and let Ms. Baker email customers erroneously stating that the court had said the dies belong to NWTM, and that the court approved a $300 fee). Calvert stated in an internal email "To date we have take the position that the dies are tooling and they are owned by the company. Upon further research and discussion that is not completely true... [salesperson] advised me that the die ownership issue was addressed about 3 to 4 years ago". However, this was bogus; I've had quite a few salepeople tell me that they were told to tell customers that NWTM dies were the property of the customer, and NWTM was referring to the dies as customer assets in advertising less than a year before the bankruptcy.

There were many, many repeated emails (mainly emails that were quoted), some blank pages, and a few oddball pages (such as the Facebook and Twitter logos each enlarged to take up a full page).

Some takeaways:

  • Jerry Moran, the owner of Medalcraft Mint that bought the Medallic assets, had access to the Medallic customer list before they bought Medallic assets ("I understand you are a former customer of Medallic..."). He emailed customers on or before April 24, 2018 to introduce them to Medalcraft.
  • One customer email implies that Calvert lied to him ("Mark indicated that the price per tool is $300 regardless of ownership, as dictated by the bankruptcy court.")
  • Most customers were quoted a flat $45 shipping cost regardless of the number of dies, and given the option of using their own UPS account. However, there were some customers that were quoted $65, $75, and $100 for shipping (the $65/$75 was after NWTM was caught lying to customers about what the court said).
  • At least 4 customers asked Ms. Baker for a copy of the made-up court order. Ms. Baker referred one to K&L Gates, two to Mark Calvert, and it is unclear who the other may have been referred to. Yet somehow Calvert claimed in court that he was unaware of the erronenous email until after it was brought up in court documents.
  • Calvert outright lied to at least one of the customers who requested a copy of the court order ("At NWTM, we always retained ownership of the dies unless the customer specifically requested the transfer of ownership."). That was in an email from Calvert himself. A lie, pure and simple.
  • Calvert or K&L Gates appears to have lied to the Court in Docket 1753, where they say "The Trustee has ... shipped 203 dies for no charge other than $45 for shipping to those customers". However, as I mention, there were customers charged fees of $65 and more for shipping.
  • There was another Baker erroneous statement: a non-profit complained about having to pay shipping for the dies, and Ms. Baker wrote "Those are the guidelines that the bankruptcy court has put in place" (I have seen nothing suggesting that NWTM was required to charge shipping fees).
  • At least two customers had NWTM dies shipped to Medalcraft, even though they say they never did business with Medalcraft. This was before the court authorized the sale of the unclaimed dies to Medalcraft.
  • There was an Estimate produced by Medalcraft Mint in April, 2018 by one of their sales reps that used to work for NWTM. Calvert was furious at this sales rep, believing that she helped Medalcraft steal NWTM clients (going so far as to make legal demands of Medalcraft), yet Calvert later used this former employee for a deposition to help the Medalcraft sale (without mentioning that she was now working at Medalcraft).
  • At least one other company besides Sierra Mint seems to have access to the Chinese dies -- Ms. Baker states that a customer's dies came from NWTM's "import vendor" (Yong Tuo in China), and that she believes that a company started by an NWTM employee prior to the bankruptcy has access to the dies.
  • Many, many customers complained that they never received a mailing about the dies (but did receive the follow-up email mentioning a typo in the original mailing).
  • Many, many customers complained that they could not get the die form submission to work at all
  • Many customers complained that they could only submit 1 .pdf file
  • After NWTM was caught sending out erroneous emails, Calvert offered to settle in a misleading fashion (sending emails with "The Trustee is currently offering to settle disputed claims of ownership at $X per die", with different customers getting different numbers of $50, $100, $150, $200 or $300). "Currently offering" suggests an amount being offered to all customers.
  • I tried to contact 7 of the die owners in this list for further information, and not a single one responded to me.

More Calvert Blunders

October 11, 2018 8:40AM EST
When you buy something with a credit card, you have very strong protections. If you don't get what you paid for, you usually can get your money back -- from your trusted bank, not the company you're having troubles with. If all goes as planned, that never happens. It does, however; even a good company occasionally gets orders using stolen credit cards, for example.

In the month that NWTM filed for bankruptcy, April 2016, there were 27 chargebacks. That is actually smaller than I would have expected, given that there was a multi-million dollar fraud involving thousands of people.

From May, 2016 through the shutdown (December 27, 2017), there were only 4 chargebacks. There is no way to know what happened, but that seems typical. That is one chargeback every 5 months on average.

After the shutdown, however, there were 11 chargebacks. These appear to be people who placed orders (some appear to be custom orders, others stock product from the online store) that never received their orders. And, presumably, weren't able to contact someone at NWTM who could (or was willing to) refund their money.

How can a business be successful if you don't get orders out, and communicate so poorly with your customers that they have to contact their bank to initiate a chargeback? Remember, Calvert was also writing bad checks in late 2017.

[Disclaimer: these numbers may not be 100% accurate, due to Calvert's crazy accounting (e.g what he refers to as "chargeback" might really be something different, or a chargeback might be listed as customer return).]

New Emails

October 8, 2018 5:50PM EST
I've received a fresh batch of emails, that came to me by someone involved in the NWTM bankruptcy (which can include employees, bankruptcy professionals, etc.). This particular email isn't damning, just interesting.

The main point of posting this email is to help show that [1] there are lot of people who are sharing pieces of information, and [2] some people are sharing documents, despite the threats (real or perceived). I received permission from the person who sent this to post it; I will never post information without authorization (unless supplied anonymously without any disclaimers, as I have no way to request permission). I am also very careful to make sure any metadata is removed (which is why I converted the email to an image; the original contains the email headers).

You can click on the image to see the whole email. And you can email me (anonymously or not) at the anonymous tips page.

$150K on Post-Shutdown IT

October 8, 2018 1:30PM EST
NWTM shut down on December 27, 2017. However, since that time, NWTM has paid monthly bills to Telepacific of about $2,700/mo, Green House Data of about $6,500/mo, and Threshold Communications of about $10,000/mo. Chapter 11 Trustee Mark Calvert classifies the services of all three companies "IT" (to be fair, at other times he classifies them all as "Telecom"). That adds up to at least $159,036.41 (possibly more with hidden payments, such as the February 5, 2018 payment to Green House Data with the "Payable to:" listed as "Bill.com Pmt MISC VENDRORS - Bill.com", with no sign of Green House Data).

So the question becomes, why would NWTM need to spend $159K -- quite a bit less than the $125K employees expect to get from the alleged WARN Act violation -- on IT? That includes web hosting, Internet, telephone lines, and the like. But $20K/month? The website traffic (with no shopping capability anymore) and email can be easily handled with a <$200/mo hosted server (1&1, that NWTM's CIO trusts for his Sierra Mint, charges $100/mo for 6-core 32GB RAM 2TB HD server with RAID). Add a few phone lines and Internet access for 10-20 skeleton crew employees, and a few other things (fax line, 800 number), and you might be talking about perhaps $1K-$2K/month.

Calvert approved each of the 19 payments to these companies totally $159K ("All Payments are approved by the Trustee before they can be made."). What could an almost defunct company just disposing of assets possibly need to spend $20K on IT (hosted servers, Internet, phones) for?

UPDATE October 12, 2018 12:45PM: The fax line was shut down by early June, 2018, so phone charges were on their way out. Green House Data was used, among other things, for cloud storage of accounting records, financial records, and email. However, those records would likely account for at most a few terabytes of data. Even a massive 50TB of data could be maintained in the cloud for just $250/mo at well respected BackBlaze (or ~$1,000/mo at high end Amazon, Microsoft, or Google). 50TB could be stored on an in-house server for well under $5,000 (with no monthly fee).

Calvert's Misunderstanding of Ponzi Schemes

October 3, 2018 2:40PM EST
The NWTM Chapter 11 Trustee, Mark Calvert, should be an expert at Ponzi schemes: he was the Trustee of a bankruptcy involving Washington state's biggest Ponzi scheme.

But, it seems like a case of everything looking like a nail when you are a hammer. Calvert emailed the FBI agent investigating Ross Hansen and Diane Erdmann, and wrote (forwarding an email from a customer who had not received his $74K bullion order, and asked Calvert if he could write it off on his taxes):

Calvert may be a Ponzi expert, but I was studying the tax laws on Ponzi losses and how they relate to bullion purchases back when Calvert measured "bouillon" on bathroom scales. This definitely is similar to a Ponzi scheme, and has some attributes of a Ponzi scheme. But, with the possible exception of lease customers (less than 1% of creditors), [1] it is not a Ponzi scheme by the traditional definitions, and [2] it does not meet the IRS definition of a Ponzi scheme. Both require [1] investors, and [2] income being paid.

The tax law does have a provision ("safe harbor treatment", in Rev. Prov. 2009-20) that says that the IRS will not challenge certain Ponzi related theft loss claims. But does not apply to 99% of NWTM customers, as 99% of customers were not expecting to earn income through NWTM. And all it does is guarantee that the IRS will not challenge the theft loss, so it provides no real benefit (just guidance).

Worse, Calvert forwarded an email from a bullion order customer, one waiting for metal, that would not benefit at all from the IRS provisions that Calvert referred to.

The real question becomes: was Calvert worried that creditors wouldn't get an unchallenged tax deduction, or was there another reason he wanted a quick indictment?

Calvert Pushed FBI

September 30, 2018 11:45AM EST
In the Calvert emails I recently obtained (reminder: the tips page accepts uploads), there were several where Calvert was pushing the FBI for an indictment. I had previously heard a rumor that Calvert had "cozied up" to an FBI agent. It sounds like this is what the rumor referred to. I have confirmed the authenticity of these emails.

On October 17, 2016, Calvert wrote to an FBI agent assigned to the case: "So.. it will be important for creditors that somebody be indicted by this year.." (which, in fact, was untrue; I plan to cover that later). On February 24, 2017, Calvert wrote to the FBI agent "Any chance you can move a little quicker...!!!". On February 20, 2018, apparently upset that one of his employees was being asked to meet with the FBI, he wrote to the agent "Ben, What are you doing Annette knows nothing about storage... Think you should focus on Erin or on Greg the attorney... Please advsie [sic]".

In the bankruptcies I've covered, many creditors have been frustrated with how long it takes for an indictment (during which time there is often no way to know if the case has been dropped). But unlike the Trustee in the Tulving Company case, Calvert has never been an FBI agent, nor does he have any law enforcement experience. Yet from two of those emails, he was clearly pushing for the FBI to speed things up: which would likely entail cutting corners. And third third email, well, that's odd... is he trying to protect the employee, or trying to dictate how the FBI should investigate?

Northrup: UCC 'Toxic'

September 29, 2018 8:25PM EST
I've received some emails to/from Mark Calvert (reminder: the tips page accepts uploads). The one I mention in this post was from Mike Northrup, the attorney for the UCC (Unsecured Creditors' Committee). Remember, he is the one that the ex-co-chair of the UCC accused of not assisting the UCC (e.g. not filing a letter with the court but instead sharing it with Calvert and Gearin, and saying that the Trustee would never be replaced).

Northrup heard from the UCC that there were some rumors, which if true would suggest fraud or incompetence of the Trustee. Presumably, the UCC expected Northrup to get information to prove/disprove these rumors, and/or act on them if true.

Instead, Northrup sent an email (with the subject "Case Rumors") to the person accused of the fraudulent/incompetent actions and his attorney, and quickly generated about $2,500 in fees for himself, Gearin, and Calvert with a couple emails and phone calls. And Northrup obviously did not believe there was truth to the rumors, as he referred to one UCC member as apparently "swallowing this garbage". He wrapped up with "The atmosphere is toxic".

Is this really how an attorney should be referring to his client in an email to the opposition?

Calvert's Accounting: By Hand

September 28, 2018 2:15PM EST
Each month, Chapter 11 Trustees are required to file a monthly financial report. Internally, NWTM uses Quickbooks for its accounting needs. The monthly report requires a list of cash disbursements (every check, wire transfer, withdrawal, etc.), roughly 50-200 per month. These range from payments for postage to bank charges to rent to suppliers.

I have discovered that rather than have Quickbooks generate a list of cash disbursements, it appears that Calvert creates the list manually. As in, by hand. Not even cut-and-pasting, but re-typing it each time. That's the only explanation I can come up with for what I have discovered. Looking at a single report, all seems pretty normal. But when you compare them from one month to another, things get a bit strange. For example:

  • Rent payments to one company show up as "HUMPHERY INDUSTRIES LTD.", "HUMPHERY", and "HUMPHERY INDUSTRIES LTD" (no period), whereas the actual company name is "Humphrey Industries, Ltd." (notice all the hand-typed variations mis-spell the name: clearly, they are all being copied from the same source, but yet not cut-and-paste). The rent payments show up with descriptions of "RENT", "BUILDING RENT", "PREPAID EXPENSES", "UTILITIES/TELECOM", and "Prepaid Expenses" (not all caps).
  • Rent payments to another company show up as "KENT BUSINESS CAMPUS ASSOCIATES, LLC", "KENT BUSINESS", "KENT BUSINESS CAMPUS", "Kent Business Campus Assc. LLC", "Kent Business Campus". The rent payments show up with descriptions of "RENT", "Rent", "Bldg Lease Pmt", "Washington Rent", "AP VENDOR PAID", "BUILDING RENT", "RENT KENT", and "Kent Rental Payment".
  • Rent payments to a third company show up as "PORT CITY CENTRE, LLC" or "PORT CITY CENTRE". But the descriptions include "RENT", "BUILDING RENT", "PREPAID EXPENSES", "Prepaid Expenses", "Rent", "rent", "Wisconsin Rent", "AP VENDOR PAID", "VENDOR PAYMENT", "LEASE PMT", "Lease Payment". For this one, the payment types were listed as [1] "CHECK", "Check", "BILL.COM", and "Bill.com" (Calvert started using bill.com for payments in late 2016; the capitalization suggest these were manually entered).
  • The Chinese partner was listed as "LIN JUNG - FENG", "LIN JUNG-FENG", "LIN JUNGFENG", "YONG TUO EMBLEM CO. LTD." The descriptions showed up as "AP Vendor Paid", "AP VENDOR PAID", "COGS" (cost of goods sold), "RAW MATERIALS", "THIRD PARTY SUPPLIERS", and "THIRD PARTY VENDOR".
This makes it extremely difficult for anyone to search for specific expenses. If, for example, you search for "Lin Jung-Feng", you'll miss many of their payments. Or if you see "BUILDING RENT" one month, and search other months for "BUILDING RENT", you'll miss many entries under other names.

Worse, however, is the accounting nightmare: how can a rent payment in some months be classified as a prepaid expense, while in other months be classified as rent? How can rent be listed one month as rent, and another month as a lease payment, and another month as a rental payment? How can rent be rent one month, and "AP VENDOR PAID" another month? Presumably, in the real accounting records (Quickbooks), these are entered properly, and the numbers we see in the Balance Sheet and Income Statement are accurate. But how can they possibly be sloppy to this extreme in the cash disbursements, and be able to have the rest of the accounting done properly? And where are they getting these disbursements from where they do not see the proper accounting category?

And the $64M question: why would you resort to taking the time to hand-create these financial statements, when Quickbooks could instantly generate more accurate copies?

Pre-2009 Records Update

September 17, 2018 1:05PM EST
On March 22, 2018 Chapter 11 Trustee Mark Calvert filed a motion to destroy paper records "from before 2012", which in typical Calvert style was also referred to as records "from before 2013" (yes, in the same filing).

Ross Hansen objected to this, arguing that some records might be beneficial to his criminal trial. A hearing was held on July 6, 2018, and an order was signed allowing Calvert to give the company records from 2008 and earlier to Ross Hansen, and the later records to the U.S. Government. Presumably, the records have already been transferred.

UPDATE September 18, 2018 7:35PM: The Government is now in possession of the boxes of records ("over 1000 boxes of NWTM Physical Records from the Nevada facility"), per Docket 41 of the criminal case against Hansen and Erdmann.
UPDATE 2 September 19, 2018 8:15AM: I apologize for any confusion about the pictures, those are not pictures taken inside the government storage facility. Those pictures were taken at NWTM roughly 6 months after the company shut down.
UPDATE 3 September 19, 2018 4:15PM: Here are a couple of somewhat more recent pictures, for the person that was looking for more. I can't say who sent them (I keep my sources strictly confidential), but maybe you could share some pictures and other documents, too, like everyone else? Most of what I get is never published.
UPDATE 4 September 20, 2018 10:05AM: I'm not sure what is so interesting about boxes of records, but some people seem to have a real obsession with them! I have received two anonymous tips guessing who may have sent the pictures -- but they are wrong. The pictures were sent directly to me from the person/people who took them, and I have confirmed that the person who sent the pictures took them (and didn't get them from someone else). The pictures from my May 1, 2018 "Can You See NWTM?" post were much prettier. Hey, if you have less boring pictures feel free to send them!

WARN Settlement Update

September 14, 2018 8:20AM EST
Judge Alston just signed an order regarding the WARN settlement. The settlement is for employees who were laid off at the end of December.

It looks like the order requires notice to be sent to NWTM employees that were laid off in December. Employees will have a chance to object to the settlement at the hearing if they wish. If approved, the settlement would require NWTM to pay $125,000, of which about $76,337 would go to employees (or $81,337 using Calvert's math; see my August 17 post for details). As is typical is class action settlements, if the settlement is approved, employees would have the option of opting out (which is typically done if people want to reserve the right to sue, or feel they should not get the money for some reason).

Information Wanted

September 6, 2018 1:40PM EST
Thank you to those that have been sending information. All of it has been helpful.

Right now I am specifically hoping to get information on Sierra Mint: the background of how it formed, who may be working there, if there are owners other than the founder, what business it is doing, business plan, memos/documents/emails, etc.

Feel free to use the anonymous tips form, which also has my email address.

As a reminder, I do my absolute best to keep sources anonymous. Even if the information cannot be published, it can be very useful.

UPDATE September 11, 2018 1:15PM: I would also be interested in any inventories of dies.

Calvert Was Bouncing Checks

August 27, 2018 5:50PM EST
When the NWTM CEO filed a motion to get pay he was owed, his attorney stated "In fact, he had had so much trouble getting paid, with multiple delayed payments and bounced checks...". I found that hard to believe (especially after someone told me "pure speculation about the bounced checks - i wouldn't fall for that"), but had no evidence one way or the other.

Today, I discovered proof of bounced checks and overdrawn accounts going back to at least November, 2016. Calvert took over NWTM in April, 2016.

The November, 2016 monthly financial report shows that the NWTM Payroll Account (8130) had a balance of -$965.43 on October 31, 2016, after an employee deposited his/her paycheck. That same month, 11 days earlier, there was an overdraft charge on the general operating account (8106).

The January 31, 2018 monthly financial report shows that the general operating account (8106) was overdrawn on January 29, 2018. It also shows that the NWTM Payroll Account (8130) had a "returned item" (a/k/a check bounce) on January 8, 2018. It looks like it had to have been ADP's $16,529.38 payroll withdrawal (which succeeded on January 11).

Again, the February, 2018 report shows another "returned item" on the general operating account (8106) on February 22. And December, 2017 shows an employee deposited a $901.61 check on December 26, but NWTM only had $764 in the account. Oops! The solution was to transfer $1,500 from the general operating account (so they *did* have the money, just not in the right account).

Of course, I may have missed some overdrawn accounts and bounced checks. But it definitely did happen, multiple times with multiple accounts, on Calvert's watch. I find there to be a huge difference between [1] writing a check for an amount that does not exist in a bank account, and [2] being honest, and saying "Sorry, I cannot pay you today." Maybe that is why I am not a CPA billing $400/hour.

Calvert March 5, 2016 'Action Steps'

August 27, 2018 3:15PM EST
Someone kindly supplied me with a copy of an "asset sheet", apparently prepared by Mark Calvert for a March 5, 2016 meeting.

Mr. Calvert declared that he "met with" Ross Hansen. He did not disclose the extent of his dealings with Mr. Hansen, which has been concerning. The document, if real (which I believe it to be), would show that Calvert was aware of values of NWTM assets over a month before the U.S. Trustee requested to appoint a Chapter 11 Trustee. It also shows that he was aware of the WARN Act liability, and supports Ross Hansen's testimony at the 341 Meeting, where Hansen said "Mr. Calvert had specifically instructed me to take any asset and substantially discount it and try to make the value of that asset look, quote, as small as possible."

Sworn Testimony?

August 24, 2018 1:00PM EST
Yesterday, Judge Alston filed an order, in which he stated that the Court might take testimony under oath in the future.

This would up the ante, and require witnesses to answer questions and state facts under oath, knowing that they would risk going to prison for making a false statement. Prison. And if someone attempts to induce someone else to give false testimony under oath, that could end up being "suborning perjury" (which can be a crime)

If there has been any misinformation so far, now may be the best time to set the record straight (and if there is any way I can help, I would be happy to do so). As a reminder, I have an anonymous tips page (and my email address is on that page if a response is desired).

Trustee "at a Minimum, Negligent"

August 23, 2018 5:10PM EST
As I have covered, an NWTM employee sent out an email with false information in it.

Today, the Judge issued an order, where the Court makes findings of fact and conclusions of law, that Trustee Mark Calvert must send to all parties who received the email with false statements.

Rather than risk providing misinformation about court rulings (as Mr. Calvert has claimed I do, but has been unable or unwilling to back up), here is the relevant paragraph (see the previous paragraph for a link to the whole document):

"11. The emails reviewed by the Court appear to refute the claims of the Trustee and Ms. Baker that she did not know her representations were false and that he was unaware she was repeatedly demanding $300 payments based on a non-existent order until the customers filed their motion. The Court has not taken testimony under oath and has not conducted an evidentiary hearing, though it may do so in the future. For now, the undisputed evidence demonstrates that the Trustee was, at a minimum, negligent in his supervision of the settlement communications. The false emails were at the very least confusing and at worst caused dozens of customers to believe this Court had deprived them of their rights to due process. When the Trustee refunded settlement payments to the eleven customers, he failed to provide any explanation for the refunds, likely causing more confusion." (emphasis added by me).

As a reminder, I have an anonymous tips page (which can accept attachments).

CEO Gets Partial Payment

August 22, 2018 8:00AM EST
In May, I reported that NWTM CEO Bill Atalla filed a motion claiming that he was owed about $220,000 for deferred salary, vacation pay, severance pay, and a few other items. The Trustee agreed with parts of the claim, but there was a lot he did not agree with.

Yesterday, the Judge approved a settlement, where Atalla will waive all claims in exchange for $122,500 cash, or about 55% of what he believes he was owed. That works out to a higher percentage than professionals are expected to get (~33%), and much higher than most other employees are expected to get due to the alleged WARN Act violations (~12%).

UPDATE August 22, 2018 1:15PM:
To clarify, the 55% I calculated is the percentage of what Atalla believes he was owed that he will get (which includes both amounts that should have already been paid, as well as administrative claims). Since the $100K severance presumably should have been paid immediately (not as an administrative claim), Atalla will be getting roughly 20% of what his administrative claim would have been.

Administrative Claims Expected to be ~33%

August 17, 2018 2:25PM EST
In the WARN Act negotiations, Chapter 11 Trustee Mark Calvert stated that he estimates that administrative priority claims will receive a recovery of 1/3 or less of the amount of their allowed claims.

Administrative claims include, among other things, trustee fees, attorney fees, and wages or benefits owed employees.

This also means that Calvert expects that non-priority creditors (such as storage and bullion customers) will not receive any money, as all priority claims (such as administrative claims) need to get paid before non-priority claims.

WARN Act Settlement

August 17, 2018 2:10PM EST
Both sides of the WARN Act issue have agreed on a settlement, subject to the Judge's approval. The WARN Act requires employers in many cases to provide 60 days notice of termination when there are mass layoffs. The Trustee calculated that the maximum liability for the estate would be $642,000.

If approved, NWTM would pay $125,000 to settle. By my calculations, about $76,000 of that would end up going to the 100 NWTM employees that are part of this class (proportional to what their claim is estimated at, which is based partly on their salary), or roughly 12% of what Calvert calculated their claim as. The settlement agreement Exhibit A shows $81,337 as "Net Allocable to Employees", but does not seem to include the $5K of estimated legal expenses they listed. I would suggest that might be an error, and that the Exhibit overestimates the allocation for each creditors, but as a non-professional, I will assume I misunderstand the exhibit. I don't want to post misinformation.

UPDATE August 18, 2018 9:00AM:
(image from Docket 1847-1; I am not linking to this document because it has the names of the employees in it)

I don't have a degree in mathematics, but I am having troubles figuring out how $122,000 less $40,663 less $5,000 equals $81,337. I keep getting $76,337. Every time. I would love to say the numbers are wrong, and that they forgot to include the $5,000, but I want to avoid the misinformation Calvert has accused me of. So since he says it is $81,337, it must be.

Wanted: Calvert's Misinformation at about.ag

August 10, 2018 7:00PM EST
As someone who takes great pride in honing in on the truth, I naturally take notice when the accuracy of my site is questioned.

Since I started the site in 2011, I have twice had people make references to lots of misinformation on my site. Neither was able to back it up. The most recent was NWTM Chapter 11 Trustee Mark Calvert, who at the July 27 hearing was listening to the Judge talk about how Calvert missed opportunities to discover the fraudulent emails, when Calvert started saying (at 32:10) "So much misinformation with the about.ag site about rulings that have been made..." Calvert was unable to back up his statement, even after I told him that if he could not I would be forced to tell the Court that he could not (the letter arrived today).

The other time someone made a similar accusation was private, when NWTM's President/CIO Paul Wagner called me, upset about what I had written about his Sierra Mint. He told me at least twice in his conversation with me that a lot of what I have written is false. Interestingly, my phone number is private, and few people have it -- I believe he got it from Jerry Moran of Medalcraft (this was around the time the Medalcraft name entered the picture), who had asked for it a few days earlier (but never called me). Shortly afterwards, Paul Wagner asked me to take down an update he said was "false" -- yet after I pointed out the information I had verifying the statements, he never responded. Hmmm.

So I have only seen misinformation statements coming from NWTM, through Mark Calvert and Paul Wagner. But Calvert's statement goes much farther than Wagner's: Calvert made his statement in court to the Judge as an excuse for why he didn't do something the Judge thought he should have been able to do. And Calvert is refusing to back it up!

Calvert claims that he has talked to hundreds of people who were misinformed by misinformation about court rulings at my site. That seems impossible to me, and if true, Calvert has sucked up $10,000+ from the estate by my calculations, all because he won't tell me what this misinformation is. If anyone wants, feel from to ask Calvert himself (mark@cascadecapitalgroup.com, 206-909-3636) or his attorney Michael J. Gearin (michael.gearin@klgates.com, 206-370-6666).

The accusations

August 7, 2018 3:55PM EST
The NWT Mint email scandal started when it was discovered that Jenifer Baker, an NWT Mint employee, sent emails to 74 customers misrepresenting what the court had and had not ruled about die ownership. At a hearing on July 6, 2018, the Judge ordered that NWT Mint file with the court copies of the emails sent to customers regarding the return of their dies. Mark Calvert stated that the false information came from Ms. Baker's misunderstanding, and not from him.

There was another hearing (a "show cause" hearing) on July 27, 2018, after the emails were filed. At this hearing it came out that a customer stated in one of the emails that Mr. Calvert made the same false statements as in the emails. And multiple customers asked Ms. Baker to show them the order containing those false statements, and she referred them to Mr. Calvert. You would think when getting those calls, he would have discovered the fraudulent emails being sent to customers. But Calvert claims that he has talked to hundreds of creditors who were confused due to misinformation about court rulings at my site, and he presumably assumed they got the misinformation from me. Yet he has been unwilling to provide a single piece of misinformation at my site. Hmmm...

The Judge has stated outright that this has all the elements of fraud, and that it was at a minimum negligent misrepresentations. When asked about the customer that claimed Mr. Calvert repeated those lies -- which, if true, would suggest that Calvert was the true source of the lies -- Calvert's attorney (Mr. Gearin) said he called the customer, and the customer could not recall exactly what Calvert said (but said that if he wrote it, it could be true). Gearin made it sound like he never discussed this issue with Calvert. An attorney hears that his client made a fraudulent statement, and he checks with the source, but not his client? I'm not a lawyer, so maybe attorneys typically do not let their clients know that they are being accused of fraud.

And the question remains: Calvert says that he could produce 6 people who were on a conference call to testify regarding what he said about die ownership. How could his instructions have been so clear that he could have that many people testify, yet Ms. Baker still managed to get 2 false statements in her email?

Next: Ms. Baker had several customers ask her to produce the order from the court. She referred them to Calvert. If she did not know that her email was a lie, how could she not after getting those calls or emails? And did none of the callers bother to tell Calvert that they were referred to him through the employee? That's the first thing i would say if i were the customer ("Ms. Baker suggested I call you..."). And did Calvert tell these customers the truth? If so, why didn't they ask him why they were told otherwise? As has been said at several hearings, it just doesn't make sense.

Hearing Synopsis

August 4, 2018 8:55PM EST
August 6, 2018 9:50AM EST
There was a lot of information that came about as a result of the July 27 hearing (the audio is worth the time to listen to).

It started with the Judge admonishing NWTM for the "unusable" format of the 6,000 pages of emails. He pointed out that some emails were included 6-8 times, while many were email strings that would just end, leaving the Judge to wonder what happened next. He also pointed out that the timestamps don't make sense (something I suspected, but hadn't looked into).

The Judge then points out how half a dozen emails refer customers to Sierra Mint in regards to reordering if the customer had Chinese dies (Calvert had stated several times at the May 4, 2018 hearing that he was not aware of Paul Wagner's Sierra Mint having any intention of using Chinese dies).

The Judge then asks more about the wording of the fraudulent email the NWTM employee sent out. Mr. Gearin, Calvert's attorney, tried to make it sound like a mistake -- and even lashed out at the Judge for not believing it was a mistake ("I don't understand why you can't accept that a mistake could be made").

The Judge responds to Gearin by quoting the email where a customer says that Calvert told him the same lies that the NWTM employee sent in the emails. Gearin says that he called the customer, who now doesn't recall exactly what Calvert said, but if he put it in an email, maybe that is what he said. Neither Gearin nor Calvert denied that he said that; Gearin implies that he did not discuss this with Calvert. Note to self: Why would Gearin go to the trouble of calling the customer, but essentially say "I didn't talk to Calvert, maybe he was the source of the fraudulent statements"?

After discussing whether Calvert may have made the same fraudulent statement that was in the emails that were sent, Gearin segues into discussing the meeting where Calvert told employees about the die protocol. He does not explain how this is relevant to whether Calvert lied to customers.

Then Jenifer Baker, the NWTM employee who sent the emails, gets onto the stand. The Judge explains that the Trustee's actions look like actions of the court, that the Trustee is an extension of the Judge. So if Calvert says something confusing, people may take it as thinking that the court is confused, or at worse, perpetrating a falsehood.

The Judge pointed out that some people asked Ms. Baker to show them the made-up court order, and he asked what she did when they asked. She said referred them to Calvert. She pointed out that if nobody told her what she wrote was wrong, she would have no reason to "ask these questions" (which I take to mean asking more about the court order).

The Judge then asked Calvert if someone asked about a court order already determining ownership, why didn't he ask where they heard it? Someone must have told them. Calvert simply responded that he didn't know where they got their information from. The Judge points out an email a customer sent Calvert where he was upset at having to pay $300/die, and he included the erronous email, so Calvert had a chance to see the erronous email.

Calvert then started talking about the Monday morning meetings, and how he communicated very clearly at that point that they are not selling the dies (to which the Judge replies "not clear enough").

At 30:15, the Judge points out that he is not satisfied, and not sure what he is going to do. He talks about the 11 customers that got the erroneous email and paid for the dies, and got a refund on their credit card with no explanation, and how they would be wondering "What kind of clown show is going on here?", with the court being the clown show. He mentions the customer email sent to Calvert that included a copy of the erroneous email, and how Calvert had a chance to catch this.

Calvert then goes in with his attack on about.ag, starting by stating "So much misinformation with the about.ag website...". [Note to self: I need to correct this misinformation. Wait, I am unaware of any misinformation, and I emailed Calvert asking about the misinformation, and he has not responded.]

At 33:45, the Judge talks about having 6,000 pages of documents, and Calvert rudely interrupts saying "That you're having a hard time interpreting. What I would recommend...", at which point the Judge continues with "No, I'm having a very easy time interpreting. ...", and Calvert interrupts again. The Judge points out that he is going to send an order informing customers that the Trustee made misleading statements through his agent.

The Judge then points out that well after the erroneous emails were discovered, emails were sent out apparently trying to settle die ownership by coming up with a price and saying that it was the current price that the Trustee was willing to settle at, when it fact it was really just negotiations with a specific customer. So on June 22, one customer was told the Trustee was currently settling at $100/die, while another was told the Trustee was currently settling at $300/die. I cannot see how this misleading wording could not have come from Calvert (or at least with his approval). Calvert should have at least overseen the process. And if not, while I can see Calvert not firing a "not the best educated" (per Calvert) employee sending out fraudulent emails because "her heart was in the right place", wouldn't he after a second time? Like the original email, it just makes no sense.

At around 42:30, the Judge points out that he has further problems with the emails, but turns to the other matters at hand.

The Special Meeting?

August 5, 2018 1:25PM EST
Mr. Calvert and his attorney have several times mentioned a meeting at which Calvert told the employees what the Judge had ruled about the die protocol. Calvert referred quite a few times to the "Monday morning meeting."

But his attorney, Mr. Gearin, said that there were meetings with staff, and stated that it was at the May 31 meeting where Calvert told everyone he was not sell the dies, that they have not determined that the estate owned the dies.

So it sounds like there was a meeting on May 31 -- the day that Ms. Baker started sending the fraudulent emails, so it makes sense it would have been on May 31. My "spidey sense" was going off, and I checked: May 31, however, was a Thursday.

Did Mr. Gearin make a mistake in court in front of the Judge about the date? He didn't need to specify the date, but he did. The Judge is trying to get to the truth, and every mistake must be scrutinized.

In this case, Calvert repeatedly (at least 3 or 4 times) said that it was a Monday meeting where he told employees about the die settlement protocol. But his attorney is saying it happened on a Thursday meeting. If it was Thursday, why would Calvert have been so adament that it was a Monday meeting?

UPDATE 1 August 5, 2018 4:00PM: Jenifer Baker, the NWTM employee who sent the emails, started sending the fraudulent email before noon on May 30. So was there no meeting (did Mr. Gearin lie to the court?), or did Ms. Baker have a second chance to realize her mistake, or did I mis-hear Mr. Gearin saying "May 31 meeting"?

UPDATE 2 August 5, 2018 8:25PM: It looks like there was a special May 31 meeting. Mr. Gearin mentioned "settlement" several times when referring to the May 31 hearing. And sure enough, Ms. Baker changed her wording mid-day on May 31, from "The court has approved a fee for the ownership transfer in the amount of $300.00 per die" to "The court has approved the settlement for the ownership transfer in the amount of $300.00 per die." So there were two meetings at which die ownership was discussed, something that nobody told the court.

Paul Wagner's Sierra Mint Up and Running

August 4, 2018 7:05PM EST
In the audio of the July 27, 2018 hearing, the Judge refers to emails where NWTM refers customers to Sierra Mint. Sierra Mint is the company that NWTM President and CIO Paul Wagner started a few months ago.

I will have more to say about this in a separate post.

Dismantling Calvert's about.ag attack

August 3, 2018 3:30PM EST
The context: My understanding is that Calvert started talking about about.ag in response to why he did not ask creditors where they had heard the misrepresentations that his employee wrote.

"So much misinformation with the about.ag site about rulings that have been made and interpretation of those by a non-professional. Um. ... There is a number of comments about rulings made by this court on a site called about.ag. And the interpretation of those are done..."

He is claiming a lot ( "so much") of misinformation, specifically misinterpretation of court rulings. By me.

I go to extreme lengths to debunk myths, hoaxes, and misinformation, and I take great pride in sticking with the truth.

"... by a person that receives money for clicks, "

The implication is that I receive money for each site visitor, and by extension that I am doing this for money. The truth is that NWT Mint pages account for about 3% of the traffic to about.ag, and I make money only when people click on ads... which for NWT Mint pages generate under $50 a year. It is not uncommon for me to spend that much in a month just on court filings. [UPDATE August 4, 2018: The combined Tulving, Bullion Direct, and NWTM pages account for 32.7% of hits to the site, and $93.07 of ad revenue for 2017. There was no quarter in 2017 where I made more money from ad revenue on those pages than I spent on court documents via PACER] It would take 100 times the traffic to make the NWT Mint pages profitable enough to be a second job. I have never received a penny from any creditor, in this case or any other.

"and as a result I think we have a situation where there's a lot of misinformation out there and therefore I do get a number of confused people. A significant amount of confused people. You should see my phone records. I have hundreds of people I've dealt with in a very professional fashion, and I've resolved those issues to the people's satisfaction."

Huh. Is he just saying that over the past few years he has responded to hundreds of creditors (completely and utterly irrelevant), or is he truly suggesting that he has responded (at $400/hour) to hundreds of creditors misled by my site, without letting me know of errors? I can recall 2 times before this where someone reported misinformation on my site (aside from frequent typos; I cannot afford an editor!). One was legitimate: a company I accused of minor wrongdoing, because a bankruptcy Trustee stated so. That was fixed within an hour. The other time I was accused of misinformation was when Paul Wagner (President of Sierra Mint, an NWT Mint vendor, as well as being President and CIO of NWT Mint) called me, furious over my reporting of Sierra Mint. He repeatedly talked about lots of misinformation at my site, but could not give me a single example.

So, Mr. Calvert, the court has stated that an employee under your watch was responsible for "at least negligent misrepresentation", and pointed out how a customer claimed you repeated the same lies. Since you are blaming me for you not realizing your employee was lying to customers, could you please at least give some examples of "so much misinformation" at about.ag regarding court rulings?

[I will update this if Calvert responds to my email requesting examples of such misinformation]

UPDATE 1 August 4, 2018 7:00PM: A closer examination for 2017 shows that the combined Tulving, Bullion Direct, and NWTM pages accounted for 32.7% of hits to the site, with $93.07 of ad revenue attributable to those sites. In 2017, each quarter I spent more money downloading court documents on PACER than was received in revenue.

Audio

August 2, 2018 3:20PM EST
The audio from the recent hearing about fraudulent emails is available.

I will comment more on or before Sunday.

Matter Taken Under Advisement

July 27, 2018 4:05PM EST
Today was the hearing as to whether there should be sanctions for the fraudulent emails sent by NWTM. Although some of the focus was on one employee Calvert said made up the fraudulent statements, as I previously reported a customer claimed that Calvert made essentially the same statements.

I do not yet have any details about the hearing, except that the employee who sent the emails was present. Hopefully, the audio will be released.

For those that aren't aware, "taken under advisement" means that the Judge was not ready to make a decision at the hearing, and will make one later.

Calvert and the Fraudulent Emails

July 26, 2018 8:30PM EST
As I have written recently, the Judge in the NWTM bankruptcy case essentially accused NWTM of fraud, saying "This is as distressed as I have been in 3 years plus on the bench." At issue were emails that an employee sent to customers requesting the return of their dies. If both Calvert and the customer asserted ownership, the court authorized Calvert to negotiate a price for the dies; if no deal was made, a hearing would be held to determine who owned the dies. Instead, the emails falsely stated that the court determined that NWTM owned the dies and approved a $300 fee to transfer ownership.

Mr. Calvert's explanation was essentially that the employee was not highly educated, and made it up. The Judge asked if anyone had gone through other emails this employee sent out, and Mr. Calvert said that they had not. Maybe they should have:

One customer wrote to NWTM: "After our call I spoke with Mark Calvert. I understand the [dies] are on your desk ready to ship. Mark indicated that the price per [die] is $300 regardless of ownership, as dictated by the bankruptcy court." (the customer used the word "tools" instead of "dies", but was referring to dies). This email was sent on June 1, 2018, before word of the fraudulent emails got out. I think the email speaks for itself.


Change in Wording...

July 20, 2018 8:30AM
Later today NWTM should be filing some more details about emails that were sent.

However, I did find out this morning that the text was not the same in all emails that were sent. The one change I am currently aware of is that there was a change from "The court has approved a fee for the ownership transfer in the amount of $300.00 per die.", and was later changed to "The court has approved the settlement for the ownership transfer in the amount of $300.00 per die." This begs the question: who would change the wording like that, and why?

Wanted: Info on Die 'Email Fraud'

July 19, 2018 2:50PM
I am hoping that someone may have information on the email about dies that Judge Alston felt was fraudulent (see my previous post for the relevant text of the email).

The court shows who sent it, but I am hoping to find information on whether someone else wrote part of it, if instructions were given to the employee to write the email, or anything else that may be useful.

You can send information to me anonymously (or via E-mail) at the anonymous tips page.

NWTM E-mail "Made Up Out of Whole Cloth"

July 11, 2018 1:45PM
The NWTM employee wrote, falsely, "The court has determined that NWTMINT retained ownership of all NWTMINT dies created to produce coins, medallions or other products for customers. The court has approved the settlement for the ownership transfer in the amount of $300.00 per die". The Judge asked how the employee came to the understanding about the court determining that NWTM owned the dies. Mr. Neu said he spoke to the employee extensively, and asked her, and that she said she was rushed. The Judge asked Mr. Neu if she literally made it up on her own, and Mr. Neu said the employee told him she did.

We also know that Mr. Calvert instructed her "to make an initial settlement offer of $300/die."

What is interesting is that the notice sent to thousands of customers (approved by the Judge) stated "the Trustee believes that with limited exceptions, NWTM retained ownership of all NWTM Dies created to produce coins, medallions, or other products for customers." The employee wrote copied that nearly verbatim, substituting "NWTMINT" for "NWTM", changing "Dies" to "dies", and removing a comma. And changed "the Trustee believes that with limited exceptions," to "The court has determined that." Not just "cut and paste", but "cut, paste and edited." And no, in her declaration she did not state that she cut, paste, and edited someone else's words.

Hmmmm.

She was so rushed that she had to cut-and-paste the words from the legal notice, but had time to change "the Trustee believes" to "The court has determined that". And time to change what she felt were a few typos?

The other oddity is how she took the time to change "NWTM" to "NWTMINT." A quick Google search shows that nobody uses the term "NWTMINT". Why would an employee of many years change NWTM to NWTMINT? And would someone Mr. Calvert described as not being the highest educated person on the planet (but with a good heart) really think to remove a comma like that (both versions are grammatically correct)?

"The elements of fraud committed 74 times"

July 11, 2018 11:45AM
At the hearing on July 6, Judge Alston made it very clear that in his opinion, NWTM committed fraud on Mr. Calvert's watch. To be clear, this is not a legal determination of fraud (as far as I know), but it is about as close as you can get!

I highly recommend listening to the audio; it's about 12 minutes starting at 48:00.

When referring to the motion that stated that NWTM was sending emails erroneously stating what the court said, Judge Alston stated that "These are the elements of fraud". He said that the employee made a statement, that was false, that she knew or should have known was not true, to induce people to pay $300 to get their dies back, and a lot of people did.

Mr. Calvert countered by saying that he thinks the missing element of fraud is intent, and that if the employee had intent of fraud, he would have fired her. Judge Alston explained that with intent, usually nobody admits it, it is inferred -- and that it is pretty easy to infer intent from the email.

The Judge stated "This is as distressed as I have been in 3 years plus on the bench. Because it is not only a fraudulent statement, but a fraudulent statement attributed to this court." and "I'm concerned that this whole process is tainted. I don't know what else she has said. If she says this crazy stuff in an email, what you are telling me is that she made this stuff up, has someone reviewed the rest of her emails to other parties?".

This may help shed new light (and lend credibility to) previous allegations of wrongdoing at NWTM after the bankruptcy petition was filed.

Dies for Just Shipping Cost?

July 10, 2018 8:55PM
Over the past few weeks, court documents have shown that Mr. Calvert has given dies to customers for just the shipping costs, without requiring them to pay $300 each.

Even though the deadline for requesting your dies back was a few weeks ago, if you have dies that you would like back for just the shipping cost, I would urge you to contact Mr. Calvert.

Medalcraft to Buy Last Dies for $75,000

July 8, 2018 3:15PM
Chapter 11 Trustee Mark Calvert filed a motion to sell the remaining dies to Medalcraft for $75,000. Specifically, they would be buying the unclaimed NWTM dies in which no parties asserted an interest.

In typical fashion, Calvert has not specified how many dies this sale includes. Nor has any accounting been made in court records of all the dies.

UPDATE July 11, 2018 7:30AM: On June 21, 2018, just 15 days before this motion, Mr. Calvert filed a budget showing an expected income of $150,000 from Medalcraft for the dies. What happened?

Mediator Kornfeld: Replaced

June 28, 2018 8:05AM
Yesterday, NWTM filed a stipulation requesting that the court allow Lawrence R. Ryan be the mediator of what was the class action lawsuit by employees against NWTM for violating the WARN Act (not giving them 60 days notice before being terminated).

Previously, the two parties had requested Mr. Kornfeld be the mediator. I posted about it (on June 8, 2018 and June 15, 2018), showing his closeness to the case (e.g. he essentially brought Mark Calvert to NWTM, may have brought Calvert to his first (and only other major) bankruptcy Trustee position, he is representing the ANS that is paying $420K for dies that Medalcraft will own, now has the Assistant U.S. Trustee that started on the NWTM case working at his firm, etc.). I also let the WARN-side attorneys know about these strong connections to the case, but never heard back (as was the case when I offered them information when the WARN class action was originally filed).

The stipulation has one vague reference to Mr. Kornfeld, worded in typical NWTM-lawyer fashion. It mentioned that they sought Mr. Kornfeld, and then "Subsequently, it was determined that Mr. Kornfeld would no longer act as mediator for this dispute and the parties agreed upon Mr. Ream as mediator". Perhaps the WARN-side attorneys did read my e-mail after all, and it didn't get stuck in their spam folder. Very vague (and wrong: he never did act as mediator). Did Mr. Kornfeld say he would not do it? Did one of the two sides complain about the potential bias? Did someone ("it"?) determine that the Judge wouldn't approve Mr. Kornfeld as mediator?

New Budget Filed

June 22, 2018 8:20AM
Chapter 11 Trustee Mark Calvert has filed his second budget.

It hints at an expectation that the case will be wrapped up by the end of August. It shows $150,000 to be received from Medalcraft at the end of July for dies. It shows a "Clawback Claim" receipt of $1 at the end of June (which could be that Mr. Calvert identified someone to 'claw back' a payment from, but does not know the amount). It shows $61,517 of deposits to be returned to customers -- perhaps NWTM is doing the right thing, and returning money people paid for product they never received (after the bankruptcy petition was filed).

It also shows a $350,000 expected cash receipt at the end of June for "Store Inventory." Given Mr. Calvert's record of secrecy, we are left wondering if that is a guesstimate of when the inventory will be sold and for how much, or if a firm deal is in place awaiting court approval. It certainly is not being purchased by Sierra Mint, as Mr. Calvert stated to the Judge last month that Paul Wagner "has no desire to buy any assets from this estate." One has to wonder how someone with credentials such as Mr. Calvert can expect to get cash receipts of $350,000 from the store inventory in the next week unless a deal has been struck with someone and he is going to file an emergency motion with the court. Or maybe it is normal to produce budgets showing cash receipts well before they are expected?

UPDATE June 30, 2018 8:00AM: To be clear, the money being returned is not important. It is being returned to customers that placed orders after the bankruptcy was filed (in other words, they knew they were dealing with a bankrupt company, and they automatically get priority over people owed money from before the bankruptcy filing). It is also only $60K, which is only about 1/10 of 1 percent of what is owed creditors.

Medalcraft to Get ANS Dies... Maybe?

June 21, 2018 9:00AM
Every time a court document is filed, I have to decide whether to take the time and spend the money to read it. Occasionally, there is interesting information in the documents I don't get. That was the case here (thank you to the person who sent me the document).

Docket 1678-1 (filed May 23, 2018), is a contract between ANS and Medalcraft.

This contract essentially says that Medalcraft will move and store the dies for ANS, and in exchange for doing so, it gets to keep them.

ANS has 1 year to identify dies that it likes (presumably to use for limited-edition restrikes). Medalcraft cannot produce any products using any dies that ANS holds a copyright to. Medalcraft can produce products using dies for 'authorized customers'. ANS and Medalcraft will also try to identify 20% of the dies each year for 5 years to cancel and sell for scrap (which would get rid of about 2/3rds of the dies).

The odd part of the agreement is with sections 4(d) and 4(e). The consideration to Medalcraft for moving and storing the dies is in section 4(e), which basically says that they get to keep the dies when the contract ends (which Medalcraft could end in just over 5 years if they want). But Section 4(d) allows ANS to give 30 days notice at any point and get the dies back. So Medalcraft only gets their compensation if ANS doesn't take it away within the next 5 years. Or maybe if they do, Medalcraft will argue that ANS terminated the contract, which would mean that Medalcraft now owns the dies that ANS just took possession of.

UPDATE June 21, 2018 12:30PM: I was under the impression that docket 1678-1 was docket 1678 (the declaraction). I have removed comments I wrote suggesting that it was filed in error (which it would have been if it was docket 1678, rather than 1678-1).

NWTM False Claims, Part II

... Motion to Enforce a Prior Court Order

June 19, 2018 4:25PM
Today, a law firm representing a number of creditors filed a "Motion to Enforce a Prior Court Order." From the title, it means that somebody (allegedly) didn't do what the Judge told them to in a signed order. Oops!

In this case, it's pretty much what I wrote in my "NWTM False Claims" post: Calvert is allowing E-mails to be sent out claiming that the Court said things it did not, and trying to cheat (trick people into paying for dies they own, by lying and saying that the court said it was OK). Yikes.

There is an old expression "where there is smoke, there is fire." I interpret to mean that if you discover one bad thing happening, it is MUCH more likely that other bad things are happening there than in some other random location. And while some have referred to allegations of wrongdoing as a "crazy colorful conspiracy theory", this is at least the second time there has been a credible court filing showing that Mr. Calvert disobeyed the Judge (the other one being when he did not return dies that the Court ordered him to).

As a reminder: Medallic and NWTM are two separate companies. Medallic dies were already sold, so this issue only applies to NWTM dies. Mr. Calvert has "huffed and puffed" about how Medallic dies were owned by NWTM/Medallic, not customers. But NWTM dies are different, and in what appears to be all or at least the vast majority of cases, NWTM dies were owned by the customers. It appears that Mr. Calvert implied to the Judge that the Medallic view (that dies are owned by Medallic) applied to NWTM dies, which is false. Many salespeople would tell customers that dies were the property of the customer.

NWTM False Claims

June 15, 2018 4:25PM
In general, just about everyone (except the Trustee) agrees that [1] Medallic dies usually belong to Medallic (unless the customer arranged otherwise), and [2] NWTM dies usually belong to the customer. Chapter 11 Trustee Mark Calvert has done his usual job of obscuring the issue: he keeps referring to the "Medallic dies", rarely mentioning the NWTM dies, possibly making it appear to the Judge that the NWTM dies are owned in the same manner as the Medallic dies. The Judge, to the best of my knowledge, has made no ruling on who owns the dies.

The Judge signed an order allowing Mr. Calvert to settle die ownership issues, and that a hearing will be held on July 17, 2018 to "address claims of interests in or ownership of NWTM Dies of any party that has timely asserted its interest in NWTM Dies and has not settled with the Trustee prior to such hearing". So customers can [1] settle with Mr. Calvert, [2] assert ownership by June 21, 2018 (in which case their ownership will be determined at the July 17 hearing), or [3] relinquish any claims to the dies. Technically, another option is available (an adversary proceeding). The order allows Mr. Calvert to state that NWTM believes that NWTM owns the dies, but allowing customers to assert ownership.

However, I have heard that NWTM is sending out an E-mail stating, in part, "The court has determined that NWTMINT retained ownership of all NWTMINT dies created to produce coins, medallions or other products for customers. The court has approved the settlement for the ownership transfer in the amount of $300.00 per die." However, I have seen nothing in court records or hearings suggesting that the Court has determined that NWTM has retained ownership of NWTM dies -- in fact, the hearing is designed to tackle that issue! I also have seen nothing about the court approving any specific settlement at $300: it authorized the Trustee to settle, but the implication was that it was at whatever the Trustee and the customer agreed to. Think about it, how could the Court authorize the Trustee to settle something if the Court already determined the terms? That's an order, not a settlement. But I'm not a lawyer so maybe I am misunderstanding legal basics.

What is outrageous to me is that the E-mail being sent to customers who are proving die ownership makes it sound like paying $300 is their only option. However, customers have other options (as seen above), including [1] paying ANY other amount that Mr. Calvert agrees to, or [2] waiting for the July 17 hearing. NWTM appears to be misleading people into believing that they are being forced to pay $300, when that is not necessarily the case.

The worst part, however, is that Mr. Calvert is trying to convince the world something that appears to be completely untrue: that NWTM owns the dies. I have talked to many, many people involved who all basically say the same thing about the NWTM (as opposed to Medallic) dies: salespeople were told to tell customers that customers owned NWTM-created dies. As if it couldn't get worse, every $300 fee that is paid will end up going to Mr. Calvert and the other bankruptcy professionals, to help pay their bills, not to creditors.

$420K Sale of Dies to ANS Approved

June 15, 2018 3:05PM
Today the Judge filed an order authorizing the Trustee to sell the order dies to the American Numismatic Society (ANS), for $420,000.

Mediator Kornfeld, Part II

June 15, 2018 11:55AM
In my last update, I mentioned that NWTM is requesting Armand J. (Jay) Kornfeld to mediate the issue of a potential violation of the WARN Act (which was originally a class action lawsuit, that was since voluntarily dismissed). And that Mr. Kornfeld has significant connections to this case.

Yesterday, Mr. Kornfeld filed an unsigned order written by K&L Gates (who represents NWTM via the Trustee), and lists Kornfeld's law office as being the attorneys for the American Numismatic Society, and Armand Kornfeld himself (along with one of his partners) is representing ANS. In fact, Mr. Kornfeld was the one who filed the document with the court. ANS is buying the older Medallic dies from NWTM for $420,000.

WARN Class Action Update

June 8, 2018 5:20PM
In March, I reported that the WARN Act class action lawsuit was dismissed, for unknown reasons. This is in regards to Chapter 11 Trustee Mark Calvert shutting down the company without giving employees 60 days notice, which is required in many cases.

The case re-appeared yesterday, when Mr. Calvert's attorneys filed a motion for an order allowing Armand J. (Jay) Kornfeld to be the mediator of the dispute. If the mediation is unsuccessful, the plan is to file a motion for allowance of an administrative priority claim.

The odd thing about this is that Mr. Kornfeld and Mr. Calvert have interesting connections. For instance, I found out today that Mr. Kornfeld represented Meridian Mortgage Investors Funds II, V, VII and VIII, before Meridian Mortgage was forced into bankruptcy. Meridian is the other notable Chapter 11 bankruptcy that Mr. Calvert was Trustee of before NWTM (Meridian's founder/owner, Darren Berg, is now on the lam after escaping from prison). Mr. Kornfeld wrote that Meridian requested and suggested that the U.S. Trustee's office appoint a Chapter 11 Trustee. That Trustee turned out to be Mark Calvert.

Further, Mr. Kornfeld is the person who originally recommended that Mark Calvert assist Ross Hansen in reorganizing NWTM. And has been involved in "virtually every significant commercial fishing and seafood processing case filed in the Seattle area in the last 20 years" (Mr. Calvert runs a Seattle-based fishing company, and Mr. May is a veritable fishing magnate in Seattle; Calvert's fishing company is owned in part by a fisherman who Mr. Kornfeld helped in a personal bankruptcy before the fisherman was sent to jail for a $6M fraud). And the Assistant U.S. Trustee at the time of the NWTM bankruptcy filing, Thomas Buford (who presumably was involved picking Mr. Calvert), is now working at Mr. Kornfeld's law firm.

April Financial Report

June 4, 2018 1:45PM
Chapter 11 Trustee Mark Calvert has filed the April, 2018 Monthly Financial Report.

At this point, I don't spend much time going over the details of these reports, as there are others who are doing so.

It shows $380K of accounts receivable over 90 days overdue ($164K from before the bankruptcy, $215K since then), of which $298K is listed as uncollectible ($150K before bankruptcy, $147K after). It shows $5.1M owed the professionals. It shows that they are down to 9 full-time employees (from 10 last month), with about an average $58K salary.

It is unclear if the uncollectible receivables are legitimate (e.g. for goods people received), or illegitimate (e.g. money paid for goods that NWTM never delivered, like the golf medals). The reason for writing them off as uncollectible is age and "the hardship of collections with the knowledge that NWTM is closed".

NWTM Assets to be Re-Auctioned

May 29, 2018 7:50AM
The NWTM assets, which were originally sold to Industrial Assets to auction, but that Mr. Parish bought for $2.5M (financed by Mr. May), are now going to be auctioned off as originally planned.

Industrial Assets will be conducting the auction, but it is unclear exactly where the proceeds will go. This is done outside of the court, so there likely will be no records of how much everything sold for or who got the money.

Auction of Misc. Equipment

May 29, 2018 7:45AM
The Trustee has filed a motion to sell various property, including 2 vehicles, a gun safe, refridgerators, a telescope, a metal detector, and a WWII camera. A full list of what is being sold is in the declaration.

Trustee Bankruptcy Violations

May 19, 2018 2:30PM
Judge Alston filed a vacating order. He had previously filed an order allowing the professionals to automatically be reimbursed 80% of their fees after giving certain notice. This order essentially takes back that previous order.

In it, he writes "several Monthly Financial Reports ... filed in this case show the chapter 11 trustee repaid monies loaned to the estate by [his company Cascade Capital] ... without disclosing the loans and without obtaining authority from the Court to repay the loans, in violation of the Bankruptcy Code and the Bankruptcy Rules."

More on May 4 Hearing

May 18, 2018 3:30PM
The May 4, 2018 hearing was important, as it covered the Medallic sale to Medalcraft (approved) and the motion to convert to Chapter 7 (denied). And the Judge started asking questions of the Trustee.

The Judge asked Chapter 11 Trustee Mark Calvert if he knew anything about allegations that someone is planning to use the Chinese dies. Calvert stated that he doesn't know of anybody that plans to use the Chinese dies (other than Medalcraft in accordance with their agreement, which is an interesting story, as Medalcraft shouldn't have anything to do with the Chinese dies). He said "No, I have no knowledge of anyone who plans to use the dies in China." Calvert also stated that he cannot find a buyer for the ~$1M of store inventory (~$2M retail), which is made mostly from the dies in China.

Mr. Calvert stated that he has had "great discussion" with Paul Wagner, and that Mr. Calvert asked Mr. Wagner to "write a memo of his proposed activities post-employment" (which seems odd to me, as his activities during employment seem more important -- and because Mr. Calvert had apparently seen Mr. Wagner's business plan around 2016). Mr. Calvert states that Mr. Wagner has no desire to buy assets from the estate, and has no desire for any intellectual property. But he is looking at the possibililty of manufacturing items in China and selling them on the Internet or to other buyers.

The Trustee's attorney, Mr. Gearin, discussed allegations that metal was not properly inventoried, and pointed out how there is evidence and video of the inventory. Which is completely, utterly pointless, as Mr. Calvert has refused to release any of that evidence, which some have claimed shows that Mr. Calvert inventoried metal that he now denies NWTM has in its possession.Huh. In other words, 'Judge, those allegations are false. Why? Because we say so. Trust us, please.'

Phony Documents Filed

May 18, 2018 2:00PM
On May 10, 2018, there was a document filed with the court purporting to be written by Mr. Parish (who had purchased the NWTM assets with funding from Mr. May). I thought it suspicious, since it was written without an attorney less than a day after Mr. Parish had an attorney file a motion for him, and filed 6 days after the day it was written.

Today, Mr. Parish has used his attorney to file a declaration under penalties of perjury. He has stated that he neither filed that letter nor instructed anyone to, and did not write it.

Further, that leads back to docket 1469, an anonymous letter written by an NWTM employee. The letter appears to have been printed in a nearly identical manner to the phony document.

Who Lied, Mr. Gearin or Mr. Parish?

May 18, 2018 8:25AM
The day before the May 4, 2018 hearing, Mr. Parish filed a conditional objection (through his attorney) to the Medallic sale (he was concerned that some of the NWTM assets he purchased might be given to Medalcraft). At the hearing on May 4, 2018, Mr. Gearing stated that he spoke to Mr. Parish the night before, and that his objection was withdrawn.

I thought it was odd that Mr. Parish would file an objection the day before the hearing, and by that night withdraw his objection. But it got odder, as Mr. Parish filed a letter with the court (written by him, not his attorney), dated May 4 (the morning after the phone call where Mr. Gearin said he withdrew his objection). His letter, among other things, requested that the sale be denied.

This is one of the many, many things in this case that makes you go "huh?" Did Mr. Gearin really call Mr. Parish the night before the hearing? Did Mr. Parish really withdraw his objection the night before the hearing? Why did Mr. Parish have his attorney file an objection the day before the hearing, but file his own letter the morning of the hearing? I cannot come up with an interpretation of these events other than either Mr. Gearin lying or Mr. Parish lying.

May 18, 2018 1:45PM UPDATE: Apologies to Mr. Gearin and Mr. Parish. Mr. Parish has declared under penalties of perjury that he did not write or file that letter I referred to. Mr. Parish believes it was written by Ross Hansen, who had Mr. Parish sign it under false pretenses.

Trustee Misconduct and Bounced Checks

May 16, 2018 8:45AM
I previously reported that NWTM CEO Bill Atalla filed a motion attempting to get paid what he is owed. Remember, as an employee of NWTM (rather than a professional), he is supposed to be paid in the normal course of business (not requiring court approval, like the professionals).

The Trustee replied, admitting Atalla hasn't been fully paid yet, but claiming that the amount actually owed was quite a bit less.

Today, Atalla replied to the Trustee. He states, for example, "The trustee is seeking to benefit from his own misconduct" (e.g. that he failed to pay bills when due). Atalla also refers to having checks from NWTM bounce. What? I can understand NWTM not writing a check, but writing a check that bounces? How can you justify billing the estate over $1.5M (as Trustee and his accounting firm) when you are bouncing checks? Don't schools teach kids that if you do not have the money in your account, you simply do not write a check? And it was checks, plural. Not a simple one-time mistake.

Undercover Wire Recordings

May 15, 2018 3:50PM
Today, the Federal Public Defender's office filed a stipulated motion to delay the deadline for filing pretrial motions until January 11, 2019 in the criminal case against Ross Hansen and Diane Erdmann.

In the filing, it mentions that "this initial production includes but is not limited to ... undercover wire recordings." In other words, at some point in time, there were undercover wire recordings of Ross and/or Diane.

The Judge Grills Mr. Calvert, Mr. Gearin, Mr. Smith

May 11, 2018 1:25PM
As I previously mentioned, at the May 4 hearing, the Judge brought up the letters several of us wrote to the court.

The Judge mentioned a previous employee of NWTM, who had signed a declaration in support of the sale to Medalcraft. I had written that she now works at Medalcraft, and was the employee that Mark Calvert referred to when he wrote "[she] appears to be contacting customers of the estate and attempting to divert business to the competitor. The competitor’s violation of its nonsolicitation agreement with the estate may adversely impact operational results and give rise to actionableeeds.ges [sic] claims". I also pointed out that Medalcraft was the competitor in question. So were these allegations of mine "unfounded and unsupported" and "based on rumor and innuendo" as Mr. Gearin suggested of my allegations? When the Judge asked Mr. Gearin "Are those allegations all correct?", his first words were "It is true."

The Judge made it clear that he is concerned about the lack of full disclosure, and causes him to think something is being hidden.

Next, the Judge brought up the dies. Mr. Calvert admitted that he "relied on marketing material" for the past 2 years when referring to 400,000 dies. Calvert referred to 400,000 dies as a "Ross number", but the Judge pointed out that for 2 years Calvert has been using that number, even to justify fees for researching dies.

The Judge turned the floor to the Martin Smith, of the U.S. Trustee's office, regarding complaints about the Chapter 11 Trustee Mark Calvert. Mr. Smith decided to refer to colorful characters, indirect references to conspiracy theories, and allegations. The Judge then pointed out that these aren't just specious allegations. He said he has some grave concerns about the case, and is not pleased as being approached as "colorful characters" raising issues.

The Judge then pointed out some "regular payments" to Cascade Capital (Calvert's company). These payments aren't fraud: one example was reimbursement for a payment for an electric bill via a Cascade credit card (to speed up payment). But it isn't allowed. The Judge said "Mr. Smith, I hope you are taking notes. This is yet another problem. We talked about this in October. You did it before, I said you cannot do that. It doesn't matter if it is small."

"Crazy Colorful Conspiracy Theorists"

May 11, 2018 8:40AM
I obtained a copy of the audio of the May 4, 2018 hearing. In this post, I am going to focus on just one seemingly unimportant aspect of the hearing: the allegations of conspiracy theories. Basically, one of the members of the creditors' committee, an ex-member, and myself (along with a few others) wrote to the court with allegations of what has been going on.

The Judge brought up these letters, and proceeded to ask Mr. Gearin (the Trustee's attorney) a question related to them.

Later, Mr. Gearin referred to a small number of people, some of whom have no interest in the case, filing unfounded and unsupported allegations. He suggests they are all baseless, based on rumor and innuendo. Then another attorney twice referred to some creditors believing in conspiracy theories. The U.S. Trustee, Martin Smith, then jumped in the ring and said that this case "has many colorful characters" that go down paths "none of us would imagine are there." Hmmm.

The Judge then said that he hopes the U.S. Trustee's office won't just blow off the letters as "crazy colorful consipiracy theories."

We've got two things here. The letters contain a lot of allegations, which the Trustee's attorney is suggesting are false. And an attorney brought up conspiracy theories, which the U.S. Trustee seemed to agree with. The problem with the allegations is that some/many have already been proven true (in fact, when the Judge asked Mr. Gearin "Are those allegations all correct?" at one point sheepishly admitted that they were true). As for the conspiracy theory (defined as "covert but influential organization is responsible for a circumstance or event"), I don't like going into things like that. But since an attorney and the U.S. Trustee have obviously heard it, I think it is important to bring it up.

The conspiracy theory goes something like this (do not believe that this is all true): Mark Calvert and Ross Hansen got introduced in February, 2016, and conspired to work together in secret to benefit both of them. When a Trustee was going to be appointed, it couldn't be Mr. Calvert (due to his involvement), but Mr. Calvert brags about his "very special relationship" to the then-Acting U.S. Trustee Gail Geiger, who lets him do it (with a bit of help of Mr. Gearin, who conned some creditors into convincing the court to appoint a Trustee). Martin Smith feels that he has "clean hands" since he did not make the authorization himself. Calvert and Hansen acted as though they were enemies, yet conspiring all along, with Calvert shredding evidence that would put Ross Hansen in jail. Calvert would then intentionally cause the company to fail (e.g. ignoring real offers while accepting $10M offers from people who have no money, not firing the 'henchmen', and ignoring great proposals), allowing him and his bankruptcy professional buddies to rack up a ton of fees, Ross would get out of prison (or have minimal prison time, and later dig up his buried bullion), and Paul Wagner would get the multi-million dollar Chinese business. They would cause odd things to occur, like leak a rumor that the "Titanic" medal was stolen (and then returned!), to confuse people and make those looking into the truth seem crazy. And Mr. Gearin told his buddy Mark Northrup (the Unsecured Creditors' Committee attorney) not to remove Calvert as Trustee, so Mr. Gearin threatened UCC members who threatened to remove Mr. Calvert. Meanwhile, Medalcraft is funding Mr. Wagner's business, which is located in Dayton so that NWTM assets can easily be moved there. When anyone gets close, Calvert will threaten to send the FBI after them. And to top it off, the only other person Calvert has sent to jail, Darren Berg of Meridian Mortgage, escaped prison last December!

That's a fairly typical conspiracy theory: it mixes in a few facts with a lot of speculation, with the speculation part getting out of control, yet hard to completely disprove. People who want to believe it will focus on the true pieces, and believe the rest. But where it fails is that Mark Calvert and Ross Hansen aren't smart enough to pull off something like this together.

Note that none of the letters in any way refer to the conspiracy theory. So their comments about conspiracy theories were just meant to belittle those of us that had the courage to write in.

Chapter 7 Conversion DENIED

May 8, 2018 4:30PM
Judge Alston today denied Chapter 11 Trustee Mark Calvert's motion to convert the case to Chapter 7.

In the order, he also changed the requirements of NWTM's monthly financial reports to only require a balance sheet, income or P&L statement, statement of cash receipts/disbursements, and monthly bank statements.

Hopefully, Judge Alston will release the audio of the hearing (as he has for several other recent hearings).

Medallic Assets Sold to Medalcraft

May 4, 2018 5:10PM
Yesterday, Judge Alston signed an order authorizing the Trustee to sell the Medallic assets to Medalcraft.

I don't have further details on the hearing (hopefully the judge will post the audio), so I can't say how the judge handled some of the objections (e.g. that it is unclear exactly what assets Medalcraft is supposed to get, whether they get the NWTM dies and customer lists as well, etc.). No changes were made to the Asset Purcase Agreement.

I have also heard, but have not yet confirmed, that the judge denied the conversion to Chapter 7.

Major Hearing Today

May 4, 2018 8:30AM
Today, NWTM has a hearing to discuss 3 issues (at 9:30AM PDT):
  • Motion to Convert Case from Chapter 11 to 7
  • Motion to Sell Free and Clear of Liens (Medallic sale to Medalcraft)
  • Motion to Approve (I) Deadline to Assert Claims with Respect to Ownership of NWTM Dies; and (II) Settlement Protocol to Resolve Claims to Ownership of NWTM Dies
It seems clear that there is no chance of turning NWTM into a functional business, so I expect the motion to convert to Chapter 7 should be fairly straightforward (although there are objections to it). The main question is who the Chapter 7 Trustee would be, as numerous people have suggested that Mr. Calvert should not be the Chapter 7 Trustee, and there are questions as to how he was picked to be the Chapter 11 Trustee, and whether there were conflicts of interest. Mr. Calvert put it like this: if the court converts the case to Chapter 7, "the identity of the chapter 7 trustee will be determined in due course by the United States Trustee post-conversion.". Quite mysterious.

The Medallic sale is even bigger than the conversion, which is mostly just a technicality. There have been allegations that lots of material has already been shipped to Medalcraft, allegations that Mr. Calvert and Mr. Wagner authorized Medalcraft to request any dies their customers wants. There have been several objections to the motion, but perhaps the most serious being one that was filed late yesterday afternoon (less than 2 business hours before the hearing). It essentially asks (this is my wording) 'Please wait until there are more details on the Medallic assets and a full inventory of NWTM assets, or if you allow the sale, please do not allow any assets to be moved from Dayton or Green Bay until I can inventory them.'

This may end up calling Jerry Moran's bluff (Mr. Moran is the owner of Medalcraft): he has stated that if the Judge does not authorize the sale by the end of today, he will walk.

Finally, there is the issue of the dies: Mr. Calvert wants to charge customers $350+shipping for dies, but there is a lot of controversy around that (e.g. in many cases customers own the intellectual property, and in many cases customers own the dies and should get them for free -- which Mr. Calvert said he would do, but history shows that is a lie, as he refused to return dies to a customer where the court ordered the return of the dies).

More Details on NWTM Assets

May 4, 2018 8:10AM
Michael Parish, who bought the NWTM Assets, filed a objection to the Medalcraft sale.

In the objection, he points out that Copper Leaf LLC (one of Rodger May's companies, that handles investments) loaned money to Michael Parish in order to purchase the NWTM Assets from Industrial Assets. The purchase price was $2.5M, which would have given Industrial Assets an immediate profit of $550,000.

It confirms a report I had heard that Mr. Parish sent someone to NWTM's Dayton facility to inventory the items, and that Chapter 11 Trustee Mark Calvert NWTM would not allow him in. I had heard a report that the police were called, and that Mr. Calvert initiated an emergency teleconference with about a dozen participants, but cannot confirm that.

Mr. Parish objects to the sale because the NWTM assets and Medallic assets appear to be comingled either in Dayton or Green Bay. Mr. Parish "believes that there are numerous pieces of assets, supplies and other personal property that Medalcraft could obtain that are owned by him." Part of the issue is that the Medallic sale uses broad terms such as "tools associated with the making of Chains of Office and Maces" that are not specific enough to determine in all cases whether property would be part of the NWTM assets or Medallic assets.

Coincidental Connections

May 3, 2018 1:40PM
As I have recently written about connections between various people, I want to be clear that connections are not in any way supposed to indicate that anything sinister is going on. Yes, I *do* think that there are bad things occurring in this case (not necessarily illegal). But I don't want my readers thinking that just because two people are associated outside of this case means that they are up to something.

A connection between two people or organizations is almost always benign. Many of the lawyers in this case have worked with other lawyers in this case, simply because that is their job. For example, Judge Alston represented the creditors' committee of Natural Molecular Testing (one of Mark Calvert's other 2 cases as Trustee) as recently as June, 2015 (just before he became a Judge). And I've seen the last name "Hansen" come up a lot, and even "Erdmann" -- but they all seem unrelated to Ross and Diane. I even found a connection between the attorneys for The Tulving Company (California) and NWTM. And it's normal for someone to offer a share of their business to associates of theirs. And Northrup has represented fishing companies. These things just naturally happen.

That said, I do this because sometimes there are connections that do end up showing something potentially sinister (typically a conflict of interest). For example, I discovered that a victim of fraud (not NWTM) used 2 attorneys that the perpetrator had paid (not as a client).

I have written (and will write) about various connections, in most cases assuming they are benign, writing mainly because readers may find the connections interesting.

Something is Fishy in Seattle

May 2, 2018 10:05AM
This could also be called "strange bedfellows": a CPA (also a Certified Fraud Examiner and bankruptcy professional) starts a fishing company, then takes on another CPA (also Certified in Financial Forensics) as a co-owner. A bankrupt and about-to-be-disbarred-for-fraud attorney brings in 5 more people as owners (including himself), one who doesn't seem to exist, and another who was bankrupt then and now is in prison for being a "'financial predator' who stole millions from widow and partners". This book writes itself.

In 2009, Mark Calvert formed a fishing company: Northland Fisheries Group, LLC. He started as the sole owner, but in 2011, he had 8 other people join as owners, with a 9th joining in 2012. Some we know.

PersonPositionJoinedInfo
Mark CalvertPart Owner
Founder
2009Chapter 11 Trustee for NWTM bankruptcy.
Chapter 11 Trustee for $140M Ponzi Scheme.
Tod McDonaldPart Owner2011Did $225K of financial work for NWTM via Calvert's Cascade Capital.
Lead financial investigator for a $140 million ponzi scheme.
Bruce HullPart Owner2011Bankrupt when he became a part owner.
Disbarred in 2013 for embezzling over $100,000 from trust accounts of clients.
JM, BM, TM, DC, JBPart Owner2011Referred by, and using disbarred attorney for mailing address.
WWPart Owner2011Referred by, and using disbarred attorney for mailing address.
Name does not seem to exist in the United States.
Jody CannadyEmployee2011Did $115K+ of financial work for NWTM via Calvert's Cascade Capital.
Led the botched NWTM bankruptcy inventory.
Terry CosgrovePart Owner2012An expert in the fishing industry, that went to prison in 2017 for embezzlement.
(red indicates theft; yellow indicates the person used the services of the broke, disbarred attorney both before and after he was disbarred).

The member that joined in 2011, and appears to have brought on most of the other members, was an attorney. Unknown to Mr. Calvert, Mr. Hull was bankrupt (again; he also filed for bankruptcy in 1996). On March 10, 2011, his business bank account balance was $-25.43. On June 13, 2011, his personal bank account had a negative balance. In March through June of that year, the attorney got by by taking funds out of a trust account for one of his clients (by the end of June, the $80,000 in that trust account had dwindled down to $25.89). He also had other money issues going back at least as far as 2009; for example, he had a trust account for a client in 2009 that had a $-491.19 balance. He was disbarred in 2013. One wonders how he came up with the money be a part owner of Calvert's fishing business?

The rest of the owners as of 2011, aside from Calvert, his associate, and the disbarred attorney, were apparently referred to Calvert by the disbarred attorney. They used his address in 2011 (before he was disbarred), and kept using his address through the filing of the latest annual report. Presumably, the disbarred attorney had not pillaged their trust accounts.

That's bad, yes. But not as bad as it could be. Further digging shows that one more person joined as part owner of the company, in 2012: Terrance L. Cosgrove, who was well known in the fishing industry. He was still listed as a part owner as of June 20, 2017. The Seattle Times refers to him as a "'financial predator' who stole millions from widow and partners."

Mr. Calvert's Cascade Capital Group touts their maritime experience, which goes well beyond Northlake: "Cascade Capital Group is active in a variety of maritime-based industries, including commercial fishing operations in the Pacific Northwest, seafood processing and storage, construction of vessels, shipyard operations, maritime equipment construction, shipping, and logistics."

So Calvert and Cascade are fish experts. Let's look at some connections. Next, we look at Rodger May, who was the high bidder on the Medallic assets, yet Mr. Calvert was fighting to disallow his bids. Mr. May is a veritable fishing magnate: he claims that he "is both a pioneer in the fisheries world, and one of the most successful individuals in fisheries", currently the chairman and CEO of Northwest Fish Company, and oversees the management of $100M in assets. I'm wondering if Northlake Fisheries considers Mr. May to be a competitor of theirs? And does Mr. May know that Calvert is in the fishing business? Does Mr. May know that digraced Terry Cosgrove is a part owner of Calvert's fishing company?

One last piece of information: Terry Cosgrove (the guy behind the $6M fraud) filed for bankruptcy in September, 2010. His bankruptcy attorney was a man by the name of "Armand J. Kornfeld", who represents many people in the fishing industry. To make a long story short, he turns out to be the very same "Jay Kornfeld" that Ross Hansen was discussing bankruptcy with, who referred Ross to Mark Calvert. He has "developed an expertise in the commercial fishing industry, with involvement in virtually every significant commercial fishing and seafood processing case filed in the Seattle area in the last 20 years.".

Please note that connections between people do not in any way indicate any wrongdoing.

U.S. Trustee Connection

May 1, 2018 3:35PM
I started following NWTM and Ross Hansen in August, 2014. When I start following a company or an individual, I look deeply into their past, and all their connections.

With the first case I followed, The Tulving Company, I never even thought of investigating the Chapter 11 Trustee (who was a former FBI special agent) or the U.S. Trustee's office. When the NWTM case started, Martin L. Smith was the Attorney for the United States Trustee, and Thomas A. Buford was the Assistant U.S. Trustee. They have worked together on cases for at least 6 years, likely quite a few more. Mark Calvert is "wet behind the ears" with at being a bankruptcy Trustee; I can only find evidence of 2 other times he was a Trustee before this (Meridian in 2010, and Natural Molecular Testing in 2013).

Given the many allegations of what is going on, I figured I should look a bit more into connections behind the scenes, of people involved after the bankruptcy filing. I'm working on a post "Something Fishy in Seattle", and as I'm working on it, something odd came up.

On April 22, I wrote about how a Jay Kornfeld introduced Ross Hansen to Mark Calvert. So what did I find out? That Mr. Buford, the Assistant U.S. Trustee, quit in 2017, and went to work for Bush Kornfeld LLP, Jay Kornfeld's law firm. The same one that introduced Ross Hansen to Mark Calvert. Mr. Kornfeld once represented someone Mr. Calvert knows in a personal bankruptcy.

It is likely a coincidence that Mr. Buford ended up at Kornfeld's law firm. But for further coincidences, Mr. Buford is one of 8 faculty members of the King County Bar Association (for Continuing Legal Education). Of those 8, Ross Hansen used 3 of them as attorneys for the NWTM bankruptcy (J. Todd Tracy and Steven J. Reilly of The Tracy Law Group, and Alan J. Wenokur). The 2 attorneys for The Tracy Law Group withdrew because a Chapter 11 Trustee was appointed by the U.S. Trustee, and Mr. Wenokur withdrew because Ross Hansen no longer needed his services, presumably also because a Chapter 11 Trustee was appointed.

Can You See NWTM?

May 1, 2018 9:35AM
Someone sent me these pictures reportedly from an empty office building about 2 miles from NWTM's offices in Dayton, NV. I was hoping for something a bit closer up, where you could see what was going on. But I thought these pictures were worth sharing nonetheless, as those people that haven't been to Dayton don't quite realize how nice a view there is.

Possible Recourse: Washington State 'Tort Form'

April 30, 2018 8:55AM
I just heard from a creditor that let me know that he heard that Washington State has a tort form that you can fill out if you think that you suffered a loss as the result of negligent actions of a state agency.

So why might the government be responsible? The key here is that the Attorney General's office [1] basically allowed NWTM to operate owing customers millions of dollars (through the 2008 Consent Decree), and [2] seemingly ignored complaints all but shouting "NWTM owes customers millions of dollars!". One good example is the person who complained to the Attorney General in April, 2015, after NWTM had violated the 2008 Consent Decree. That alone should have immediately caused an investigation. But it gets worse: when the customer threatened NWTM that he would file a complaint with the Attorney General, NWTM advised him not to, saying that Ross Hansen would get mad and try to delay his refund as long as possible. If the Attorney General's office doesn't take action on a complaint like that, what complaints do they take action on?

I have no legal training, so I cannot begin to say whether or not Washington State may be liable; it is quite possible the statute of limitations may have expired. However, if you think that this may be an avenue worth pursuing, be sure to read my page on the Attorney General which goes into further details about their role in the NWTM fiasco.

Did Calvert Hedge?

April 29, 2018 7:25PM
Experienced bullion buyers know that dealers need to know whether or not hedge, and how much to hedge. If you don't hedge, you take on the risk of a market change.

In the case of Calvert-era NWTM (after Ross Hansen had the company file for bankruptcy), it seems like NWTM is taking on the risk. Specifically, the United States Golf Association paid NWTM $22,815 in November, 2017 for 1,300 troy ounces of silver. NWTM apparently never bought it (they refused to respond to USGA's request to get the metal, money, or medals back). So did NWTM hedge the price of 1,300oz of silver? I see no signs of NWTM doing any hedging, although with Calvert's inability to communicate with creditors, it is a possibility. But obviously Calvert did not properly account for the $22,815 if he cannot return the cash, metal, or the medals he was supposed to make.

Ross Hansen's Friend Buys NWTM Assets

April 25, 2018 4:35PM
In my previous post, I mentioned that I am going through the audio from the April 20, 2018 hearing.

In it, Mr. Neu (the attorney for Chapter 11 Trustee Mark Calvert) says that Mr. May was no longer interested in purchasing the NWTM/Medallic assets as of April 19 (which is odd, given that the Trustee was requesting the Court approve a sale to Medalcraft without mentioning whether Mr. May was still bidding).

Mr. Neu then said that Mr. May entered into an agreement with Industrial Assets (who bought the NWTM assets for $1.95M, and was planning to auction them) to purchase all the NWTM assets that Industrial Assets bought. Mr. Neu then said that Mr. May is financing this on behalf of Michael Parish who is Ross Hansen's friend.

Michael Parish was brought up in court before a few times, including at a recent hearing where it was mentioned that Mr. Parish was "trying to get his hands on the assets" via Mr. Hansen. He also appeared in docket 1110.

300,000+ Dies Lost

April 25, 2018 4:35PM
The Judge released the audio of the April 20, 2018 hearing. It regarded destroying documents, sale of Boy Scouts dies, and the protocol for selling dies to customers.

In it, the Judge asked "Let me ask, are there 400,000 dies, roughly?" Remember, both Ross Hansen and Mark Calvert previously referred to more than 400,000 dies (Mr. Calvert did in January of this year). Mr. Neu (the attorney representing Mr. Calvert) said that Paul Wagner recently did an inventory of the dies at Dayton, and identified 80,000 to 100,000 dies, plus there are an unknown number of dies located in China. I'll try not to ask about the inventory coming up with "80,000 to 100,000."

The Judge then asked about the ~320,000 dies that were unaccounted for, and the Judge believed they were in China, and Mr. Neu led him to believe that.

The catch is that the information I have shows that there are only around 26,000 dies in China. I'm guessing nobody thinks that there could be anywhere near 300,000 dies in China.

Most of the 300,000 missing dies were "junk" unrelated to coins (e.g. for jewelry), and had little value. But why did Mr. Neu not mention this at the hearing? And where did those 300,000 dies go? Did Mr. Wagner completely botch an inventory (which I highly doubt), or did someone get those 300,000 dies? And if so, who? And if so, why did Mr. Neu not tell the Court about it?

Of course, this assumes that the 320,000 or so missing dies are just the "junk" ones, and not important ones (NWTM/Medallic customers). But given that Medalcraft apparently said that there is only about a 50% chance that any given Medallic customer dies exist, it suggests that someone not only got the "junk" dies but also some valuable ones. Uh-oh.

Was Sealed Indictment Leaked?

April 24, 2018 4:25PM
The indictment against Ross Hansen and Diane Erdmann was signed, filed, and sealed on Thursday, April 12. It was unsealed on Monday, April 16.

On Saturday, April 14, I received an E-mail from someone who seemed disappointed that I had not yet written about the indictment of Diane Erdmann. I ran a search, and explained that there was no sign of an indictment, so if there was one, it was almost certainly sealed. I assumed that this person was simply mistaken. It never occurred to me that he might know of the existence of a sealed indictment.

Then the day after the indictment was unsealed, I heard from someone who claims that he heard about the indictment on Friday, April 13. This person claims to have heard it secondhand (he heard it from someone he trusts, who got it from someone with access to the sealed indictment -- whose identity I will not post here). Normally I would be willing to quickly dismiss such a claim (especially hearing about it after the indictment was unsealed). But not in this case. This source has been quite reliable with information.

So was the existence of the sealed indictment leaked? The only way that it could not have been is if both [1] The person hearing it on April 13 lied to me (or was lied to), *and* [2] The person who E-mailed me on April 14 was just guessing about the indictment or mistaken about it. As for #2, in the over 750 days since the bankruptcy filing, this is the only person who told me that an indictment had been filed (until it actually was, and was unsealed). The odds of someone happening to write that within the 4 days that the indictment was sealed seem very, very small.

Piercing the U.S. Trustee Bond

April 24, 2018 1:45PM
When a corporation owes money, the owners/shareholders are not normally liable for the debt. There is a legal term called "piercing the corporate veil", that in some cases allows people to go after the owners.

In a bankruptcies, the Trustee is usually required to post a bond "in favor of the United States conditioned on the faithful performance of official duties by the trustee or trustees." According to one bond issuer, the bond "works by covering a claim for fiduciary duty violations by the bankruptcy trustee. These violations may include theft, misappropriation of funds or property, misrepresentation, and so on."

Before I get accused of suggesting that Mr. Calvert is involved in such activities, I am bringing this up because the lawyer for one creditor stated to Mr. Gearin (the Trustee's attorney) a few weeks ago that he is prepared to "seek relief... which may include... a proceeding on the Trustee's bond." This is due to a creditor paying money in late 2017 for silver for medals, never receiving the medals, the silver, or their money back.

If this were to happen, it sounds like it would involve an adversary proceeding (like a "mini lawsuit" within the confines of the bankruptcy proceedings), making it a somewhat more difficult (and costly) procedure than simply filing a motion.

The original bond was set at $300,000, increased to $750,000, increased to $1.2M on July 5, 2016, and increased to $2M on August 23, 2016. In the March, 2017 Monthly Financial Report, Mr. Calvert stated that "Trustee increased the bond for the large cash inflow", but did not state how much the new bond is, nor has it been reflected in court records yet.

UPDATE April 28, 2018 7:25PM: The new bond is set at $3M.

Did Calvert Overbill? Did Cascade Underbill?

April 22, 2018 6:50PM
Looking at the July, 2017 Monthly Financial Report, the income statement shows a total of $457,275 in "Trustee Fees" billed from April, 2016 through July, 2017.

Comparing this to the Trustee's application for compensation, we see that "the Trustee incurred a total of $602,160.00 in fees during [April 2016 through July 2017]".

The first thing I note is that the monthly fees in the income statement exactly match the application for compensation for July, 2016 and March, 2017. This helps show I've at least got the right category.

The next thing is that for many months the income statement shows a flat $30,000 fee. For example, in April 2016, the income statement shows $30,000 for "Trustee Fees". Yet he billed $52,780 on the application for compensation. To the untrained eye -- in this case, meaning anyone who hasn't been given information leading to where the missing $22,780 appears on the income statement (if at all) -- it appears as though either Mr. Calvert "guessed" how much he would charge when preparing the statement (and never corrected it), or included the extra $22,780 in some other category.

Note that the discrepancies aren't limited to where Mr. Calvert entered $30,000 for his fee: for example, in April, 2017, the income statement shows $21,920, but he billed $24,640.

The billing for Calvert's Cascade Group is similar. The income statement shows $883,852 billed for "Cascade Capital Group Professional Fees", but they only billed for $819,579. For most months, they billed less than the income statement showed. But in November, 2016 the income statement showed -$37,118 (perhaps Cascade provided a discount?), but Cascade billed $26,230. And in December, 2016, the income statement showed $103,730 in Cascade fees, but Cascade only charged $18,096. Huh.

Isn't the point of the U.S. Trustee requiring accounting reports so that people can understand the profitability and other financial concerns of the debtor? How can you do that when there are apparently guesstimates and overcharges and undercharges?

How Mark Calvert Became Chapter 11 Trustee

April 22, 2018 1:40PM
Since early on, I've wondered how Mr. Calvert became the Trustee. I found it odd that he was hired, given his high-school level of accounting sloppiness (note to self: if I get sued for that, I need to re-read my "accounting nightmares" posts). I've discussed it a bit, but found out a lot more today.

It sounds like Mr. Calvert first became involved at the suggestion of Jay Kornfeld, an attorney that Ross Hansen was using in February, 2016. Ross met with Mr. Kornfeld on February 26, 2016, and Mr. Kornfeld suggested that Mr. Calvert become involved in the discussions. On March 1, 2016, a full month before the bankruptcy filing, Mr. Kornfeld discussed the NWTM situation with Mr. Calvert. Ross first met with Mr. Calvert (along with Mr. Kornfeld) at NWTM on March 5, 2016.

Mr. Calvert and his firm reportedly prepared a number of documents related to restructuring NWTM, including detailed "to do" lists, projected cash flow statements, staff reduction plans and timelines.

This goes beyond what was originally known.

DateDescription
Feb. 23, 2016$38M defamation verdict in Cohen case
Feb. 26, 2016Mr. Kornfeld suggests to Ross that Mr. Calvert become involved in discussions
March 1, 2016Mr. Kornfeld discusses the case with Mr. Calvert
March 5, 2016Mr. Kornfeld, Mr. Calvert and Ross meet at NWTM.
Calvert creates an asset list for the "initial meeting"
March 14, 2016"[Cohen's] counsel has also been advised ... NW Mint has dissolved all of the metals they are holding for clients to fill orders and there is nothing left in NW Mint’s vaults"
March 15, 2016NWTM pays $10,000 to Larry Feinstein, a local bankruptcy attorney
March 18, 2016Domain 'existingbullionorders.com' registered
March 18, 2016Ross pays Hannes Tulving's criminal attorney a $25,000 retainer. The funds come from cash that Diane deposited earlier in the day
March 25, 2016Mr. Kornfeld advises Ross that Mr. Kornfeld and Mr. Calvert will not proceed. The reason for this is unknown.
March 25, 2016Ross contacts Tracy Law Group to handle NWTM bankruptcy.
March 26, 2016 and
March 27, 2016
Ross and Diane reportedly enter the NWTM vault and remove metal.
March 31, 2016$150,000 of funds are wired to Tracy Law Firm as a retainer for the bankruptcy filing. The hiring requires that Elliott Bay Asset Solutions be the CRO.
April 1, 2016Bankruptcy petition filed
April 5, 2016Ross' attorney files motion to hire Bill Weisfield of Elliott Bay Asset Solutions, LLC to be Chief Restructuring Officer
April 5, 2016Mr. Gearin communicates with Tracy Law Firm about objecting to hiring Mr. Weisfield as CRO, apparently as Mr. Calvert's personal attorney.
April 6, 2016Mr. Cohen files an objection to the motion to hire Mr. Weisfield
April 6, 2016
1:13PM
Mr. Weisfield contacts Tracy Law Firm and says they talked to Martin Smith, who would in no way support a CRO. Weisfeld did not want to spend the time to be a Trustee.
April 6, 2016U.S. Trustee files an objection to the motion to hire Mr. Weisfield
April 6, 2016Mr. Weisfield withdraws from consideration
April 7, 2016 9:30AMHearing on appointing a Trustee.
April 7, 2016Judge Alston signs order that the U.S. Trustee will appoint a disinterested person to serve as trustee.
April 8, 2016 3:10PMU.S. Trustee requests the Court to allow Mr. Calvert to be the Trustee.
April 8, 2016Mr. Calvert signs acceptance/declaration: "I met with representatives of the Debtor to discuss whether my firm, Cascade Capital Group, would be engaged to provide restructuring services to the Debtor. I met with the Debtor's principal Ross Hanson. After meeting with Mr. Hanson [sic], my firm declined to undertake the engagement. Neither my firm nor I were paid any fees by the Debtor. Neither my firm nor I have any relationship with the Debtor or Mr. Hanson."
April 9, 2016 or
April 10, 2016
FBI calls Mark Calvert to discuss NWTM.
April 11, 2016The Judge allows Mr. Calvert to be the Trustee.

Scheme To Prevent Bids for Medallic

April 22, 2018 12:15PM
From the looks of it, NWTM and/or Medalcraft came up with a nifty scheme to ensure that Medalcraft would get the Medallic assets. Part I: Move part of the value of Medallic to Medalcraft, Part II: use a "poison pill"-like strategy with a bogus threat to walk if the Judge doesn't approve the deal the day of the hearing.

In August, 2017, NWTM was furious at Medalcraft, threatening legal action. Somehow, though, by February, 2018 NWTM and Medalcraft were nice and cozy, and Medalcraft put in a "stalking horse bid" (a normal bankruptcy process, a guaranteed bid before an auction). After Medalcraft was outbid, NWTM cancelled the high bid from the qualified bidder as unqualified, and announced Medalcraft the winner -- but the Judge ruled that wasn't fair. Odd things then happened, such as NWTM offering to let Medalcraft pay less to be fair, Medalcraft offering to pay more to be fair, and the high bidder offering more to become qualified. Somehow, though, the high bidder backed off (why would the high bidder back off?), and NWTM again considers Medalcraft the high bidder. NWTM has approached the Court to approve the sale.

This time, though, it's a bit different. They are pretending it is an arms-length transaction, with Chapter 11 Trustee Mark Calvert pointing out that Medalcraft will walk away if the Judge does not approve the sale the day of the hearing. But things have gone further, with Medallic telling customers that Medalcraft now has the die information, Medallic referring customers to Medalcraft, and Medallic even shipping dies to Medalcraft. Medalcraft even appears to have been given the Medallic customer list. For every customer Medallic refers to Medalcraft and every die they send to Medalcraft, the value of Medallic goes down further, reducing the value to other potential bidders if the Court does not approve the sale.

Now, I'm sure that Calvert would say this is an arms-length transaction. But how in the world can it be? In an truly arms-length transaction, Medalcraft would be treated almost exactly the same as other bidders (the exception being that they were the stalking horse bidder). But Medalcraft has gotten NWTM employees, Medalcraft has violated their non-solicitation agreement, Medallic has sent business to Medalcraft, Medallic has sent dies to Medalcraft, and Calvert is pushing Medalcraft's bogus threat to walk away (Calvert is "concerned" that Medallic will walk if the peak season is over, but Medalcraft's threatened "drop dead" date is after the peak season is over). Did Paul Wagner chat about his personal business with other bidders? Did Calvert treat Mr. May the same way? Did Calvert treat other bidders (such as the one who put down a $100K deposit, only to have Calvert accidentally sell some of the assets he bid on) the same way? From the facts -- mostly hidden from the Court -- it does not seem like an arms-length transaction.

Added: 'Threat Level'

April 22, 2018 8:30AM
I have just added a 'Threat Level:' line in the summary section above the top post (the lines in [brackets]).

To be clear, I have not received any threats regarding NWTM. However, given that multiple people in the case have been accused of threatening people in various ways, the escalated nature of this case, and that much of what I write doesn't sit well with the people I am writing about (it's the nature of what I do), I need to be aware of the potential of receiving threats.

The 'Threat Level' above is a failsafe of sorts, in case I am threatened in a way that I feel compelled to either stop writing about NWTM or receive a threat that I don't feel comfortable writing about (e.g. a threat from a lawyer that says they will take legal action if I mention the threat). I will try to occasionally update the date there (perhaps every few days). If it has been a long time since the date was updated, it is a sign that I may have received some sort of threat that I do not feel comfortable writing about. This way, if I am forced not to write about a threat, that fact will come out.

In a different case I follow, I did receive a lengthy draft complaint, and it isn't at all fun, especially when I don't get paid for my services. But I do not cave in to frivolous legal threats.

That said, if I *do* receive some sort of threat, including any threatened legal action, I will do my best to publish it here. I do not in any way consider myself to be above the law, and I do my best to ensure that my writing does not violate any laws or ethics. If I do something illegal, it will have been by mistake, but even so, I should be judged appropriately. Given what I have seen going on, I feel that a policy of immediately publishing any threat is best to help avoid receiving any.

If you feel that I have written something defamatory (remember, "defamatory" almost always means something that is not true), please feel free to contact me. I will treat the issue with the same urgency that you do. The only time I am aware that I wrote something actually defamatory (by mistake), I was notified quickly and had it removed within an hour of the E-mail being sent to me (minutes after I received it).

Busted: Yes, NWTM is Sending Dies to Medalcraft

April 21, 2018 5:40PM
I previously reported that I wrote a letter to the Judge (something I have never done before). One of the lines was "I have heard a credible report that some dies have been shipped from NWTM's location in Dayton to Medalcraft, in anticipation of the sale." That's something that I did not feel comfortable posting here, since I could not prove it (unfortunately, I do not have a team of hackers to assist me, just the occasional kind soul that leaves an anonymous tip).

Today, however, I received evidence that proves that NWTM is shipping dies to Medalcraft. Yet another "rumor"/"allegation" proven true.

So, Mr. Calvert, are you playing fair and shipping dies to other bidders as well? Are you charging Medalcraft the $300+shipping that you want to charge previous customers?

You would think that would be enough news for a single post. But I also wrote to the Judge "given that Mr. Calvert appears to have sold items twice, we need to make sure he doesn't give away the NWTM dies by mistake." Remember, Medalcraft is waiting approval to buy just the Medallic dies ("Medallic Company owned Dies" from the past 20 years). Maybe Mr. Calvert feels it's OK to jump the gun on the sale to Medalcraft. But certainly he wouldn't send NWTM dies to Medalcraft, right? The evidence I received shows that NWTM dies are indeed being sent to Medalcraft, too. Those are property of the estate (or customers) that Medalcraft hasn't even expressed any interest in. So why is Medalcraft getting those dies?

CEO Asks Court For Payment

April 21, 2018 9:30AM
Bill Atalla, the CEO that the Trustee hired, was terminated on December 29, 2017 along with other NWTM employees.

His situation was a bit different, in that he was hired with court approval, with a clear employment agreement. He has filed a motion with the court to get paid his severance, pay for time he spent working after his termination, vacation pay, and some other misc. items.

It would be interesting to see what would happen if all the other employees did the same. I imagine it wouldn't make sense for most employees to pay an attorney to pursue it, and the class action lawsuit regarding the WARN act was voluntarily dismissed (for unknown reasons), but it would certainly be interesting to see the Trustee's reaction.

Atalla also filed an objection to the conversion to Chapter 7. The best line comes after pointing out that the $50M of creditors and the debtor would not benefit from a conversion to Chapter 7, when he writes "So who will benefit from conversion? Only the trustee and his professionals."

More on Die Sales

April 21, 2018 9:00AM
The Trustee filed the March, 2018 monthly financial report, which I have been going over.

True to form, the Trustee makes a vague statement about the dies: "The Trustee has confirmed the dies available for sale, for which there are 3 different offers for different types of dies. Provided the Court approves the protocol for these sales, the sales are anticipated to be complete in April."

Again, "Huh?".

The first piece is that these sales cannot all be completed in April. There is a hearing on May 4, 2018, to see if the Medalcraft sale goes through, which includes the recent Medallic dies. How can the Trustee expect to complete the sale before the Judge approves it? And how can the Judge approve the sale of other dies in just 6 business days when Calvert hasn't even filed a motion about them yet?

Next, there has been confusion since the beginning about the quantity of dies, how many have no value to a mint (e.g. the jewelry dies), whether the Chinese dies are included, how many may have already been sold (e.g. if the Tomball sale ended up including any), the exact (or approximate) number of each type of die, and whether any have been shipped to other mints without the knowledge of the court. This new statement just adds to the confusion.

The Trustee so far as only really mentioned one set of dies: the dies he wants Medalcraft to have ("Medallic Company owned Dies... associated with any customer for which there has been a sale within the past 20 years."). So unless the Trustee has changed things, there's that. That would leave (if memory serves): [1] NWTM dies (e.g. the dies that NWTM had made in-house for many years), [2] Older Medallic dies, [3] Chinese dies (located in China, around 26,000 of them), and [4] "Junk" dies (e.g. jewelry dies).

The Trustee also took a $100K deposit on an offer that included many (perhaps all) of the Medallic dies, but I'm assuming that deal is done (the Trustee accidentally sold assets that were to be included in that sale). As of March, the Trustee was also expecting to sell older Medallic dies to "NY Numismatic Assoc". But who is he planning to sell the NWTM dies to? There has been zero mention of those dies. Perhaps Sierra Mint?

Where Are Sales Coming From?

And Why Bank With Texas Account?

April 20, 2018 5:25PM
Today, the Trustee filed the March, 2018 monthly financial report.

It shows $153,605 of Core Operating Sales in March. The inventory sold was valued at $45,000 (exactly the same as February), with total costs of goods sold of $99,171 (inventory cost, labor, etc.).

The catch is that NWTM is shut down, with the NWTM website no longer taking orders, and Medallic is referring people elsewhere. Where is this business coming from?

One reader pointed out that NWTM is still selling inventory on Amazon, and that they have 596 items for sale (accounting for thousands of items, as many have 10+ in stock). Many/most/all are fulfilled by Amazon, which means that Amazon has them in their possession (does this inventory appear in court documents?). But it appears that Amazon orders only accounted for about $4,000 of that $153,605. So that doesn't cover much.

The descriptions of receipts of money simply show "Custom Customer." But from everything Chapter 11 Trustee Mark Calvert has said, it sounds like Medallic did the custom minting. And Medallic isn't accepting more orders from what I have seen. So it sounds like this is actually the Chinese business (which did custom orders). But where are these orders coming from?

And to add to the confusion, the accounting appears to be a bit wonky: it shows Amazon, PayPal, wire transfers and a few other similar payments going into the general operating account (8106) as expected. But on February 16, 2018, a $40,000 transfer was made from the general operating account (8106) to the "Texas Sale Proceeds" account (8122) that had been dormant for months. They then started depositing checks into that Texas account, and even the $195,000 deposit for the NWTM assets was wired from K&L Gates (the attorney dealing with escrow) into that account. Then they would transfer funds that had come into the general operating account into the Texas Sale Proceeds accounts, and pay some bills from each account. Huh.

UPDATE April 21, 2018 9:20AM: One person believes this money may be from "collections" -- NWTM trying to collect money owed from past invoices, and/or payments for orders that were placed (but not paid for) before the websites shut down. Another believes this is for coins to wholesale buyers.

"...for the Trustee to either sue all former customers"

April 19, 2018 8:35AM
The Trustee filed a response to some objections to his proposal to sell the dies for $300 each plus shipping.

He makes a number of good points (e.g. that the dies need to be out of the Dayton facility by June so they need to be gone by then, and that while the price would seem astronomical before the bankruptcy, the price factors in the legal fees and such). However, at the end, he writes "It would be extraordinarily burdensome, expensive, and time consuming for the Trustee to either sue all former customers to resolve the issue of ownership..."

I'm not sure why he would contemplate the idea of suing all former customers of NWTM (including that guy that spent $10 to buy a medal in 2008, that doesn't even know what a die is, and isn't owed any money). Maybe it is just my lack of legal training, and it is normal for a Chapter 11 Trustee to consider the possibility of suing all former customers.

NWTM Asset Auction Surprise: Bought In Whole

April 18, 2018 2:30PM
A company called Industrial Assets, d/b/a BidItUp, bought the NWTM assets for $1.95M in March, which we knew about. They were planning to auction to equipment (which they valued at over $5M) on May 2, 2018.

The surprise came within the past few hours, when the website changed, and now states "AUCTION CANCELLED • FACILITY SOLD IN ITS ENTIRETY". Presumably, someone came in with an offer for all the assets, that exceeded what BidItUp felt it could reasonably expect in the auction (somewhere well over the ~$2M they already invested). Why else would BidItUp cancel the auction?

So now it is time to report a rumor I had heard 2 days ago: that Ross Hansen had a "big deal" in the works, that he had found some investors (as he so often seems to), and repurchased NWTM in part or in whole, and that it would happen this week. I also heard that he asked the court on Monday for permission to travel to Nevada (where the NWTM assets are located), as early as yesterday.

From the reports, it sounds like Ross Hansen may have purchased the NWTM assets. To be clear, this only includes assets that were already sold (e.g. not the dies, inventory or Chinese business). Since BidItUp already bought the assets, this is happening outside the courtroom, so the records likely will not be public.

Executed Arrest Warrant

April 18, 2018 8:25AM
To help remove any doubt, here is a copy of the executed arrest warrant. This is the form that shows that Ross Hansen was ordered to be arrested (in this case, he self surrendered).

Pleading Not Guilty, Public Defenders

April 17, 2018 3:20PM
After going through what must have been dozens of lawyers over the past few years, some paid in cash and others bullion, Hansen and Erdmann have been assigned public defenders. Ironically, they made a sworn financial statement that they are "financially unable to retain counsel." The irony is that Ms. Erdmann claimed that she was effectively destitute (her attorneys' words), and then came up with $700K of bullion to pay legal bills. Mr. Hansen was assigned Jennifer Elizabeth Wellman and Dennis Carroll, and Ms. Erdmann was assigned attorney Michael G Martin.

Both Hansen and Erdmann pleaded Not Guilty. A jury trial is scheduled for 6/25/2018 at 09:00 AM

Further Arrest Details

April 17, 2018 8:40AM
I have heard that Ross Hansen and Diane Erdmann have not been detained, but were allowed to self-report to their initial appearance, which was yesterday at 2:00PM.

Although the court has not yet released details of bail, I have heard that they were both released without bond, on their own recognizance (essentially a promise to show up for court appearances). I have also heard that they are restricted to travel only in the Western District of Washington, although some exceptions may be made.

This information does not come from the court, but I believe it to be from a reliable source.

UPDATE April 17, 2018 3:10PM: I have confirmed this information. Hansen and Erdmann are also required to surrender any passports they may have. They also "must not harass, threaten, intimidate, tamper with, improperly influence, or injure... victims of crime."

Ross Hansen and Diane Erdmann Arrested, Indicted

April 16, 2018 8:05PM
On Thursday, April 12, 2018, the U.S. Attorney filed an indictment (criminal case 2:18-cr-00092-RAJ in the Washington West District), against Ross Hansen and Diane Erdmann. They were arrested today, and the case was unsealed today. They were charged with 10 counts of wire fraud and 10 counts of mail fraud.

[Please remember that everything stated here is an allegation, not necessarily a fact]

It states that "Although Hansen and Erdmann fulfilled some standard bullion customer orders, these orders were fulfilled by using money from newer customers." It states (as we knew) that the fraud was similar to a Ponzi scheme. It also points out the now-infamous "it is our policy to ship orders promptly after you have properly paid us" notice on the website. It says that starting around 2015, NWTM sent out E-mails fraudulently stating reasons why orders would not be timely delivered, such as "due to unprecedented demand."

It further refers to the term I uncovered, the "drop dead" date, that was used internally. It points out, as I have, that many orders were not shipped by the "drop dead" date. It goes on to say that Diane Erdmann "intentionally fulfilled some standard bullion customer orders with the wrong type or brand of bullion". It states that "more than half of the silver bullion orders over $5000 placed in January 2015 were not fulfilled until August 2015 or later."

It states that Diane Erdmann specified that smaller orders be filled first (which makes sense, as it results in fewer people complaining). It states that 93% of the dollar value of silver orders in 2015 were not shipped within the required 10 weeks. It states that Diane "Erdmann also prioritized fulfilling orders where the customer had threatened to file a lawsuit or to contact the authorities." It states that NWTM employees (at the direction of Mr. Hansen and Ms. Erdmann) regularly lied to customers regarding delays, including telling them that NWTM had to fulfill government contracts or because the U.S. Mint was not producing certain products.

It states that Hansen and Erdmann "fraudulently inflated the amount of precious metals inventory in the enterprise software to allow additional sales to be entered into the system." It points out that storage metal was used to fulfill customer orders, and that employees referred to it as "borrowing" or "pulling" from storage (as opposed to the term "poaching" seen on some storage boxes). In some cases, the storage metal was never even purchased.

It states that multiple employees asked for inventories, and Hansen and Erdmann refused.

It mentions that Pan American silver, which had consigned 75,000oz of silver to NWTM, requested the silver back around September 30, 2015, and was told they would get it back in installments from February 2016 to June 2016 (they never did return any of the metal, nor did they have any allocated to Pan American).

It states that Hansen and Erdmann took owners' draws of over $1,000,000 from 2012 to 2016. It also mentions the $700,000 of metal that they sold for attorney expenses.

Information in the filing suggests an investigation that started in 2014.

References: Indictment, Order issuing bench warrant, Department of Justice news release.

Epic Trustee Fail

April 14, 2018 11:55AM
Imagine sending a bank wire to NWTM for $22K for silver to be delivered in about 8 weeks, not getting it, and having nobody respond to your requests, hiring a lawyer to send a demand letter, and still getting no response.

This sounds like 2016 when people were yelling "That damned Ross Hansen!" But in this case, it happened a few months ago, and it should be "That damned Mark Calvert!"

The United States Golf Association, USGA, paid $22K on November 16, 2017 for silver for medals that NWTM was going to make for them by January 5, 2018. But NWTM apparently never even started working on the metals. On December 21, 2017, a week before the company shut down, NWTM even sent an invoice to make 2 more dies. The USGA never received the medals or the dies.

How in the world can Mr. Calvert shut down the company, laying off 100 employees, yet keep paying a skeleton crew to purportedly finish up business, but not finish orders NWTM already promised customers and taken money for? Apparently it wasn't profitable enough. Mr. Calvert wrote in February "The Trustee has completed certain profitable work in progress after the closing of the plant with the skeleton crew that remains employed in connection with the winddown and liquidation efforts of the estate." In fact, NWTM took in $405K in January and $158K in February for "Core Operating Sales". Presumably the USGA medals just weren't profitable enough to finish. Or return the money for. And not even profitable enough to justify a phone call to let them know they weren't going to get their order.

If NWTM took in well over $500K since the company shut down, and couldn't even complete a $900 order (part of that $500K, for 2 dies), how much of that $500K is money that NWTM took in and did not find profitable enough to make or return the money for? How many new creditors are there since Mr. Calvert took over?

Can Mr. Calvert have NWTM file for Chapter 11 bankruptcy... again? Creditors can force companies into Chapter 11 bankruptcy... but can they force a bankrupt company into bankruptcy?

Did NWTM know it could not deliver those orders it took money for? Can a company take orders it knows cannot be delivered?

Another Allegation of Trustee Failing to Respond

April 14, 2018 12:05PM
The United States Golf Association recently filed an objection to one of the Trustee's recent motions.

In it, it claims that NWTM lured USGA into making purchases that NWTM stated would begin to be delivered by January 5, 2018 (one E-mail shows that they were all supposed to be delivered by January 5). Apparently, NWTM never notified USGA that they had shut down, and NWTM deposited a check two weeks after shutting down (for 2 new dies), and then never delivered the product.

USGA writes "The Trustee failed and/or refused to respond to USGA’s requests for compensation sent in February 2018 after learning of NWT’s non-fulfillment of the order..., and its further demand sent in March 2018".

This is starting to sound very, very familiar. I do my best not to "take sides", although recently someone felt that I was "vilifying" the Trustee and those around him. My response is "I calls 'em as I sees 'em" -- I write about whoever does something that needs to be written about. This is a very, very good example of why I write what I write: the Trustee has shown a clear pattern of refusing to respond to people when it doesn't fit his needs. It is true that I have zero evidence that he has not responded to people (and that's why I didn't write about it the first time I heard about it). But I have clear evidence that plenty of people have alleged that he has not responded to them. Had I not written about it the first time, people would not have gotten very useful information about the Trustee. I don't intend to vilify, but if the only way I can warn people makes it sound like I am vilifying, I'm going to warn people.

"We're Broke, Want a Die for $300?"

April 14, 2018 9:25AM
NWTM has very, very little cash. We know that, for example, because they were late in paying employees their last paycheck.

But now the Trustee has apparently filed a motion that would allow him to sell dies back to the customers that paid to have them made, for $300 each (plus cost of shipping). It appears that part of his rationale for charging $300 is the costs of storage, but that appears to have already been built into the fee that was charged to create dies. In the words of one creditor, the sale of the dies is "a mechanism to extract additional consideration to compensate for the estate’s dire administrative insolvency."

That is clearly more than what it would cost to return them to the customers, and much more than what the Trustee feels the dies are worth. It appears that he wants to take advantage of the small percentage of customers who really need their dies back, to collect some extra money to help pay him. Remember, the estate doesn't have enough to fully pay back the professionals, so every extra dollar he can collect is an extra dollar that can be used to pay the professionals.

Mr. Gearin's Trustee Prediction

April 10, 2018 7:25PM
After the bankruptcy filing on April 1, 2016, many creditors were contacting Seattle bankruptcy lawyers for advice. When four of them contacted Mr. Gearin (who at the time was the personal attorney for now Chapter 11 Trustee Mark Calvert), they all requested that he speak on their behalf at an April 7, 2016 hearing to state their preference that a Chapter 11 Trustee by appointed.

Mr. Gearin stated "I informed them that I would seek to be employed as the Trustee’s counsel in the event one was appointed". This begs the questions: Had the U.S. Trustee already decided on Mr. Calvert? Did Mr. Gearin know that Mr. Calvert was already chosen, or did he expect to solicit the business of any Trustee that the U.S. Trustee's office would happen to appoint? How did the U.S. Trustee -- who presumably had no idea that NWTM would be filing for bankruptcy until it did on April 1, 2016 -- go about making the decision on making Mr. Calvert the Chapter 11 Trustee?

The question of how Mr. Calvert became Trustee was curious before, after we found out that he had spent quite a bit of time with Hansen and NWTM (more so than his declaraction would suggestion). Now it becomes even curiouser, knowing that his attorney made a verbal objection to the CRO motion, and that his attorney attended the hearing on the CRO motion to state that 4 creditors (not his actual paying client) wished for a Chapter 11 Trustee to be appointed.

Trustee's Attorney Involved Before Trustee Appointed

April 10, 2018 4:45PM
I found out today that Mr. Gearin, Chapter 11 Trustee Mark Calvert's attorney, was involved in the case before Mark Calvert was appointed.

As background, the U.S. Trustee filed a motion to appoint Mark Calvert on April 8, 2016, and the Judge approved the appointment on April 11, 2016. On April 12, 2016, Mr. Calvert filed a motion to authorize employment of K&L Gates (the law firm Mr. Gearin works for). The K&L Gates expense application shows that K&L Gates first billed for services on April 8, 2016.

However, earlier that week, on April 5, 2016, Tracy Law Firm on behalf of NWTM (who was then run by Ross Hansen) filed a motion to appoint Bill Weisfield and Stuary Heath of Elliott Bay Asset Solutions (EBAS) as the CRO (Chief Restructuring Officer), after EBAS spent "considerable time" consulting with NWTM. That CRO job is the exact same job that Ross Hansen wanted Mark Calvert to have, as of mid-March, 2016. Somehow, the FBI called Mark Calvert on April 9 or April 10, before he was appointed Trustee. And by April 12, Mr. Calvert was reportedly flaunting the fact that he was receiving calls from the FBI in front of Ross Hansen.

Yet hidden in a document I discovered today, there is a reference to Mr. Gearin discussing objections to the CRO motion with the Tracy Law Firm on the day it was filed. And in another document I looked at today, I found out that Mr. Gearin was at the time Mr. Calvert's personal attorney. The next day, the well publicized creditor in the defamation lawsuit filed a formal objection, and later that day Tracy Law Firm filed a response saying that EBAS withdrew from consideration, and the day after that, NWTM and the U.S. Trustee filed a stipulation that a trustee (rather than CRO) would be appointed. That Trustee ended up being Mark Calvert. Oh, and Mr. Gearin attended a hearing about the Trustee appointment, stating that 4 creditors wished for a Trustee to be appointed -- and that he did not charge them to do so.

A few days after the bankruptcy filing, Mr. Hansen is looking at EBAS to be the CRO. Mr. Gearin is one of those who object. The formal objection is that there should be a Trustee and not a CRO. But rather than hire EBAS, the U.S. Trustee hired Mr. Calvert.

Mr. Calvert worked with Mr. Hansen for about 2 weeks in the month before the bankruptcy was filed, for about 20 hours (even attending at least one management meeting), with Mr. Hansen hoping Mr. Calvert would become the CRO. After spending that time with NWTM, Mr. Calvert decided he would rather be the Trustee, so he declined the position of CRO, and when Mr. Hansen found someone else to be CRO, Mr. Calvert apparently had Mr. Gearin call to verbally object (which does not normally appear in court documents). Mr. Gearin then showed up at the hearing (again, something not normally showing up in court documents), stating that 4 creditors wanted a Trustee to be appointed. And sure enough, a day later, the U.S. Trustee appointed Mr. Calvert as Trustee.

[I do assume that Mr. Gearin is ethical, and that when he talked to those 4 creditors that he did not bill, he did not in any way lead them into their desire to see a Trustee be appointed. He did tell them he would seek to be the Trustee's counsel.]

NWTM's Bankruptcy Website Gone

April 10, 2018 5:00PM
Early on, the website "existingbullionorders.com" was set up and used for the NWTM Chapter 11 bankruptcy, as the official bankruptcy website. And it was updated as recently as last month.

Chapter 11 Trustee Mr. Calvert, however, somehow let the domain name lapse (expire), on March 17, 2018. WHOIS records show that the registrar hasn't let the domain go yet, and NWTM has about a week to get it back. Any IT guys over there at NWTM who can take care of this ASAP? You know I'm going to post an "I told you so" if someone else grabs the domain.

This brings up a piece of information I hadn't thought about before: the domain was registered on March 18, 2016. That's a full 2 weeks before the bankruptcy filing, and appears to be during the time Mr. Calvert was interacting with NWTM regarding him coming on as a CRO. So this brings up some new, seemingly unimportant, questions: Who picked the odd website name of 'existingbullionorders.com'? Who actually registered the domain (it belongs to NWTM, but someone decided to register it)? If Mr. Hansen registered the domain, why did Mr. Calvert use it rather than a more appropriate "nwtmbankruptcy.com" (costing no more than about what Mr. Calvert bills for 2 minutes of his time)? If Mr. Calvert chose the name, why did he do so before he was officially on board, and why would he choose such an odd name?

UPDATE April 19, 2018 3:15PM: The domain is back. Apparently the NWTM IT guy read this and renewed the domain.

Was Some Missing Metal There?

April 10, 2018 1:05PM
I heard something interesting this morning.

A creditor who had metal stored with NWTM supplied the FBI with the serial numbers of the bars that were missing. This is pretty standard: if you believe something is stolen from you, and contact the FBI, you let them know what you have. And we already know that the FBI was involved at some point after the April, 2016 inventory started.

But the interesting piece is that the creditor reportedly claims that the FBI said that they saw at least some of the creditors' metal in the photographs of the inventory. But Mr. Calvert apparently has told the creditor that he never had the creditors' metal.

I do not have any way to contact the creditor, so I cannot assume this to be true. However, this goes to the very heart of what is wrong with the bankruptcy: despite Mr. Calvert's early bold claim that his goal was "to share as mcuh information as possible", he is sharing nothing. Zilch.

UPDATE April 29, 2018 3:05PM: It turns out the report is true. While I cannot confirm that the FBI said what they did, there is a creditor who has filed a document with the court that "On or about March 2018, most of the metals in question were easily findable by an FBI agent whom I contacted to look at the original Inventory that Mr. Calvert had repeatedly not allowed me to see."

My Letter to the Court

April 10, 2018 8:15AM
I wrote a letter to the court, which was filed yesterday (docket 1579). This is my first time writing to a court.

I am not linking to it here, just as I typically do not link to court documents submitted by creditors (unless it is clear they are OK with them being published). I also included some information that I did not feel comfortable publishing on this website (e.g. credible, but unsubstantiated, allegations). Linking to the letter could be considered the same as publishing it here. Being filed as a court document, it is available to the public, but it is in a much different context (e.g. it is clear that the goal is to get information out, and not to harm anyone who has done nothing wrong).

On this website, I get pulled in two directions: on the one side, I want to publish as much information as possible for creditors (and others) about what is going on with the bankruptcy, especially since the bankruptcy process in general is usually far from transparent. On the other side, people are (for good reason) protected by defamation laws. In almost all cases, I can publish the truth without fear of being sued. But when it comes to allegations, it opens up a can of worms. I hear a lot about what is going on, but there is also a lot that I simply cannot publish because I cannot prove it is true.

The goal of my letter was to get some information into the hands of people who can do something with it, if they so desire. Much of it is a re-hash of what I've written here, pointing out many of the issues with the case that have come up over the past 2 years. It also includes some allegations, which I felt necessary to get into the light of the court, in case there is truth behind them.

Auction May 2, 2018

April 9, 2018 1:50PM
Someone told me they heard that there was an NWTM auction near the end of April. I hadn't heard anything about this, so I did some digging.

It looks like Industrial Assets Corp. (d/b/a BidItUp), the company that the court authorized to purchase NWTM equipment for $1.95M, is auctioning the NWTM equipment that it bought. However, they state that the auction is "By Order Of The United States Bankruptcy Court...", which is inaccurate. The court ordered that BidItUp could buy the equipment for $1.95M, and it contemplated that BidItUp might auction the equipment (but nothing requires BidItUp to do so; in fact, the idea of them selling directly was also contemplated). Hopefully, nobody will be confused and bid higher than they otherwise would, thinking that somehow creditors may benefit (it wouldn't be the first time that happened!).

The actual auction is on May 2, 2018 starting at 8:00AM. There are previews April 26, 27, 30, and May 1. They state "Assets Formerly Of Northwest Territorial Mint, LLC – Complete State-Of-The-Art Full-Service Coining Mint ... The Largest Us Mint Manufacturer Ever To Come To Auction ... Over $5 Million Dollar Valuation - too much to list all!!"

Medalcraft's Final Offer: $1M

April 2, 2018 9:10AM
Things only get more and more interesting with the offers for the Medallic assets. We now have the 4th instance of what appears to be a party increasing their bid without needing to. Medalcraft now wants to pay $1M for assets that before it wasn't willing to pay more than $810K for after getting outbid with a $825K offer.

This is odd for a number of reasons. First, they originally offered $700K, but raised that to $810K during the bidding (presumably the most they would be willing to pay). Yet when Medalcraft's Mr. Moran received the call that his $810K bid won (and hearing that Mr. May made an unsolicited, unaccepted bid of $900K), Mr. Moran kindly offered to pay $910K "if that would make a difference." Mr. May later offered $1.25M. However, the motion to accept Medalcraft's offer suggests that Mr. May's $1.25M offer disappeared somehow (Mr. Calvert says he was in discussions with Mr. May to buy all the remaining assets, and hadn't heard back, but never mentions the $1.25M offer).

Medalcraft has stated that they will walk away if the court does not approve this offer (technically, he said he would walk away if the offer wasn't approved by the court by May 4, but that happens to be the date of the court hearing).

So where did the $1.25M by Mr. May offer go, and why did Mr. Moran raise his bid? I can't make sense of this.

'$1M Accounting Error?' - Update

March 29, 2018 8:15AM
On February 24, 2018, I wrote about a possible $1M accounting error. It seemed related to a "Inventory Brass-Copper Adjustment" line item in the Income Statement. In February, 2017 there was a $150,001 credit (gain) in this category, and in March 2017 there was a $938,844 debit (loss).

What I just found was the explanations. For February, Calvert wrote "Inventory: At the time of bankruptcy no physical inventory had been done for Copper and Brass. We now have a value and inventory and made the adjustment this month with a 25% reserve." A perfect explanation: balance sheet inventory went up $170,951, $150,001 of which was attributable to the copper/brass adjustment, and it shows up as income in the "Inventory Brass-Copper Adjustment" category. That's roughly 500,000 900,000oz of brass/copper; a lot, but imaginable.

But March is where common sense disappears. The balance sheet inventory goes down $942,332, with $938,844 of a loss shown on the income statement attributable to "Inventory Brass-Copper Adjustment". And this time Calvert wrote "We did an inventory valuation for all precious metals in the vaults plus system reports for nonprecious metal inventory. We discovered Copper, Brass and Nickel metals were not included and made the adjustment Feb 2017 with a 25% reserve." Huh? The second setence is a recap of the February, 2017 change. Precious metals prices didn't go down enough to justify a $938K loss. And to have negative income from "Inventory Brass-Copper Adjustment" implies that there was $938K of brass/copper inventory that was overvalued, but we know from February that it was only $150K.

How can you lose $950K of brass and copper a month after your inventory shows that you have $150K of brass and copper? That's roughly 5 million ounces of brass and copper. In difficult-to-move 70 pound boxes, that would be over 4,000 boxes!

UPDATE March 29, 2018 8:25AM: It appears that the March, 2017 financial report has another note: "At time of bankruptcy we did not know what precious metals would be returned to customers, with research and approval from the court we have that value and reduced inventory in March 2017 for that value." I often point out I am not a lawyer, but I'm not an accountant either. It seems that Mr. Calvert and his crack accounting team knows what I don't: when you hold $1M of inventory for storage customers, and it is listed as an asset in inventory, you fix it by reporting a $1M loss as "Inventory Brass-Copper Adjustment". Because we all know customers stored pounds of brass bouillion with NWTM. Yikes.

Is NWTM Donating to Charity?

March 27, 2018 8:20AM
I have heard that an employee was told that some items were donated to charity after NWTM shut down in December.

If anyone has any information on this (e.g. if you were told the same thing, who may have said it, if you know of what items may have gone or to where), I would very much appreciate hearing about it (you can get my E-mail address or send an anonymous tip here).

UPDATE March 27, 2018 5:40PM: I have gotten a response from one person so far, who has stated that nothing has been donated to charity (as should be the case). Unless I hear further, I think it is safe to assume that nothing has been donated to charity.

Trustee to Sell to Boy Scouts Dies

March 27, 2018 8:25AM
The Trustee has filed a motion to sell medallions, dies, and awards with Boy Scouts of America designs on them to the Boy Scouts of America for $30,000.

Will Calvert Destroy Art?

March 26, 2018 8:15AM
Chapter 11 Trustee Mark Calvert recently filed a motion to destroy paper records from either before 2012 or before 2013 (depending on which court document you choose to read).

One reader pointed out that the archive boxes include hard copies of artwork, labelled with a code starting with the letter "A" followed by a 6 digit number. These were apparently used for all NWTM projects (domestic and imported), including designs that were never produced (including hundreds that were never ordered after the bankruptcy).

Will Calvert Tell Court of NWTM Dies?

March 26, 2018 7:45AM
Chapter 11 Trustee Mark Calvert has gone to great lengths to explain to the court that Medallic had a policy of owning the dies they created for customers. And, from what I have heard, for the most part this is true: with some exceptions, Medallic customers were told that Medallic owned the dies.

But I'm concerned that I haven't seen mention in court records of the NWTM dies. NWTM created tens of thousands of dies. The NWTM dies, from what I have heard, were usually considered property of the customer. But if Calvert isn't mentioning them in the court, what is he expecting will happen to them? Is he expecting to sell them for scrap? Sell them to someone willing to bid on them? Give them away to someone? Or will he do what I imagine he would be required to do: return them to their rightful owners?

Converting to Chapter 7

March 24, 2018 8:20PM
Yesterday, Chapter 11 Trustee Mark Calvert filed a motion requesting that the case be converted from Chapter 11 (reorganization) to Chapter 7 (liquidation).

I am trying to figure out what impact, if any, this may have for creditors (technically, the bankruptcy officials are considered administrative creditors, but I am referring to people owed money before the bankruptcy filing).

The Deteriorating Chinese Business

March 23, 2018 2:45PM
Chapter 11 Trustee Mark Calvert has been making a big stink about how the Medallic assets need to be sold soon, as 75% of Medallic's business is done between February 1 and May 1 (information which, interestingly, comes from Medalcraft).

However, it has been said that about 30% of NWTM's business was done with companies in China producing the product, and it is a high profit business, generating over $1M of profit annually. That's a nice chunk of change.

So what has happened to it?

It seems that NWTM employees have been taking bits and pieces to other companies. I am aware of what appears to be at least four companies that have hired NWTM employees, and are reportedly finding ways to get business from NWTM customers. I have heard rumors that Calvert was presented with a business plan from someone interested in running the Chinese business, who felt like it was overlooked and could be obtained cheaply. But it is not getting mentioned in the court documents (which is exactly why it is being overlooked), and the business is deteriorating. Shouldn't Calvert be speeding up the sale of the Chinese business, in addition to (or instead of) Medallic?

Once competitors have gobbled up all the customers, the customer list will have nearly no value. Except, of course, to those who already helped themselves to it. Taking an order from an NWTM customer is fine, cold calling or E-mailing NWTM customers is not.

UPDATE March 23, 2018 4:30PM: To be clear, the Chinese business was almost exclusively part of NWTM, with very little (if any) Medallic business being done in China.

[This page is continued at http://about.ag/NWTMintOld.htm]



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