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Ross and Diane's Appeal
May 17, 2024 9:30AM ESTOn May 9, there was a hearing regarding Ross and Diane's appeals. The hearing may be viewed here (backup on YouTube).
There are 2 main parts to their argument. The first is that the judge had a duty to question a juror who may have felt they would take an indictment by the government as evidence of fraud (the US attorney pointed out that the defense also had a duty to question this). The second is that the shipping delays may not have been an "essential" part of the bargain that customers made (which is relevant due to a decision that was made about a month ago in another case).
The majority of criminal appeals do not succeed, so this sounds like a long shot.
Sentence Reduction Explanation
May 17, 2024 9:30AM ESTThe First Step Act of 2018 has a "Time Credits" provision (18 USC 3632 (d)(4)), that allows most prisoners to earn 10-15 days of credit per month in prison.
The media and government portrayals of the law are unfortunately vague. From the best I can tell, there is no maximum credit that can be earned... but the sentence can be reduced by a maximum of 1 year (with any extra credit letting the person transition to an RRC (halfway house) sooner).
So it sounds like Ross and Diane will be finish their sentences about a year early, and may be able to transition to a halfway house earlier than they otherwise would.
Ross Now at FCI Sheridan in Oregon
July 21, 2023 8:00AM ESTI should have waited 24 hours before my post about Ross (or written in weeks earlier).
The Bureau of Prisons is now reporting that Ross Hansen is at FCI Sheridan (enter "Bernard" as the first name, "Hansen" as the last name).
Ross' Whereabouts Unknown
July 20, 2023 8:00AM ESTFor about a month now, the Bureau of Prisons has been reporting the location of Ross Hansen as "NOT IN BOP CUSTODY".
From my understanding, this means that the prisoner is not in a BoP facility, and usually means that they are either in transit to another facility or in a non-BoP facility (such as a county jail). There are many reports from people whose loved ones are in this status, and cannot be found even by their attorneys.
This definitely does not mean that he has escaped; the BoP has a special status for that. As for why they are showing this and where he may be, that is something I do not know
Also, I have updated the table in the post below this with the latest changes in sentencing.
More Sentence Reductions
May 16, 2023 8:00AM ESTTable udpated July 20, 2023 8:00AM EST
Again, in both the Bullion Direct and NWTM cases, there have been sentence reductions, applied to all 3 felons at the same time.
From my understanding, once the judge sets the prison sentence, and the Bureau of Prisons is expected to keep the prisoner detained according to federal law (with no exceptions). With federal prison sentences, there is no parole, but offenders get about 15% "good conduct time" reduced from their sentence (unless forfeited). It's up to 54 days per year of the sentence. However, that does not explain what is going on here; for example, Charles McAllister had a 10 year prison sentence, but it now expected to be released after about 7 years and 7 months. The "good conduct time" of 54 days per year of the sentence works out to about 8.5 years. There is nothing in the court records explaining this, and with it happening with 2 unrelated cases, it is clearly widespread... but I cannot find anything online explaining this.
The Bureau of Prisons states that the release date "reflects the inmate's projected release date based on BOP calculations", which implies that it factors in good time. But that would mean that it should not change.
I've added a chart showing the changes, which are always in multiples of 5 days.
| Date | Charles McAllister | Ross Hansen | Diane Edrmann |
|---|---|---|---|
| 15 May 2021 | In prison (10 year sentenece) | --- | --- |
| 18 May 2021 | 18 Nov 2029 | --- | --- |
| 10 May 2022 | 18 Nov 2029 | In prison (11 years) | In prison (5 years) |
| 18 Jul 2022 | 18 Nov 2029 | 22 Sep 2031 | --- |
| 25 Oct 2022 | 20 Aug 2029 (-90) | 02 Sep 2031 (-20) | 11 Aug 2026 |
| 20 Feb 2023 | 22 Apr 2029 (-120) | 14 Jul 2031 (-50) | 02 Jul 2026 (-40) |
| 31 Mar 2023 | 22 Jan 2029 (-90) | 24 Jun 2031 (-20) | 22 Jun 2026 (-10) |
| 09 May 2023 | 23 Dec 2028 (-30) | 09 Jun 2031 (-15) | 28 May 2026 (-25) |
| 07 Jul 2023 | 08 Dec 2028 (-15) | 10 May 2031 (-30) | 13 May 2026 (-15) |
Another Massive Sentence Reduction
March 31, 2023 2:45PM ESTThe Bureau of Prisons is now showing Ross Hansen's release date as June 24, 2031 (about a month earlier than the last change), and Diane Erdmann's release date as June 22, 2026 (about a week earlier).
Although the Department of Justice has alerted victims of this, no explanation was given. This is the third time in about 6 months that multiple felons in unrelated cases have received sentence reductions at about the same time. I have no idea if this is a normal occurrence, fixing widespread errors, massive federal sentence reductions, or something else.
The release dates can be found at https://www.bop.gov/inmateloc/ (entering "Bernard Hansen" or "Diane Erdmann").
Massive Sentence Reductions?
February 20, 2023 3:10PM ESTThe Bureau of Prisons is now showing Ross Hansen's release date as July 14, 2031 (more than 3 months earlier than the last change), and Diane Erdmann's release date as July 2, 2026 (about a month early).
Although the Department of Justice has alerted victims of this, no explanation was given. This is the second time in about 4 months that multiple felons have received sentence reductions in unrelated cases at about the same time. I have no idea if this is a normal occurrence, fixing widespread errors, massive federal sentence reductions, or something else.
The release dates can be found at https://www.bop.gov/inmateloc/ (entering "Bernard Hansen" or "Diane Erdmann").
Ross to be Released September 2, 2031
October 25, 2022 1:00PM ESTSeveral victims have told me that the received an email from the Department of Justice informing them that Ross Hansen's release date has been changed to September 2, 2031, which the Bureau of Prisons has confirmed. This is 20 days earlier than he was originally scheduled to be released. No information is known as to why this change was made; however, a similar change was made to the owner of Bullion Direct (who was in prison for a similar fraud scheme), whose release date was moved up by several months. So I am guessing that there was a re-calculation of release dates for many prisoners.
Diane at Pekin FCI (IL)
Release Date: 08/11/2026
October 25, 2022 12:55PM ESTThe Bureau of Prisons finally updated Diane's whereabouts, after several months of keeping people in the dark. She is now at Pekin FCI in Illinois, presumably at their minimum security satellite camp. Her release date is scheduled for August 11, 2026.
Ross now at Terminal Island FCI (CA)
Release Date: 09/22/2031
July 18, 2022 9:15PM ESTI was checking to see if Diane had been placed yet, and she has not (nor has her release date appeared at the BOP Inmate Locator page.
However, when I checked up on Ross (no webcams there yet, though), it shows that he is now at Terminal Island FCI, and it shows a release date of 09/22/2031. I have no idea why he was moved so quickly. I was a bit concerned when I read that Terminal Island FCI has a metal factory that makes "high-quality metal products" -- and pictured Ross in a black-and-white striped jumpsuit leading a gang of medal-making inmates. But no, they make metal products like desks (and perhaps the metal prison toilets, I imagine, as Home Depot doesn't usually have them in stock).
Ross at Victorville Medium II FCI (CA)
June 22, 2022 9:15PM ESTThe Bureau of Prisons is now showing that they have Ross in a nice comfy bunk in a prison cell at Victorville Medium II FCI (in California).
To look him up on that page, you need to enter "Bernard" as the first name, and "Hansen" as the last name.
As a medium security prison, my understanding is that he will be in a prison cell with a cellmate, and that it will be locked at night.
Ross is Appealing
June 16, 2022 6:50PM ESTSorry if the headline was misleading. Ross is appealing the final judgment and sentence.
Today his attorneys filed a simple notice of appeal, saying just "Notice of hereby given that Defendant Bernard Ross Hansen (Defendant Hansen) appeals to the United States Court of Appeals for the Ninth Circuit from the final judgment and sentence entered in this action on June 6, 2022."
Restitution
June 7, 2022 9:45PM ESTI forgot to mention about restitution.
Judge Jones ordered $32,163,327.52 of restitution for Diane, and $33,744,166.92 for Ross. The media in at least one case got this wrong, and thought it was $65M of restitution; it is not. It is marked with $32,163,327.52 as "joint and several". That means that Ross and Diane are both responsible for the first ~$32M, and only Ross is responsible for the rest. So if Diane won a $100M lottery ticket, she would have to pay the ~$32.1M -- leaving Ross responsible for the ~$1.6M. If Ross won a $100M lottery ticket, he would have to pay the full ~$33.7M, and Diane would owe nothing.
In theory, they should pay this money, and victims would get it. In reality, the chances are they aren't going to pay enough money to make any type of meaningful payout. Even if they came up with $300,000, that's a penny for every dollar owed.
How Were the Sentences Determined?
June 7, 2022 12:00PM ESTSomething that struck me about the hearing yesterday is that there was virtually no rationale given for the sentences that were imposed on Ross and Diane.
In the Tulving Company case, the judge started with the total offense level of 28 (78-97 months in prison), and then lowered it based on the various mitigating factors: 5 levels for cooperation and 4 for serious health issues, bringing the offense level to 19. The guidelines for a level 19 offense are to sentence 30-37 months in prison, and the judge went with 30 months.
Judge Jones did come up with the total offense levels: 43 for Ross (guidelines are for a life sentence), and 39 for Diane (guidelines are for a 262-327 month prison sentence). While he talked about what he read for sentencing (the various reports and memos), the reasons variances might be given (e.g. health), he never outlined his thought process, and just came up with 5 years for Diane and 11 for Ross. By my calculations, that works out to 11-12 levels variance for Ross, and 14-15 levels for Diane. But whether he mental calculated those new levels, or just picked numbers, one can only guess.
My hunch is that he played it safe, and just went with what the probation office recommended (5 years for Diane, 10 for Ross), and gave Ross an extra year so as to [1] not give the exact sentence the probation office recommended, and [2] slap his wrist for having masterminded the escape from justice. But, that's just speculation on my part.
UPDATE June 8, 2022 10:20AM EST: To be clear, I am not suggesting that the judge did anything wrong here. I would have liked for him to have provided more details about how he came up with his numbers. But it is up to the judge to decide the sentence, and there is nothing about the sentencing that seems out of the ordinary to me. If Diane were sentenced to 30 years in prison, or if Ross had been sentenced to 12 months of home confinement, it would be a different story.
Court Documents
June 6, 2022 7:20PM ESTThe court has filed the sentencing documents for Ross and Diane.
I should also point out that Diane asked to be placed at FCI Dublin, and the court agreed (although the Bureau of Prisons has the final say). Ross did not make a request for placement, nor did the judge make a recommendation, so the Bureau of Prisons will choose what they think best for him.
DoJ Press Release
June 6, 2022 7:10PM ESTThe Department of Justice has issued a press release, which covers some of the information from the sentencing (as well as some old news).
5 Years for Diane, 11 Years for Ross
June 6, 2022 3:25PM ESTI haven't gotten official confirmation from the court (PACER) yet, but several people have confirmed 60 months for Diane (5 years), and 11 years for Ross.
The hearing lasted about 2 hours and 40 minutes. It followed the typical sentencing formula, with each side giving their input, as well as 3 victims that spoke. The judge seemed to be judging them very harshly, but not letting that judgment interfere with a just sentence given the all the various "pushes" and "pulls" (upward/downward departures) from the sentencing guidelines. He could have given Diane up to 27.5 years in prison, and life for Ross.
As probably the only expert on fraud at established bullion companies in recent history, I was disappointed that the government allowed Hansen's attorney to claim that Hannes Tulving (owner of The Tulving Company) led a flashy lifestyle, "driving around in a Ferrari" (which happened for less than a year, and before the fraud began) and a living in a $30K/month condo (which was actually $5K/month, and going to someone who was involved in the downfall of the company). He lived very much like Ross, just in a nice area of town: Hannes Tulving worked nearly 24x7 (he would literally take orders in the middle of the night), never taking a vacation. But I doubt that had much, if any, influence on the outcome.
If anyone has any specific questions, please let me know (email is right above the posts), as I listened to the whole thing.
Slight clarification: it is 5 years and 11 years per count, to run consecutively. A distinction lawyers would notice, but does not (to my knowledge) have any effect on the amount of time they spend in prison: 5 years for Diane, and 11 for Ross.
UPDATE June 6, 2022 5:10PM EST: Another clarification: Given the way that federal prison sentences work, they must serve at least 85% of their sentence (assuming no successful appeals, pardons, etc.), and usually get out at that point for "good behavior". So Diane will likely serve a bit more than 4.25 years in prison, and Ross will likely serve a bit more than 9.35 years in prison.
Also, I did not mention, the judge assigned Diane a "offense level" of 39 for Diane, and 45 for Ross (which the government pointed out gets reduced to 43, which is the maximum level).
More Arrest Details
June 1, 2022 11:15AM ESTThe sentencing filings provide a bit more detail on what happened.
Oddly, the FBI seems to think that Ross and Diane traded one of their cars for the 2005 minivan they were driving. However, the minivan was theirs (Diane got to keep it in her bankruptcy, since the trustee felt it was worth less than the costs of selling it).
After the sentencing hearing, the FBI went to Ross and Diane's rented house. The FBI "observed individuals moving belongings out of the residence." This is strange. While there was a good chance that they would have been detained at the sentencing hearing, it was not certain, so they would not have made plans to have someone remove their belongings that night.
They also stayed at Bremerton, WA, which was previously unknown.
After surveillance, Ross was arrested while walking their dog, and Diane was arrested in the hotel office. They had 3 loaded firearms in their car, but apparently none on them or in their hotel room. They also had a "burner" Tracfone and some ammunition, along with a Walmart receipt and reading glasses. They apparently had less than $1,000 cash with them.
Sentencing On Track
June 1, 2022 11:00AM ESTThe government has filed a new sentencing recommendation, asking for just an extra year for Ross and 6 months for Diane (16 years and 8 years, respectively). They seem to be using the fleeing more to justify their reasons for the original sentences, rather than to be "greedy" and ask for a lot more prison time. The government points out that while Ross and Diane feel they should have lower sentences for health issues, if they were healthy enough to flee, they are healthy enough for prison. The Probation Office feels 2-3 extra years should be added to their sentences.
Ross believes the fleeing should not impact their sentences. His attorney made it sound like what it was: a very foolish, poorly planned last-minute decision. His attorney points out that Ross was surprised that the FBI took so long to find them. And finishes by saying that fleeing "should not significantly alter [the Court's] approach to sentencing in this case."
Diane, however, had her attorney request a slightly longer sentence (3 years, instead of the 2 she initially requested), which was likely a smart move, as it shows her taking some responsibility for her actions.
The government probably made a very wise move by only asking for a small addition to the sentence for fleeing: it helps prevent the government from looking greedy, and helps solidify their case for 8 years for Diane and 16 years for Ross.
This leaves Judge Jones in the difficult position of determining a sentence. He probably had something in mind before, and the fleeing likely isn't going to reduce what he was initially thinking. The fleeing ultimately makes the judge look bad, as he was the one that allowed them to be free for the past nearly 4 years since they were originally arrested. He also needs to take "general deterrence" into account: he needs to let people thinking of fleeing know that it isn't in their best interest.
The final nearly unspoken factor in sentencing is where they will go. The judge cannot decide this (the Bureau of Prisons does), but the judge can make recommendations. In my mind, fleeing makes it unlikely that the judge will recommend them for a minimum security "camp".
Diane: BOP #49005-086, Ross #16745-086
May 12, 2022 7:45AM ESTThe Bureau of Prisons has now released information on both of them. They are both, as I suspected, staying at SeaTac FDC while awaiting their sentencing on June 6 at 9AM. You can confirm this information at https://www.bop.gov/inmateloc/ (using "Diane Erdmann" and
UPDATE June 14, 2022 9:00AM EST: The Bureau of Prisons has surprisingly updated Ross Hansen's name in their system. Previously, using "Ross" as the first name and "Hansen" as the last name would find him; now, it does not (I believe they had him listed as "Ross Bernard Hansen"; he has been listed in court cases, and was registered to vote, as "Bernhard Ross Hansen" (with a "h" in Bernhard)).
Sentencing Hearing June 6 at 9:00AM
May 11, 2022 8:10PM ESTThe court's notes for today's hearing confirm what I had heard:
MINUTE ENTRY for proceedings held before Judge Richard A. Jones - CRD: Victoria Ericksen; AUSA: Brian Werner, Benjamin Diggs; Def Cnsl: Benjamin Byers; PTS: Michael Munsterman; Court Reporter: Nancy Bauer; BOND REVOCATION HEARING as to Diane Renee Erdmann held on 5/11/2022. Defendant advised of Allegations 1 and 2 as set forth in the 5/10/2022 Petition. Defendant DENIES the allegations. For the reasons set forth on the record, the Court GRANTS the government's motion to remand Defendant pending sentencing and REVOKES Defendant's appearance bond. SENTENCING set for 6/6/2022 at 9:00 AM in Courtroom 13106 before Judge Richard A. Jones. Supplemental sentencing materials due by 5/31/2022. Defendant remanded to custody. (VE) (Entered: 05/11/2022)
"Nugget"
May 11, 2022 6:35PM ESTAnother piece of information has come out about the mastermind plan behind how Ross and Diane were able to get 11 extra days of freedom (in exchange for perhaps a few extra years in prison). They called their dog Stewie "Nugget" to help avoid detection.
They also parked their car in the back of the motel, away from the street, and told employees they were doing so so that "family members" wouldn't be able to find them. Ross apparently was talking a lot to people, doing his typical conning-even-when-there-is-nothing-to-gain, saying how he was working for the government and just quit.
Note to self: the next time I become a fugitive, tell people the truth, but use codewords. "FBI" becomes "family members", and "being sought by" becomes "working for".
Ross and Diane Staying In Custody
May 11, 2022 4:30PM ESTA reader with knowledge of the hearing today says that Ross and Diane did show up this time, in prison jumpsuits. Ross' attorney could not think of a credible argument to that Ross should not remain in custody, while Diane's attorney suggested home monitoring would be sufficient. However, Judge Jones not surprisingly kept both in custody. The new sentencing hearing will be on June 6 at 9:00AM, allowing time for new sentencing recommendations.
I have not been able to confirm this with the court (and will provide an update when I do), but was able to confirm the June 6 date with another source. A big "Thank You" to the people who updated me (without people providing information like this, I don't have as much to write about, or it takes a lot longer to update people).
Stewie Safe
May 11, 2022 1:15PM ESTIt has been reported that Stewie, Ross and Diane's dog, is safe and unharmed, and has been placed with a family member.
Ben and Kat Alexander
May 11, 2022 12:50PM ESTAccording to a media report, part of the intricate plan to avoid capture involved using aliases. They apparently did not use their real names when checking into the motel they were captured at, but instead used the names "Ben Alexander" and "Kat Alexander". I have to wonder if they were pretending to be married, or pretending to be siblings.
Ross Hansen: at SeaTac FDC
May 11, 2022 12:30PM ESTIt loos like Ross Hansen spent the night at SeaTac FDC, and has has an inmate number (Bureau of Prisons Register Number) of 16745-086. I believe that is the same one he was using back around 1994.
Although Diane is almost certainly also at SeaTac FDC, I cannot find any trace of her whereabouts yet, for a number of possible reasons (the BOP system may not have processed her yet, the website may not be updated yet, or they may have her name wrong).
Thank You
May 11, 2022 10:50AM ESTI wanted to say "Thank You" to a number of people:
- The person who spotted Ross and Diane and reported it, leading to their capture
- The FBI and others involved in their capture, who risk their lives to protect the public
- Everyone who provided tips
Hearing Tomorrow
May 10, 2022 8:50PM ESTRoss and Diane will be in court tomorrow (Wednesday) at noon, in front of Judge Jones, who has overseen their case since the beginning.
Court documents show that they had firearms with them, in further violation of their bond.
I expect that the hearing tomorrow will just cover the bond, a technicality to keep them in custody, and that a new sentencing date will be announced soon.
CAPTURED
May 10, 2022 5:27PM ESTIt is official, the FBI has confirmed that they have been captured. More details as soon as I get them.
UPDATE May 10, 2022 6:10PM EST:
They were caught at the Hadlock Motel in Port Hadlock, WA, about halfway between their home and the Canadian border. They were smart enough to switch license plates, but the FBI agents investigating a tip were smart enough not to walk away when they saw the wrong plates on a 2005 Chevy Astro.
Captured?
May 10, 2022 5:25PM ESTI've just heard from a realiable source that the FBI has captured Ross and Diane. No further details are available. I have not been able to confirm this, but will update as soon as I have.
Media, Investigators...
May 10, 2022 8:40AM ESTI wanted to welcome any media and investigators (or other like-minded individuals) to this site, as news of Ross Hansen and Diane Erdmann's fugitive status grows. I have been following this case since January, 2016 (about 3 months before the scheme was shut down), and have thousands of documents (I am a firm believer in provable facts). I assist victims at no cost, mostly through this site and an email list. No media source reported it until 3 days later, after the FBI Most Wanted poster was released.
I am happy to discuss this with you (contact information above), answer any questions, or help lead you to the information you seek.
Normally, I try to let justice run its course on its own, trying not to do anything to alter the outcome of a criminal trial or sentencing. However, now that Ross Hansen and Diane Erdmann have been convicted, and are clearly fleeing, I am happy to do anything I can to help them be apprehended.
FBI MOST WANTED
May 2, 2022 5:30PM EST
The FBI has issued a "WANTED" poster for Ross Hansen and Diane Erdmann.
(thank you to the person who submitted the file at the anonymous tips page).
Tips Wanted
May 2, 2022 3:10PM ESTThere are 3 possibilities at this point: [1] Ross and/or Diane have been apprehended, [2] They have intentionally fled to evade prison, or [3] They have a valid excuse for not showing up at the sentencing.
At this point, more than 72 hours after the sentencing hearing began, #3 seems less and less likely. If they had been delayed due to a car accident, that would be resolved by now. If their house caught on fire, that would be known by now. Sure, it's possible they got into an accident and are unconscious or have amensia (but I would think those responsible for apprehending them would have checked hospitals near the route from their house to the court). But the odds of those valid reasons go down as each hour passes. Of course, it would take some time to find out about a valid explanation.
So given that #2 -- fleeing -- is a very strong probability at this point, if anyone has information on their possible whereabouts, feel free to leave me a note on the anonymous tips page (or email me directly, which would be necessary for a response; my gmail address is on the "Contact:" line above). Knowing Ross, he likely would have talked about this before the sentencing hearing, but is not bold enough to have talked to people afterwards. But my guess is that someone knows something.
Page on Their Arrest Status
April 30, 2022 8:35AM ESTI have added a page at about.ag/RossDiane_ArrestStatus.htm where I will provide any updates on the status of their arrest.
NO SHOW
April 29, 2022 5:15PM ESTThe sentencing hearing started at about 1:45PT. Neither Diane Erdmann nor Ross Hansen was present. The judge asked the attorneys, and one had emailed with Ross (or Diane?) last night. The judge asked if their could have been any confusion about the timing of the hearing, and it did not sound like that was the case.
The government then requested a warrant for their immediate arrest, and the judge said he had no alternative but to grant the request. He also pointed out that the court has a low toleratnce for not being on time for a sentencing. He issued a recess until 2:00, and shortly afterwards he announced that he had issued the warrant for their arrest, and terminated the hearing.
So there are two possibilities here:
- Ross and Diane intentionally skipped town. If this is the case, the warrant has been issued, and if found, they will likely be in prison until the sentencing, at which point their prison term at sentencing will be increased, or
- They had a lame excuse: a flat tire, emergency, or something like that, in which case the sentencing will get delayed. But that does not explain why neither called their attorneys.
Pre-sentencing Documents
April 23, 2022 11:30AM ESTA lot of documents have been filed in the past 2 days, getting ready for the sentencing on Friday, April 29, 2022 at 1:30PM.
The Probation Office has recommended a 3-year sentence for Diane, and a 7-year sentence for Ross. The Government wants a 7.5 year sentence for Diane, and a 15 year sentence for Ross. Diane is requesting a 2 year sentence, Ross wants a sentence of undetermined length that is significantly less than 7 years.
Sentencing guidelines provide a fairly narrow range for a recommended sentence, after calculating a "level" (based on factors such as the amount of loss) and criminal history (which I believe is not considered in this case, since Ross' criminal history was too long ago). The largest factor by far is the amount of the loss, which the Government pegs at over $25M. That adds 22 levels to the guidelines, versus just 8 for a loss under $150K.
Ross is claiming the loss "cannot reasonably be determined", and therefore the gain to him should be used. He believes the loss to be incalculable in part because of the poor accounting system that NWTM used and because of Calvert's mishandling of the Chapter 11 bankruptcy. He then tries to show that his gain was just $97,030 (the owner's draws from July 2015 until bankruptcy). This would have the potential of reducing his sentence as much as about 10 years.
I'm sure common sense will prevail as to whether $97,030 or $33M is a more reasonabe representation of the amount of loss to NWTM customers.
Sentencing Continued to April 29, 2022 1:30PM
March 16, 2022 6:45PM ESTThe judge just allowed another motion to continue sentencing to April 29, 2022 at 1:30PM.
This was due to a delay in Diane getting the second hip replacement surgery.
Sentencing Continued to April 1
January 3, 2022 5:25PM ESTThe judge just allowed a motion to continue sentencing to April 1, 2022, at 1:30 p.m.
For Diane, this was to allow her time to get a hip replacement, and for Ross, the ability to assist Diane during the recovery time.
The government argued that the sentencing should go on as expected (with any prison sentence to start after Diane's recovery). It was pointed out, however, that the Bureau of Prisons ultimately decides when the prison sentence starts (with input from the judge), so the only way to assure that she would be able to get recovery time was for the sentencing to be continued. Of course, other factors were taken into consideration as well (including the increase in COVID cases).
Victim Impact Statements Due Dec. 3
October 18, 2021 12:45PM ESTThe government has sent out an email to victims a couple of days ago, alerting them to the change in date for the sentencing.
One important piece of information is that the deadline for Victim Impact Statements has been extended, to December 3, 2021.
As it stands, the government has received somewhere in the vicinity of 600 such statements (as of October 5, they had processed 400, with several hundred more in the works). Unlike most court documents, these statements are not public. Ross Hansen, Diane Erdmann, the government, and their attorneys can access them, but lowly people like myself cannot (for good reason; most people would not want these details shared).
The victim impact statement serves a number of purposes. The most obvious is that it helps the judge determine a sentence (the judge has guidelines for prison sentence length, but needs to decide where in the range is apporpriate, or if there are reasons to go above/below the guidelines). There's a big difference between "I paid for a $20 silver eagle and didn't get it, I am so mad!" and "I lost my life savings, but working after retirement isn't so bad" and "My wife still won't forgive me for trusting Ross". It can also help provide a sense of closure for victims.
As far as convicted felons awaiting sentencing are concerned, the most damning potential of the victim impact statements is if they show a "substantial financial hardship." If one or more victims meet this criteria, 2 levels are added to the sentencing guidelines. If there are 5 or more victims meeting that criteria, 4 levels are added. If it hits 25 victims meeting that criteria, 6 levels are added. The difference between 0 or 25 victims meeting that criteria could result in an 8-10 year difference in the length of the sentence.
Sentencing Now January 7, 2022
October 12, 2021 8:20PM ESTJudge Jones has ordered that the sentencing be continued until January 7, 2022 at 1:30PM.
Ross's attorneys argued that they needed more time, given their other commitments, the 500+ pages of victim impact statements, and the large spreadsheet used to calculate losses. Diane's attorneys argued that she needs to complete 2 months of psychological testing in order for the judge to properly determine her sentence.
Calvert Loses, Yet Again
August 8, 2021 8:45AM ESTIn October, 2019, in an 85 page ruling, Judge Alston denied Calvert nearly all his fees as Trustee. Calvert was understandably mad, and appealed -- but lost his appeal.
Recently, Calvert asked for $40,000.00 to cover estimated expenses in closing the bankruptcy case (100 hours at $400/hr). At a hearing, Judge Alston asked for an explanation. Calvert responded by reducing his request to $19,000.
Judge Alston ruled that Calvert get none of those estimated expenses. Among other things, Judge Alston stated that "the Trustee is asking the Court for an award of compensation for services he has not provided in this case", "the Trustee s failure to even attempt to justify his initial $40,000 estimate ... equates to a tacit acknowledgement that he grossly overstated his initial request for compensation.", and "the Trustee knowingly and intentionally sought compensation for services that he knows will be provided by another professional."
More Details
August 2, 2021 3:40PM ESTA few more things about the guilty verdict:
Ross and Diane are still out on bond (but without their passports). My guess is that they will be required to self-report to prison sometime shortly after the sentencing (the Bureau of Prisons will choose the date and the prison, likely with a recommendation by the judge).
Before the sentencing, a "Presentence Report" (PSR) will be made. This will not be available to the public, but the defendant usually can see it (with names in victim statements redacted). It contains various details that may be relevant to sentencing. In this case, one of the most important pieces will be the Victim Impact Statements. These are written (and/or oral, in person) statements from victims that "describe the emotional, physical, and financial impact [they] have suffered as a direct result of the crime." One way these affect the sentence is that if the crime resulted in "substantial financial hardship" to 5 or more victims, 2 levels are added (or 4 levels if there were 25 or more 25 victims with substantial financial hardship). A difference of 2 levels can affect the sentence by about 2-4 years in this case.
It is very hard to predict the length of their prison sentences. According to the 600+ page 2018 Guidelines Manual, I estimate that they will end up at roughly level 35," which work out to a guideline of 14 to 17.5 years in prison. However, many other factors are taken into consideration, and the sentence could be much less than that (even just probation), or possibly higher. Wire/mail fraud carries a maximum 20 year sentence (which the judge should not exceed) per count. Normally all counts would be treated the same ("grouped"), with the sentences running concurrently (a single sentence), which the guidelines seem to explicitly suggest (see example #3 in Note 6 on page 370 of the Guidelines Manual). However, if the judge felt it necessary to treat unfulfilled orders, storage and/or lease metals differently (which I doubt would happen), I believe it would result in well over Level 43 where a life sentence is recommended.
If I had to guess, I would go with somewhere around 14-16 years. However, as I suggest in the previous paragraph, I could be way off. The judge could be very lenient or very harsh, there could be factors that I am not accounting for (such as health issues), or I could simply be misinterpreting the complex guidelines.
As reference, in the Tulving Company case, the owner was at Level 28. The judge reduced that 5 levels for cooperation with the investigation, and another 4 points for medical issues. That led to a guideline of 30-37 months, and the judge went with 30 months (2.5 years). With Bullion Direct, the owner was sentenced to 10 years in prison (details on points are not known).
Jury Verdict Form
August 2, 2021 1:20PM ESTFor those that are curious, the Jury Verdict Form was just released.
It is a 7 page form that goes through each count, and shows whether Ross Hansen and/or Diane Erdmann were found guilty on each count.
GUILTY
July 30, 2021 8:10PM ESTThe court just released the information that Ross Hansen (mis-spelled in the minutes as Hanson) is guilty on 14 counts, not guilty on 1 count. Diane Erdmann is guilty on 13 counts, not guilty on 2 counts.
MINUTE ENTRY for proceedings held before Judge Richard A. Jones - CRD: Victoria Ericksen; AUSA: Brian Werner, Benjamin Diggs; Def Cnsl: Angelo Calfo, Anna Cavnar and Henry Phillips for Defendant Hansen; Russell Aoki, Steven Fogg, Isham Reavis and Benjamin Byers for Defendant Erdmann; Court Reporter: Debbie Zurn; JURY TRIAL Day 16 as to Bernard Ross Hansen and Diane Renee Erdmann held on 7/30/2021. At 9:05 a.m., the jury returns and resumes deliberations. At 3:36 p.m., the jury returns to open court with the following verdicts: As to Defendant Bernard Ross Hanson, GUILTY as to Counts 1, 3, 4, 5, 6, 8, 11, 12, 13, 14, 15, 16, 19 and 20; NOT GUILTY as to Count 9. As to Defendant Diane Renee Erdmann, GUILTY as to Counts 1, 3, 4, 5, 6, 8, 11, 12, 13, 14, 16, 19 and 20; NOT GUILTY as to Counts 9 and 15. For the reasons set forth on the record, the Government's motion to remand Defendant Hansen is DENIED. Sentencing set for 10/29/2021 at 9:00 AM in Courtroom 13106 before Judge Richard A. Jones. Defendants remain on bond. (VE) (Entered: 07/30/2021)
Trial, Thu July 29
July 29, 2021 8:10PM ESTJURY TRIAL Day 15 as to Bernard Ross Hansen and Diane Renee Erdmann held on 7/29/2021. At 9:02 a.m., the jury returns and resumes deliberations. At 4:30 p.m., the jury is excused to return on 7/30/2021 at 9:00 AM to resume deliberations.
Trial, Wed July 28
Deliberations Begin
July 28, 2021 8:35PM ESTJURY TRIAL Day 14 as to Bernard Ross Hansen and Diane Renee Erdmann held on 7/28/2021. Counsel present closing arguments. The alternate jurors are selected and excused. At 3:50 p.m., the jury commences deliberations. After inspection and approval by counsel, all admitted exhibits are provided to the jury. At 4:32 p.m., the jury is excused to return on 7/29/2021 at 9:00 AM to resume deliberations.
Jury Instructions
July 28, 2021 3:25PM ESTThe judge has filed the 32 page jury instructions, which instruct the jury on exactly how what they are supposed to determine and how they are supposed to determine it. For example, it defines "reasonable doubt" and the elements of fraud that must be met for a guilty verdict.
Trial, Tue July 27
July 27, 2021 8:50PM ESTNote: It looks like we are nearing the end of the trial; yesterday, the government rested, and today both defendants did.
JURY TRIAL Day 13 as to Bernard Ross Hansen and Diane Renee Erdmann held on 7/27/2021. The testimony of Mark Calvert resumes and concludes. Anne Layne is sworn and testifies. Exhibits Admitted: 581a, 1044, 1046, 1446, 1458, 1473, 1474, 1475 and 2001. Defendant Hansen rests. Defendant Erdmann rests. Objections and exceptions to the Court's proposed jury instructions are noted for the record. The Court instructs the jury. Jury trial to resume on 7/28/2021 at 9:00 AM, before Judge Richard A. Jones.
Trial, Mon July 26
July 27, 2021 7:55AM ESTJURY TRIAL Day 12 as to Bernard Ross Hansen and Diane Renee Erdmann held on 7/26/2021. The testimony of Special Agent Andrew Cropcho resumes and concludes. Government rests. Defendant Hansen's motion for judgment of acquittal pursuant to Federal Rule of Criminal Procedure 29 is DENIED. Defendant Erdmann's motion for judgment of acquittal pursuant to Federal Rule of Criminal Procedure 29 is DENIED. Special Agent Ben Williamson and Mark Calvert are sworn and testify. Exhibits Admitted: 574, 581 (excluding page 3), 1022, 1028, 1034, 1035, 1385, 1459, 1476 and 1786. Exhibits Refused: 1011 and 1465. Jury trial to resume on 7/27/2021 at 9:00 AM, before Judge Richard A. Jones
Trial, Thu July 22
July 22, 2021 10:30PM ESTJURY TRIAL Day 11 as to Bernard Ross Hansen and Diane Renee Erdmann held on 7/22/2021. The testimony of John (Jack) Szczerban resumes and concludes. Jose (Dino) Vasquez, Samantha Blizard and Special Agent Andrew Cropcho are sworn and testify. Exhibits Admitted: 400d, 404a, 405a, 499, 532, 538, 542, 545, 546, 547, 548, 550, 552, 553, 1756, 1757, 1758 and 1759. Jury trial to resume on 7/26/2021 at 9:00 AM, before Judge Richard A. Jones.
Trial, Wed July 21
July 21, 2021 8:30PM ESTJURY TRIAL Day 10 as to Bernard Ross Hansen and Diane Renee Erdmann held on 7/21/2021. Diane Hopkins is sworn and testifies. The testimony of Greg Fullington resumes and concludes. The testimony of Paul Wagner resumes and concludes. Richard (Russ) Wilson and John (Jack) Szczerban are sworn and testify. Exhibits Admitted: 11, 12, 20, 115, 146, 147, 487, 529, 530, 1110, 1390, 1747, 1755 and 1760. Exhibits Refused: 1115 and 1385 (pages 3-10 only). Jury trial to resume on 7/21/2021 at 9:00 AM, before Judge Richard A. Jones.
Trial, Tue July 20
July 20, 2021 9:50PM ESTJURY TRIAL Day 9 as to Bernard Ross Hansen and Diane Renee Erdmann held on 7/20/2021. Patricia Williams, David Carver, John Young, Jason Calhoun, and Greg Fullington are sworn and testify. Exhibits Admitted: 132, 139, 167, 168, 169, 170, 171, 172, 173, 174, 175, 176, 177, 178, 179, 180, 181, 533, 1315, 1720, 1721, 1725, 1726, 1727, 1728, 1730, 1731, 1732, 1733, 1734, 1735, 1738 and 1742. Exhibits Refused: 534 and 1717. Defendant Hansen's oral motion for a mistrial is DENIED. Jury trial to resume on 7/20/2021 at 9:00 AM, before Judge Richard A. Jones.
Trial, Mon July 19
July 19, 2021 8:50PM ESTJURY TRIAL Day 8 as to Bernard Ross Hansen and Diane Renee Erdmann held on 7/19/2021. Testimony of Alea Guerra resumes and concludes. Sam Furuness, John Drummey, Steven Campau, John Jankowski and Paul Wagner are sworn and testify. Exhibits Admitted: 60, 61, 63, 78, 380, 381, 383, 384, 385, 386, 387, 388, 391, 405d, 496 and 1350. Exhibits Refused: 1064 (reoffered and refused) and 1329. Jury trial to resume on 7/20/2021 at 9:00 AM, before Judge Richard A. Jones.
Trial, Thu July 15
JURY TRIAL Day 6 as to Bernard Ross Hansen and Diane Renee Erdmann held on 7/15/2021. Raymond (Ken) Farrell, Edward (John) Rickey, John (Mike) Orms, Norman Hauptman, William Hanson, Julie Howe and Alea Guerra are sworn and testify. Exhibits Admitted: 116, 117, 119, 121, 123, 124, 125, 126, 127, 129, 130, 148, 150, 151, 152, 153, 182, 183, 184, 185, 186, 187, 267, 268, 488, 490, 526, 527, 1278, 1291, 1704 and 1711. Exhibit Refused: 1285. The Court hears from counsel for Defendant Hansen ex parte in closed proceedings as set forth in the sealed record. The Court hears argument on Defendants' 307 Joint MOTION to Preclude Government from Calling Belatedly Disclosed Witnesses. For the reasons stated on the record, the Court denies the motion as to Dino Vasquez and Patty Williams, and reserves ruling as to Jack Szczerban. The motion is moot as to Reed Thayer, as the Government indicates it does not intend to call Mr. Thayer as a witness. Jury trial to resume on 7/19/2021 at 9:00 AM, before Judge Richard A. Jones.Trial, Wed July 14
JURY TRIAL Day 6 as to Bernard Ross Hansen and Diane Renee Erdmann held on 7/14/2021. Testimony of Bud Jameson resumes and concludes. Kyle Markley, Debbra Fillo, Peg Morris, Kim Neff and Jeff Goodfellow are sworn and testify. Exhibits Admitted: 37, 101, 103, 104, 140, 142, 143, 144, 145, 199, 200, 201, 202, 203, 204, 205, 206, 207, 208, 209, 210, 211, 212, 213, 261, 263, 272, 273, 278, 319, 322, 400a, 405c, 405e, 521, 522, 523, 524 and 525. Jury trial to resume on 7/15/2021 at 9:00 AM, before Judge Richard A. Jones.
Probation Violations
July 14, 2021 8:40 AMRoss Hansen has now been caught violating his probation 4 times by talking to witnesses. Yesterday he reportedly stated to a witness "By the way, this is prison for the rest of my life."
Trial, Tue July 13
JURY TRIAL Day 5 as to Bernard Ross Hansen and Diane Renee Erdmann held on 7/13/2021. Testimony of Derrin Tallman resumes and concludes. David James, Diane Wong, Annette Trunkett and Bud Jameson are sworn and testify. Exhibits Admitted: 50, 51, 52, 53, 54, 55, 56, 57, 84, 86, 194, 195, 196, 198, 298, 299, 300, 301, 302, 303, 310, 315, 316, 403a, 486 and 1231. After hearing from Defendant Erdmann and her counsel ex parte in closed proceedings, for the reasons stated on the record, the Court DENIES Defendant Erdmann's motion to discharge her attorneys and for appointment of new counsel. Jury trial to resume on 7/14/2021 at 9:00 AM, before Judge Richard A. Jones.Trial, Mon July 12
JURY TRIAL Day 4 as to Bernard Ross Hansen and Diane Renee Erdmann held on 7/12/2021. Testimony of Catherine Hopkins resumes and concludes. Christopher Welch, Shawn Boelens, Brent Bassett and Derrin Tallman are sworn and testify. Exhibits Admitted: 4, 6, 160, 161, 162, 163, 164, 165, 166, 304, 305, 306, 307, 308, 309, 513, 1068, 1150, 1151, 1153, 1157, 1165, 1218, 1684, 1690, 1691 and 1693. After hearing argument of counsel, for the reasons stated on the record, Defendant Erdmann's 304 MOTION for Mistrial is DENIED. Jury trial to resume on 7/13/2021 at 9:00 AM, before Judge Richard A. Jones.Trial, Thu July 8
July 8, 2021 9:25PM ESTThe judge denied the defendant's motion to exclude from evidence the $700,000 of precious metals that Diane Erdmann sold after the bankruptcy, which she states was hers. The minute entry states (I removed the names of customers):
JURY TRIAL Day 3 as to Bernard Ross Hansen and Diane Renee Erdmann held on 7/8/2021. Testimony of Erin Robinson resumes and concludes. [Bullion Customer], [Bullion Customer] and Catherine Hopkins [general counsel for NWTM ~2010] are sworn and testify. Exhibits Admitted: 14, 138, 188, 189, 191, 192, 193, 224, 225, 461, 493, 1078, 1155, 1508 and 1509. Exhibits Refused: 13 and 1064. Jury trial to resume on 7/12/2021 at 9:00 AM, before Judge Richard A. Jones.
Trial, Wed July 7
July 7, 2021 8:35PM ESTNothing really to report. The minute entry states:
JURY TRIAL Day 2 as to Bernard Ross Hansen and Diane Renee Erdmann held on 7/7/2021. The Court preliminarily instructs the jury. Counsel present opening statements. Erin Robinson is sworn and testifies. Exhibits Admitted: 26, 27, 28, 29, 31, 33, 34, 46, 251, 256, 258, 259, 260, 262, 264, 265, 266, 269, 270, 271, 274, 275, 279, 280, 286, 287, 288, 289, 294, 295, 296, 297, 410, 411, 414, 416, 418, 419, 420, 421, 422, 423, 425, 426, 427, 428, 429, 430, 483, 484, 485 (illustrative only) and 491. Jury trial to resume on 7/8/2021 at 9:00 AM, before Judge Richard A. Jones.
Trial Underway
July 7, 2021 10:10AM ESTThe criminal trial against Ross Hansen and Diane Erdmann started yesterday. The court's "minute entry" for yesterday was "JURY TRIAL Day 1 as to Bernard Ross Hansen and Diane Renee Erdmann held on 7/6/2021. Voir dire commences. The jury is sworn and empaneled. Jury trial to resume on 7/7/2021 at 9:00 AM, before Judge Richard A. Jones."
From my understanding, that simply means that the jury has been selected. I do not have any other updates (if you do, feel free to contact me -- you can use the anonymous tips page if you like).
One outstanding issue is that the defendant's attorneys filed an "in limine" motion (one that the jury is not supposed to see) July 2, the last business day before the trial started, asking for certain evidence to be excluded from the trial (items that Hansen and/or Erdmann sold to fund legal expenses; I won't go into more details unless the judge denies the motion). The government responded pointing out that the motion was filed very late, well after the normal deadline, and pointing out what they believe to be flaws in the legal argument to exclude the evidence.
The good news is that the trial has finally started. That is what I know at this point, and I will continue to update this page as I get further details.
UPDATE July 8, 2021 10:40AM EST: The judge has ruled that the evidence mentioned in the "in limine" motion may be used. It specifically refers to the $700K of precious metals that Ms. Erdmann sold. The defendants did not want the evidence of those sales included, but the judge ordered that the government may include that evidence.
Trial Starting Tuesday
July 1, 2021 3:15PM ESTThe criminal trial again Ross Hansen and Diane Erdmann is on track to (finally!) start on Tuesday, July 1, 2021.
There is zero doubt that a crime occured: while millions of dollars of unfulfilled customer orders could conceivably not be a crime, millions of dollars of missing storage metal can only be lost or stolen. Millions of dollars of "lost" precious metals is a story only a child could believe, and stolen is a crime. The question, of course, is whether Hansen and/or Erdmann are responsible: the government says yes, they say no. That's why there is a trial.
The government presents a compelling case: that NWTM, after delayed orders in 2008 resulted in a Consent Decree with the Attrorney General, kept losing money, and Ross Hansen and Diane Erdmann kept the company afloat by delaying orders further, and enticing customers to place orders. Rather than enriching themselves, the government says they used the money to turn NWTM into the largest privately owned mint. The government points out that somewhere around 95% of large (over $1,000) bullion orders were too late (not adhering to the 2008 Consent Decree) or never delivered, and they state that Erdmann would give priority to orders where people said they would complain to outside organizations. They plan to back up their position with 484 exhibits and 56 witnesses.
Hansen and Erdmann, on the other hand, explain this as just "going out of business" and say "poor business practices are not fraud, and bankruptcy is not a crime." Their trial brief states that "Under Mr. Calvert s direction, thousands of NWTM customers lost funds sent for orders which had not been fulfilled at the time of bankruptcy or failed to recover stored metal after Mr. Calvert s firm, Cascade Capital Group, took control of the assets of the company. But these losses were sustained after the defendants left."
Tax Loss Information
June 23, 2021 1:00PM ESTI have just added a webpage that covers information on how to deduct this as a tax loss on your tax return.
The basics: I believe it should be fine to deduct the amount you paid NWTM (or the price you originally paid for metal stored at NWTM) as a capital loss, most likely on your 2021 tax return (although 2018-2020 would likely be OK as well).
Ross told in 2011: "Criminal charges could result"
April 20, 2021 2:50PM ESTIn the criminal trial, Ross Hansen is hoping to get the judge to exclude as evidence a letter written in 2011 by an in-house attorney that stated "I advised [Ross Hansen] that both civil liability and criminal charges could result..."
He is also hoping to exclude a letter written by a different in-house attorney in September, 2015 that included: "It is my belief that these business practices expose NWTM and Ross Hansen to criminal and civil liability" and "NWTM has used some of the [storage bullion] to fulfill... orders", "NWTM is using customer payments to fulfill other customer's orders, pay debts of NWTM...", "these actions are keeping NWTM in business", "akin to a Ponzi scheme", "... this has been NWTM's business model from its earliest days of operation."
The last statement I included is sounds eerily familiar: Bullion Direct was in operation for about 15 years, and has a failed business plan from the beginning, spending $15M+ of customer stored metal to keep the business afloat. The owner is due in federal prison in less than a month for a 10-year prison sentence (which he already appealed once unsucessfully, and plans to re-appeal).
Calvert Loses Appeal
January 29, 2021 12:45PM ESTAs I mentioned in February, NWTM Chapter 11 Trustee Mark Calvert appealed the judge's decision to deny much of his fees.
The appeals court affirmed the bankruptcy court's decision (meaning that his appeal was denied).
Hansen/Erdmann Trial July 6, 2021
January 1, 2021 10:00AM ESTThe judge in the criminal trial against Ross Hansen and Diane Erdmann has filed an order that sets the criminal trial to start on 7/6/2021 (time/location TBD).
Hansen/Erdmann Trial February 22, 2021
December 5, 2020 1:40PM ESTSee updated trial date in update above.
Hansen/Erdmann Trial January 11, 2021
March 24, 2020 2:00PM ESTSee updated trial date in update above.
Calvert Appealing Denial of Expenses
February 23, 2020 6:25PM ESTThis happened a while back, but Chapter 11 Trustee Mark Calvert has filed an appeal (case #2:20-cv-00079-MJP), believing that he should receive payment for his work as Trustee in this case. The fees directly to him as Trustee were denied, as I previously reported.
I am watching this, and will report as I hear more information.
Calvert's Attorney Avenatti In Jail
January 17, 2020 9:35AM ESTAs I have reported, in the Meridian case Calvert used the services of attorney Michael Avenatti.
Avenatti has now been accused of wrongdoing by quite a few people, has several lawsuits against him, and facing 3 indictments. Avenatti vigorously denies any wrongdoing.
However, Avenatti took $1M in legal fees he received in April, 2019 and attempted to keep it from his creditors. His attorney claims that he did so legally, paying debts in an order he chooses. The prosecutors say he defrauded and concealed money from creditors, by sending $700K to his ex-wife and buying cashier's checks to drain the bank account (re-depositing them when he needed money). They also say he structured financial transactions to avoid reporting requirements.
The New York Times states that if convicted, he could face up to 300 years in prison.
Calvert to Get Nothing
... Gearin gets 35%, Cascade 55%, Northrup 97%
October 11, 2019 8:25PM ESTI haven't had a chance to read the entire 85-page ruling, but it looks like Judge Alston's ruling on compensation awards Northrup nearly every penny he requested, Cascade most of the money it billed for (except amounts billed by Calvert for work that should have been done as the trustee). K&L Gates (the law firm Gearin works for) was chastised and ended up with about 35% of what they billed for (which was generous: Judge Alston made it clear they could have received nothing). Calvert was awarded just $14K for expenses, and nothing for the $1M in fees he billed for.
I will likely be adding more as I digest the entire ruling.
UPDATE: Those percentages are based on what was billed. However, where the estate has cash equal to only about 40% of the billed expenses, that seriously affects the outcome. It looks like Northrup is going to get more than twice what he would have if all expenses were allowed, Cascade will get about 50% more, and K&L Gates will get about 80% of what they would have received if all expenses were allowed. So this seems like a 'slap on the wrist' for Gearin and a windfall for Northrup. While severe for Calvert, with Cascade getting about 50% more than it would have otherwise, Calvert will likely be getting a decent amount.
Diane's Seized Metal to be Sold
October 2, 2019 6:50PM ESTBoth Calvert and the trustee in Diane's bankruptcy have filed motions requesting approval of a settlement between Calvert, Diane's trustee, and Bradley Cohen (who caused the metal to be seized originally).
Calvert valued the metal at $149K in May, 2016, and has received an offer from Bellevue Rare Coins for $142K (which is reportedly 4% below the spot value of the metal).
However, it is very difficult to determine the true value and verify the prices, since there is no breakdown of how many ounces of silver and how many ounces of gold there are. Also, one document implies that the price of silver/gold went down since Calvert prepared the original inventory (implying that that caused the value of the coins to go down). That is not true; the price of gold and silver are both higher. However, the document also refers to the price of gold as being $1,004 -- a level it has not been down to in nearly 10 years.
Of the proceeds, $25K would go to Cohen, and the rest split evenly between Diane's trustee and Calvert (for the two estates).
Asset Sale Approved
August 26, 2019 1:20PM ESTThe judge approved the sale of most of the remaining assets to Ranger Industries.
Trial Delayed Until April 13, 2020
August 26, 2019 12:00PM ESTBecause Diane changed attorneys, the court has the trial to be continued until April 13, 2020 at 9:00AM.
Court Found Ross to be in Violation of Bail
August 4, 2019 12:30PM ESTOn July 29, 2019, there was a hearing to determine if Ross Hansen violated the terms of his bond, which the government alleged, but Ross denied.
The court found that Ross "committed the violation. Court admonishes defendant for violating conditions of the bond but does not revoke the bond at this time."
NWTM Assets to be Sold for $115K
July 22, 2019 1:35PM ESTChapter 11 Trustee Mark Calvert has filed a motion to sell most of the remaining NWTM assets for $115,000 to Ranger Industries. Ranger Industries makes custom challenge coins and related items.
The assets to be transffered include the NWTM domain name and website, NWTM customer list, certain NWTM copyrights/trademarks, social media accounts, the Amazon storefront, art, design work, imagery, photography, and the store inventory (100,000s of medals).
Ross Hansen Hearing Tomorrow
July 18, 2019 10:00AM ESTRoss Hansen's probation officer has caused a hearing tomorrow at 10:30AM, as a result of "Mr. Hansen violated a special condition requiring him not to have direct contact or indirect contact with any existing and/or future witness in this case by having contact with a witness on or about June 19, 2019."
As soon as I find something out, I will post about it here.
UPDATE July 19, 2019 8:40PM EST: A hearing will be held on July 29 at 1:30PM: "INITIAL APPEARANCE RE: BOND REVOCATION HEARING as to Bernard Ross Hansen held on 7/19/2019. Defendant present on summons. Defendant advised of allegation 1 in the 7/1/19 petition. Defendant DENIES allegation. Hearing set. Defendant remains on bond pending the revocation hearing. Bond Revocation Hearing set for 7/29/2019 at 01:30 PM in Courtroom 12B before Hon. Mary Alice Theiler. (KMP) (Entered: 07/19/2019)"
Attorney Hijacked NWTM Mailings
June 19, 2019 8:10AM ESTIt was a mistake, as far as I can tell. But if so, one he won't admit to.
About a year ago, an attorney named Norman K. Short filed a very simple 1-page document, docket 1605. I'm guessing he doesn't do much with bankruptcies, so when a client of his was changing their address, Norman somehow thought she was the debtor (rather than a creditor) -- something people outside bankruptcies often confuse.
When he filed the form, it caused the court to: [1] change the attorney for NWTM from "Pro Se" to Norman Short and his GSJones Law Group PS, and [2] change the address of NWTM to that of a client of Short's (causing documents to get sent to his customer, rather than NWTM). Short signed the document "Norman K. Short, Attorney for Debtor." And so he became NWTM's attorney of record, and his client is getting important bankruptcy documents meant for NWTM (although not a problem in this case, as Calvert gets a copy straight from Gearin).
I informed Short of this in March, but he never responded (which I took to mean that I misunderstood, and there was no error). But this past week, I looked closer. It turns out that there is a creditor in the NWTM case owed $3,026 for an order for silver who used Short's services. She asked him to change *her* address, and instead he must have thought his client was not a $3,000 creditor but instead the company owing $75M. Oops!
It's really a moot point, but accidentally inserting yourself as the attorney in a $75M bankruptcy? Wow. Not even caring enough to fix it? Bigger wow.
UPDATE September 18, 2019 3:50PM EST: It sure took a while, but today Mr. Short finally caused an entry to be made in the docket: "Withdrawal of Document. Filed by Norman K. Short on behalf of Northwest Territorial Mint LLC. (Related document(s)1605 Change of Address). (Short, Norman) (Entered: 09/18/2019)".
Diane's Bankruptcy Now Chapter 7
June 14, 2019 2:40PM ESTThe judge has ordered Diane Erdmann's bankruptcy to be converted to Chapter 7. The new 341 Meeting of Creditors will be on 7/15/2019 at 09:30 AM at Courtroom J, Union Station (Diane did not appear at the Chapter 13 341 meeting).
I also did not point out that at the hearing on Tuesday, Diane did not show up. Ross Hansen appeared, claiming that he had authority to speak for her, as he had a signed power of attorney. However, no such document had been filed with the court, and it does not seem that such a document would have even allowed for him to speak on her behalf.
The Interim Chapter 7 Trustee assigned to the case is Kathryn A Ellis.
Diane: $300K/year Income
June 13, 2019 10:30AM ESTThings just blew up for Diane Erdmann at the her bankruptcy hearing on Tuesday, from the way I read it.
First, Calvert was successful in converting the bankruptcy to Chapter 7, rather than having it dismissed (speculation was that Diane was planning to dismiss it all along, using the bankruptcy as a temporary tool to delay Calvert). I believe the conversion forces her to be subjected to things like 2004 exams and subpoenas.
Second, the bombshell: the IRS filed a claim, stating that Diane owes $127K for taxes for 2016, and $41K for taxes in 2017 (with no returns filed for 2013-2015). Those numbers imply a minimum of $630,000 of income in 2016-2017. My guess is that it was collectible capital gains for bullion sold during that time (as we know of $500K-$700K or so of bullion she sold during that time).
The reason I call that a 'bombshell' is that Diane stated (p30) under penalty of perjury in her bankruptcy schedules that she had no income in 2017. How can you report no income if the IRS shows that you did? Hmmmm...
Diane Wants her Bankruptcy Dismissed
June 12, 2019 8:15AM ESTLast night, Diane Erdmann filed a motion to dismiss her bankruptcy case. It was short and to the point: "I, Diane Erdmann, hereby request that my Chapter 13 bankruptcy filing be dismissed."
I wonder what the judge will think of someone filing for bankruptcy the night before a motion to sell what she claims to be her property, delaying filing of paperwork for mysterious reasons, asking for her schedules to be sealed (they were eventually filed unsealed, but I did not post them for privacy reasons), having a creditor request to force the bankruptcy into Chapter 7, not showing up to court for her creditors' meeting, and then asking to dismiss her case with no reason given.
UPDATE June 13, 2019 10:35AM EST: I was originally not going to post her bankruptcy schedules, but given that she stated she had $1,691.23 of income since the beginning of 2017 (p30), and the IRS shows an income tax return implying over $180K of income in 2017 alone, this is a necessary document for people to see: it is a massive red flag; if she did not commit perjury, posting these may help people understand that (and if she did commit perjury and chose to submit public documents to support it, well, um, that was her choice).
Diane's Bankruptcy Meeting Delayed
June 11, 2019 1:55PM ESTLast week, Diane Erdmann was supposed to have her 341 Meeting, where her creditors would have a chance to ask her questions. However, she was apparently a no-show. The Trustee in the case filed an entry stating:
"Statement Adjourning 341(a) Meeting of Creditors. Section 341(a) Meeting Continued on 6/20/2019 at 11:00 AM at Courtroom J, Union Station. For debtor to appear. Debtor absent."
Avenatti's Disbarment Tie to NWTM Bankruptcy
June 5, 2019 7:15PM ESTAs I am patiently awaiting to hear something, anything, about the NWTM asset auction, I came across this.
Celebrity attorney Michael Avenatti, who Calvert used in the Meridian Mortgage bankruptcy, has recently been through a string of indictments in several states. The State Bar of California filed paperwork on Monday to disbar Avenatti. The disbarment focuses specifically on one client who received a $1.6M settlement... and while Avenatti deposited the $1.6M payment into a trust (IOLTA) bank account, Avenatti allegedly: did not give any money to his client, told his client he never received the settlement payment, and gave a fake settlement agreement to his client (with fake dates that the payments would be due).
While Calvert and his Cascade Capital have a number of ties to Avenatti, no new information came out about them. But, it turns out that the day after Avenatti received the $1.6M payment, Avenatti made 2 payments from that trust account: one a $48K payment that appears to be to help save a company Avenatti bought (Global Baristas), and a $16K payment to Miller Nash Graham & Dunn LLP. MNGD is the law firm that represents the Creditors' Committee in NWTM.
If I had to guess, it is simply that MNGD represented Global Baristas, and that MNGD had no knowledge of what Avenatti was up to. But it is interesting that with $1.6M to spend, Avenatti gave priority to MNGD.
UPDATE June 18, 2019 4:45PM EST: MNGD has not responded to my request for comment on why Avenatti was paying them with allegedly stolen funds. Also, Avenatti has now been accused of stealing $4M from a client, in a very similar way: depositing the settlement into a trust account in January, 2015, and stringing the client along saying that the payment had not yet been made (and presumably spending the $4M). It will be interesting to see if we find out what, if anything, the allegedly stolen $4M settlement was spent on...
Remaining NWTM Assets to be Auctioned Today
June 3, 2019 9:05AM ESTChapter 11 Trustee Mark Calvert sent out emails last week to a number of parties interested in the remaining NWTM assets, and will be accepting bids through today at "12 Noon PST". The assets include the store inventory (200,000+ medals, mainly ones that haven't sold well), as well as the NWTM domain name, website, customer list, trademarks, copyrights, social media accounts, art, design work, imagery, photography.
At 1:00PM PST today, Calvert will email everyone who the highest and second highest bidders are. The highest bidder will have 25 hours to wire the money. If they do not, the second highest bidder will have 24 hours to wire the money. The offer will then be presented to the court.
I do not understand why Calvert has made this auction private (it does not state that it is confidential, yet there is no sign that it was in any way made public, except through me). These are assets that he has essentially stated have nearly no value, yet several people have pointed out have a significant value.
The buyer is also required to adhere to a pre-made Asset Purchase Agreement, which among other things requires that the bidder be a Washington State LLC. This would be nearly an impossible requirement for someone who did not already have a Washington State LLC already formed (it 'normally' takes 2 business days to process an LLC formation, but also requires carefully choosing a name, preparing documents, etc.).
UPDATE June 3, 2019 4:10PM EST: No news yet. The auction deadline has passed, and Calvert has presumably sent out the results as of a few minutes ago. I will update this as soon as I hear the results (if anyone hears before I post here, please be sure to let me know!).
Diane's Bankruptcy Update
May 29, 2019 8:30AM ESTThere was a hearing yesterday in the personal bankruptcy of Diane Erdmann. Several things occurred and/or were discovered:
- The case was re-assigned to Judge Mary Jo Heston, who has "related cases" (I'm not sure what the related cases are).
- The Trustee for this bankruptcy is Michael G. Malaier, who happened to be the Trustee in Ross Hansen's 1995 bankruptcy.
- The Trustee objects to confirmation of the Chapter 13 plan, due to all possible reasons listed on the form.
- There is a 341 Creditors' Meeting on Thursday June 6, 2019 at 11:00AM in Tacoma.
- There will be a hearing on June 11, 2019 at 1:00PM regarding Calvert's motion to convert to Chapter 7, and whether to confirm the Chapter 13 plan.
- The deadline to file a proof of claim is June 27, 2019.
- The "341 Meeting of Creditors Notice" leaves blank the section "All other names used in the last 8 years", yet a court document in the NWTM case was filed by a company claiming that they did business with her under her maiden name in 2017.
Diane's Bankruptcy Schedules Sealed
May 24, 2019 11:10AM ESTDiane Erdmann has filed her bankruptcy schedules yesterday (which was the new deadline), along with a motion to seal them (the way that works is she filed a motion to seal the schedules, then filed the schedules sealed: if the judge denies the motion, she will have to re-file the schedules). So the court has them, but they are not public (yet, at least).
The intent seems good: she is "high profile and subject to having [her] personal affairs made public in online forums." Nobody wants their laundry aired in public to let others judge whether it is clean or not. And bankruptcy law does allow the court to protect information filed in a bankruptcy case under certain circumstances (in this case, "undue risk of identity theft or other unlawful injury to the individual or the individual s property"). My guess is that having bankruptcy schedules sealed is very rare, however.
The glaring irony here is that there is no doubt that 1,000s of individuals were truly injured to the tune of $25M by NWTM (whether Diane is responsible remains to be seen, as the criminal trial unfolds: she is presumed innocent), and she is looking to protect herself from a hypothetical injury that she chose to expose herself to (you don't file for bankruptcy expecting your financial details to be sealed).
In addition (remember that I have no legal background), the law seems to only protect in this case: [1] "means of identification" (18 U.S.C. 1028(d)(7)), which is a name or number (such as name, SSN, passport number, biometric data, address, routing code), and [2] "other information contained in a paper" with that data. The fact that she filed the petition means that her name, address, phone, and email are already part of the public record. So what does that leave? For example, the name of a bank account and amount in it is not a means of identification (if the account number is removed).
UPDATE May 30, 2019 1:50PM EST: The judge denied her request to seal the documents, and ordered her to file them unsealed by June 5, 2019. The judge wrote "The filing of bankruptcy schedules is one of the fundamental duties ... The information provided therein is critical for the creditors ...".
Avenatti's 3rd Indictment
May 23, 2019 2:00PM ESTYesterday, attorney Michael Avenatti (who Calvert used in a previous bankruptcy case, and referred to a bank Calvert used for a loan) was indicted for the 3rd time this year. This indictment, in New York, accuses him of fraud and aggravated identity theft of a client of his. He is accused of stealing part of an 4-part $800,000 advance on a book his client was writing; the alleged scheme fell apart in late February, 2019 when his client contacted the publisher directly, who said the payments had already been made to Avenatti. Aventatti is accused of forging his client's signature on wire transfer instructions.
Avenatti, as seems to always be the case these days, denies any wrongdoing.
Diane's Delay Allowed
May 10, 2019 2:55PM ESTThe judge in Diane's bankruptcy today allowed an extension for Diane to file her bankruptcy paperwork, simply stating that "good cause exists to allow an extension".
Given that Calvert filed a motion last night for conversion to Chapter 7, my guess is that the judge allowed the extension to give him time to allow/deny the motion to convert (there is a hearing on that scheduled for June 12, 2019).
Calvert Fights Back
May 10, 2019 9:05AM ESTIt seems clear that Diane Erdmann filed for bankruptcy to stop Calvert from selling the assets that were seized in 2016 (which she claims are mostly hers). When it was time to file the schedules, she came up with what appears to have been a delay tactic suggesting that she filed the bankruptcy hoping it would be dismissed.
Calvert, however, yesterday filed a motion to convert Diane's Chapter 13 case to Chapter 7, rather than dismiss it. This would force the bankruptcy to continue, which would allow a Trustee (not Calvert) to go after any assets Diane may have, and would also possibly allow the Trustee to pursue "avoidance actions" (in this case, trying to collect the $700,000 or so of bullion that Diane sold to pay legal bills). That would have the potential to bring in enough money to get much or all of Calvert's (NWTM's) $430K judgment against Diane paid.
The irony, of course, is that Calvert is pushing to convert Diane's bankruptcy to Chapter 7 because she is abusing the bankruptcy system -- yet Calvert is likely desparately hoping that the NWTM bankruptcy is not converted to Chapter 7 for abuse of the bankruptcy system. If Judge Alston were to do that, Calvert and Gearin would only get paid after the Chapter 7 professionals got paid.
Diane's Mystery Extension Request
May 4, 2019 9:40AM ESTDiane Erdmann recently filed for bankruptcy. Much of the information was due by a deadline of yesterday.
Diane missed the deadline for filing, but filed a letter that simply said (remember, she filed "pro se", without an attorney): "I apologize for this request, it's on advice of counsel that I require a delay. If required by the Court, I can submit more information."
The first issue is that while bankruptcy deadlines can be changed by a judge, it must be very risky to miss a deadline before an extension is granted. The second is who the counsel is: does she now have a bankruptcy attorney (in which case why isn't that attorney filing for her), or is this her public defender for the criminal case, or someone else? And what judge would grant an extension after the deadline passed without a reason given?
One possibility is that the bankruptcy was filed to prevent Calvert from selling the seized bullion she claims is her, and now that Calvert's original motion has been withdrawn because of Diane's bankruptcy, there is no problem with Diane's personal bankruptcy being dismissed.
More on the After Hours Theft/Tour
May 2, 2019 4:15PM ESTCalvert wrote a letter to the court yesterday. This was unusual, as normally all Calvert's court documents go through his attorney (Gearin did participate at least slightly, as he did file the letter via ECF). It clarifies his comment at the March 14, 2019 hearing, after Gearin explained that Calvert had thoroughly investigated examples of people pilfering from the company, that "I had Atalla come in in the middle of the night, in the middle of the night, picking up stuff. I had to chase him down." Atalla had responded explaining that he had permission, it was done at 6PM (because one of them had to wait until after he was done with work elsewhere), and he included a declaration Calvert got from the head of HR saying that employees were allowed to take 50-75 medals that they had worked on.
Calvert's letter seems to confirm everything that Atalla said about the event (Calvert said it occurred at 5:42PM, that he gave Atalla permission to retrieve his personal belongings with the instructions to coordinate with Edgar Chacon, confirmed that Atalla showed the camera the ~$35 of items he removed (and offered to return)).
Calvert also included an email he sent to Atalla afterwards saying that coming in late at night and taking the items was "not a problem."
Diane Files Chapter 13 Bankruptcy
April 18, 2019 7:20PM ESTI have just found out that Diane Erdmann has just filed for personal bankruptcy, under Chapter 13. With Chapter 13, you need a steady income to come up with a plan to repay creditors.
She lists 1-49 creditors owed $500,000 to $1M, and assets of $100,000 to $500,000.
UPDATE May 2, 2019 4:10PM EST: This move may have been done to prevent Calvert from selling the bullion in his possession that had been seized in April, 2016, that Diane claims is hers. Her bankruptcy filing was the night before the hearing on whether Calvert could sell the seized metal.
Criminal Case Update
April 17, 2019 8:55AM ESTThe criminal trial of Ross Hansen and Diane Erdmann is scheduled for October 19, 2019. A status conference is occurring today.
The government and the defense are coordinating a massive amount of documents. The defense wants to move up some timelines before the trial, which the government does not want. There is also a question of whether certain documents created by law firm Karr Tuttle (mainly emails regarding an "audit memo" prepared by Dino Vasquez) are privledged. The defense is also hoping to get any subpoenas issued to Calvert or NWTM; the government provided just the "subpoena returns" (documents that Calvert/NWTM produced), but will not provide the actual subpoenas (e.g. what was requested) without an order from the judge.
It is interesting that subpoenas have become a focus point in both the criminal case and the NWTM bankruptcy. The defense in the criminal case wrote "The subpoenas and the returns are key to understanding the development of the government s case against the defendants and the trustee s role in that investigation." And in the NWTM bankruptcy, Judge Alston, after seeing the FBI subpoenas "in camera" (in person, which keeps them out of court documents), requested to have them filed under seal (so they are official court documents which can be reviewed in the future by those with authorization, but are still not public). To me (remember, I have no legal training), that suggests that Judge Alston saw something in there that he felt might affect decisions he makes in this case.
Calvert's Desperate Plea
April 3, 2019 3:10PM ESTCalvert stands to lose a lot if the fee applications for himself and his company Cascade Capital are not fully approved. While it would be unfortunate, it would pale in comparison to the losses of many customers in bullion bankruptcies.
In a recently filed docket 2063, Calvert tried a "hail mary" plea as an excuse to get paid: "This was the most difficult Trustee case I have ever administered... The nature and extent of difficulties... went far above any other case I have been involved in... I respectfully request that the Court take into consideration all of these difficulties..."
I'm no lawyer, so I have a hard time understanding how a judge would be allowed to authorize unreasonable or unnecessary fees or expenses, or allow expenses involving misconduct, because this was more difficult than any of Calvert's other 2 (two) cases in the past decade. Isn't that what Calvert is asking for? Remember, too, that between both those other cases, at least 2 attorneys and a judge accused Calvert of false or conflicting testimony.
Worse, Calvert declared (paragraph 14) under penalty of perjury that employees entered NWTM's building "at night without turning the lights on... This also was appopriately addressed with the individuals including obtaining a sworn statements" and at the March 14, 2019 hearing twice stated this occurred "in the middle of the night." Yet recently the sworn statement came to light, and stated "The first thing we did when entering was turned on all the lights" and that this occurred at 6:00PM.
Calvert, does the phrase "liar, liar, pants on fire" mean anything to you? How can you declare under the penalty of perjury and in court this was done "without turning the lights on", and "in the middle of the night", when you got a sworn declaration from your director of human resources that the first thing they did was turn on the lights when they got there at 6:00PM? I guess it depends on what the definition of "middle" is. And "turn".
What Will Happen?
April 2, 2019 9:20AM ESTAt some point, Judge Alston will likely make a ruling on the fee applications. The big question is, what might that ruling be? The professionals have billed $5.5M, and there is about $2.2M of cash at this point.
As I like to point out, I am not a lawyer. That said, there are some clues. Basically, the professionals cannot be shocked if they consider the results negative.
First, going back to May, 2018, the judge has referred to having some "grave concerns" about the case. In July, he referred to fraud being committed on Calvert's watch, and concern that the process was "tainted." In July, the judge was concerned that at the second hearing about an issue he still wasn't getting straight answers. In November, he said that he has concerns about Calvert's conduct, and that he has evidence that contradicts what Calvert said under oath. In December, he said that if a question was "answered affirmatively", it would have significant impact on fee application (and it was answered affirmatively). In February 2019, he referred to being disturbed by the concern that false statements may have been made to induce conduct, and said that at least some fees would be disallowed. In March 2019, he stated that he has concerns about conduct of various parties that would result in reductions beyond overbilling, and there was the possibility of significant reductions, and he doesn't want anyone surprised by his decision.
Here are a few possibilties:
- All fees are allowed, and the professionals get what they asked for. This is the normal situation in bankruptcy, but will not happen here (the judge has stated that there would be reductions)
- There are token reductions (e.g. $300 here and $500 there). This will occasionally happen in bankruptcies where the judge is paying attention. But, the "significant impact" statement precludes that possibility.
- There are huge reductions for some professionals, and little or no reductions for others. This could severely punish some parties and reward others (some would get much less than they wanted, but that would mean the others would get more than they are expecting). I do not see this as likely.
- There are huge reductions for all the professionals -- up to 50% or so. This would send a very mild message regarding misconduct, since they would get paid the same amount (the total $5.5M would go down to perhaps $2.5M... so the $2.2M would be split among them just as it would be if all fees were allowed). The whole business about getting to the truth through the hearings and declarations would be much ado about nothing, and it would not seem to be much of a surprise, so I see this as unlikely.
- There are huge reductions for all the professionals, beyond 60% or so. This would send a much, much bigger message. This is the only option where all the professionals would feel the "pain" of not getting paid everything they would with a judge that OK's everything. This is the one that would send the biggest message. The catch here is that if the professionals do not get all the $2.2M cash, the rest would go to creditors. If the professionals got $2M (versus the $5.5M they billed, and the $2.2M they would get if they behaved well), that's only $200,000 left, which would go to creditors: but that is very little for creditors, and a big expense to handle.
- All fees disallowed for all professionals. While I'm sure that there are some people who see this as a likely scenario (and even more hoping for it), I find this one very unlikely (I imagine it would be very hard to justify from a legal perspective).
There would be rich irony if the judge converted the case to Chapter 7: Ross Hansen allegedly spread a rumor that would happen in early 2017, and Northrup referred to a UCC member that "swallows this garbage", and Calvert actually filed a motion to convert to Chapter 7 that was denied.
Calvert's Credibility Questioned
March 30, 2019 2:30PM ESTRight now, things are tense, as the judge decides how much of the professionals' fees to allow, given allegations of misconduct. Judge Alston has required the professionals to file a lot of supporting documentation in sworn declarations, in response to allegations of misconduct, so Calvert's credibility (which has already been questioned in this case) is being scrutinized. Here is what came out this week:
Meridian: The Avenatti fiasco occurred. Calvert paid Michael Avenatti $2.5M in 2015 to represent him on the Moss Adams litigation in the Meridian bankruptcy. Avenatti was arrested this past week with multiple charges in multiple jurisdictions, after last year being referred to the Attorney General for making "materially false statements" to the U.S. Senate, not once but twice. How is this relevant? It was revealed this week that in the Meridian case, the judge in 2013 stated "[Calvert's] conflicting testimony described above is of great concern to the Court" after an attorney wrote "The Trustee s testimony about his access to trial balances and loan ledgers was false.". Avenatti cleverly referred to Calvert's conflicting testimony as "inartfully worded" (p11 footnote 9). Avenatti was also accused of lying in the Meridian case, stating that a $25M settlement was offered by Moss Adams, who denies it.
Natural Molecular Testing: The court filing that dug up the Meridian testimony concerns was filed in the Natural Molecular Testing case (one of just 3 bankruptcy cases Calvert has been Trustee for in the past decade). In the court filing this past week, the attorney bluntly claimed that "Mr. Calvert's testimony is false ... Mr. Calvert knew it was false." He further writes "a financial penalty alone may be insufficient to cause a change in what appears to be a pattern by this Trustee with respect to sworn testimony and compliance with the court s instructions and orders."
So just as Calvert's credibility is being put to the test in the NWTM case, we find significant issues with credibility in all his other recent cases (I am not aware of any issues with the Florida casino bankruptcy he was Trustee of in 2005).
Included were some gems:
Gearin wrote to Calvert "You might even get to come to the meeting if you don't email [person] again." In this case, "person" (I removed the name) was someone that Calvert was emailing directly, not through his attorney as requested. In another email, Gearin wrote to Calvert "Please don't forward this until we can finalize" (and yes, he forwarded it to 2 people). In another email, Gearin wrote to Calvert about emails that someone may not have been required to submit that reflected negatively on Calvert: "This is potentially very harmful. Very frustrating."
In another email, Calvert wrote to someone on the UCC: "feel free to draft an email but I will probably just delete it will not even read it."
Another email shows that Calvert almost gave away "highly valuable sales data that any competitor would love to get their hands on" to someone with whom there was apparently no NDA in place.
New Emails Filed
March 27, 2019 10:10AM EST
Earlier this week, Calvert submitted a select set of new emails that were requested by the judge.Avenatti's Role with Calvert, Cascade
March 26, 2019 5:40PM EST
Michael Avenatti, who was arrested yesterday, represented Calvert in the Meridian Mortgage bankruptcy (Calvert's first of about 3 bankruptcies he has been Trustee for). Avenatti represented Calvert in a lawsuit against accounting firm Moss Adams, as well as represented Calvert in the Meridian Mortgage bankruptcy. It appears that the bulk of the work done by Avenatti was in the Moss Adams lawsuit. The suit was filed on December 7, 2011 in King County Superior Court.
And yet, and yet.
- Cascade Capital worked on litigation with Avenatti in Mississippi, where a Cascade employee became familiar with the bank that Avenatti is accused of having defrauded
- Avenatti was referred to the bank that he allegedly defrauded by Calvert
- Avenatti pledged to the bank the first $500K of fees from his work with Calvert on the Meridian case
- Calvert intervened for the bank when the loan was due but unpaid, asking Avenatti about it
- Cascade Capital did due diligence work for Avenatti on Tully's Coffee, which Avenatti later bought in a bankruptcy auction
- It appears that at least 2 Cascade Capital employees were with Avenatti when he first heard about Tully's Coffee and expressed an interest in buying it
- A Cascade Capital employee worked at Avenatti's Global Baristas (the entity that bought out Tully's Coffee) as CFO/COO for 2 years. That same employee did significant work on the NWTM case (accounting for about 25% of Cascade Capital's requested fees for this case).
- That same Cascade Capital employee also brought at least one other Cascade Capital employee to Global Baristas
Calvert/Cascade Sued for Fraud
March 26, 2019 4:00PM ESTIn my investigations, I just found out that Cascade Capital and Calvert were accused of fraud in a counter-lawsuit in 2018 after a Cascade client was sued by Cascade for non-payment of a loan. It seems clear that the loan was not paid; however, the countersuit claims that Cascade had a fiduciary duty to them, charging them $350-$425/hour for restructuring advice while part of that advice was to get a loan directly from Cascade.
Cascade Employee Sued Avenatti for Fraud
March 26, 2019 2:25PM ESTI'm doing some digging into the whole Michael Avenatti thing.
I found out that a Cascade Capital employee who did some work on the NWTM case worked at Avenatti's Global Baristas (that bought out Tully's Coffee) for 2 years, as COO/CFO, during 2013-2015. In October, 2018, Avenatti paid the employee $35,000 as a settlement regarding money Global Baristas owed him. The check bounced, causing the employee to sue Michael Avenatti for a number of issues, including fraud.
Calvert's Former Attorney Arrested
Attorney Charged with Extortion, Wire Fraud, Embezzlement; Accused of Bankruptcy Fraud
Attorney Accused of 'Operating his law firm in a Ponzi scheme like manner'
March 25, 2019 3:45PM ESTIn Calvert's Meridian Mortgage bankruptcy (where he was the Chapter 11 Trustee), he was represented by Michael J. Avenatti of Eagan Avenatti (now Avenatti & Associates). Avenatti has previous connections with the Seattle bankruptcy court; he bought Tully's Coffee out of bankruptcy in 2013 (which was represented by Bush Strout & Kornfeld; Jay Kornfeld referred Calvert to Ross Hansen).
Avenatti was arrested this morning on charges of extortion by the Manhattan US Attorney's Office. He is alleged to have attempted to extort $20M from Nike.
He was separately charged with wire fraud and bank fraud by federal prosecutors in Los Angeles. The Department of Justice says that if he is found guilty on both charges, he will face a maximum of 50 years in prison. The U.S. Attorney stated "A lawyer has a basic duty not to steal from his client." An IRS Special Agent stated "Professionals, including attorneys, who create elaborate schemes that have no purpose other than to mislead others and defraud both their clients and federally insured financial institutions, run the very high risk of prosecution."
The Los Angeles charges involve embezzling funds to help pay for the company that bought Seattle's Tully's Coffee.
Avenatti's law firm was hit with a $10M judgment last year after the law firm was forced into involuntary bankruptcy. In this issue, a former employee accused Avenatti of hiding millions of dollars from creditors, stating "This includes brazen acts of bankruptcy fraud."
To be clear, Calvert appears to have only used this attorney to represent him during the Meridian bankruptcy (one of several other bankruptcies Calvert was Trustee for). I am including this because of its relevance: it involves a lawyer that represented Calvert, involves an allegation of bankruptcy fraud with ties to Seattle, and involves a Ponzi-like scheme.
I'm Sorry, Calvert
March 15, 2019 11:15AM ESTDear Mr. Calvert,
At the hearing on Wednesday, you said to Judge Alston "I find your comments offensive. And I find the blog offensive." (at minute 16:20) I assume by "blog" you were referring to my blog (I have never communicated with Judge Alston outside of letters in the court docket). I want to apologize, as I in no way intended to be offensive.
I have said many times that I try to be 100% accurate in my reporting, and reduce opinions and allegations to the bare minimum to get information across. To be fair, you were aware of my blog before your appointment as Trustee was approved, and had the opportunity to see that I write for the creditors and scrutinize Trustees.
Let me just say this: if you (or anyone!) find errors, mistakes, or untruths in my blog, please let me know ASAP so I can fix it. I really mean it when I say I strive for accurate reporting: on the rare occasions where errors are reported (I make mistakes, and so do my sources), they are usually corrected within minutes.
On the other hand, if what I write about you is true and you find it to be offensive, well, um, I'm sorry, but that is what this blog is about. You can control what you do, I cannot. I write for the creditors, and they need to know what is going on with the case.
On October 3, 2016, I read that the UCC supported you hiring a production manager, and on January 30, 2017, I read that the UCC supported you hiring a CEO. I didn't question those decisions, assuming the UCC knew the facts and supported you. Both of those now turn out to be lies (in my opinion, at least, based on the facts I have seen): the UCC did not support you, despite what the record showed at the time. This is not Monday morning quarterbacking. This is finding out on Monday morning that the team threw the game, and trying to figure out why, and if there is anything that can be done to salvage things. If you find this offensive, ask yourself who controlled it, and confront them.
Hearing: No Decision Yet
March 14, 2019 2:10PM ESTThe audio of the March 13, 2019 hearing was just released.
The short version: no decision was made yet on awarding fee applications.
Judge Alston started with concerns that Calvert gave work product in response to one or more FBI subpoenas, and should not have, as it is not usable as evidence. Judge Alston is also concerned that Calvert's attitude towards Ross Hansen may have clouded his vision of how he managed the case.
At 14:40, Calvert stated that he found the comments of the Court to be offensive, that he was considered a "mole" on the Meridian case, but it was never proven, and that the work he did was for the estate, and pointed out that he checked with his attorney before sending responses to subpoenas.
Judge Alston pointed out that the thumb drive with emails that were originally supposed to be filed were in 400 separate pdf files that were unsearchable, and as such, he was unable to go through them all. He did have a concern about an email from August, 2016 stating that an employee left, and was going to be sued, yet no action was taken. He had a concern about another email, where someone who was not an NWTM employee or professional with the case appeared to have been authorized to conduct negotiations, when they did not work for the estate.
Gearin pointed out that there were a number of instances of people stealing from the estate, and that Calvert "thoroughly investigated" every one. Gearin apparently thinks that Calvert's investigation of the allegations of theft of assets by Wagner (Calvert simply got a declaration from Wagner saying he didn't; later, he did an audit of die purchases) was "thorough."
At 41:25, Judge Alston says that he got the supplemental reply where the professionals offered a voluntary reduction in fees. Judge Alston pointed out that the reality is that they would be getting a reduction whether they want to or not, due to the lack of funds in the estate. He said it would be easy to do a pro-rata reduction, but he cannot take the easy way out, as he has an obligation to creditors, to the process. He said that any award would have to be after he has come to the conclusion that the professionals are entitled to compensation. He said he is not sure if it would be an oral ruling or a written ruling.
Gearin ended by pointing out that there have been a number of false accusations, including that China assets were diverted from the estate, that were proven false. Earlier in the hearing he pointed out how he has never intentionally misrepresented facts or tried to deceive the court. So, please, Mr. Gearin, can you please explain how Wagner's new business is able to use images that are exact duplicates of NWTM copyrighted images, despite the fact that Wagner declared he has never used any NWTM assets? Anyone? Anyone? Bueller?
Gearin/Northrup: Cut Our Fees 45%
March 11, 2019 3:20PM ESTIn a rare joint filing, Gearin, Northrup, Calvert, and Cascade Capital are all recommending that Judge Alston allow them to reduce their fees and costs from $5.5M down to $3.1M (with each person/group reducing their fees by about 45%), in order to address concerns that the judge had.
On its face, it looks like attorneys "choosing the right." However, the filing is designed for one goal: to make it appear that they are getting paid less, when in fact they are not. If approved, it is all just an illusion. Why? Because the estate only has $2.2M. The $2.2M (minus a very small amount for other administrative claims) will go to the professionals, whether they bill for $5.5M or $3.1M.
From my reading, Gearin and Northrup seems to suggest that their fees not be reduced below what cash is available, eliminating the possibility of unsecured creditors receiving a (small) payment, because "the administration of those claims would require extraordinary additional time and expense with little benefit to unsecured creditors without administrative priority." That is true, of course, but if the estate had been handled very differently -- perhaps $1.2M of total expenses with the same $2.2M cash -- no sane lawyer would ask for an extra $1M they did not bill for just because it would cost a lot to administer payments to creditors.
Northrup's Declaration
March 8, 2019 12:35PM ESTOn its face, Northrup's declaration is pretty basic. He included 4 items: the by-laws of the UCC, the minutes of the UCC meetings, an email he sent to Gearin with a UCC member's response to Gearin's request for communications with Ross Hansen, and emails Northrup sent to Gearin mentioning two specific UCC members.
But: boy, oh boy.
Northrup to Calvert (Cc:ing Gearin), 17 March 2017, 4:01PM and 4:37PM: "I had a long talk with [UCC member David Petteys]. We both agree that [the UCC co-chair] has to go. Petteys has agreed to approach [another UCC member] on the same issue, to see if [that member] will go voluntarily." and "Would the two of you consider asking the court/UST to remove [the other UCC member] from the Committee, based on their collusion with Ross and [the UCC co-chair], if they refuse to resign voluntarily? Petteys might find your view on this useful. Thanks." Petteys is the attorney representing a UCC member; Petteys is also the husband of a bankruptcy analyst in the Seattle office of the Office of the United States Trustee that has been involved in this case. Note that there is no sign of any evidence that the 2nd UCC member provided any information to Ross Hansen.
Northrup to Calvert and Gearin, 21 March 2017, 11:07AM: "Larry Ciappellone just called me about this ... Ciappellone would like to see [the other UCC member] and [the UCC co-chair] gone from the Committee but recognizes the bad blood that it would create if the Committee actually had to vote on removal. He is also concerned about who would vote. So his view is (and he makes sense) that the Trustee should take the lead on this, not only with the email but perhaps with a communication to Martin Smith." Ciappellone is another member of the UCC. 15 minutes later, Gearin sent an email to UCC members stating that the Trustee was starting an investigation, and that Calvert "demands immediate production" of emails to Ross Hansen.
For those that are confused: The attorney for the UCC appears to have convinced the opposing attorney to "take the lead" on an investigation with the clear goal of removing 2 UCC members. Wow. Just wow.
Gearin's Declaration
March 7, 2019 1:20PM ESTOne key takeaway from Gearin's declaration is that he stated that he was incorrect at the February 1, 2019 hearing when he said that everyone knew that the estate was administratively insolvent since the beginning of the case, and wishes to correct the record in that regard.
Similarly, he addressed an email he sent to a UCC member stating that she had not sent documents Gearin requested, when in fact she had. Gearin now says "It appears that I had forgotten about Mr. Northrup's prior disclosure of documents to me."
Gearin also supplied, as Judge Alston requested, copies of emails communicating with the attorney of the man who was the subject of a settlement agreement that was accidentally disclosed by a UCC member to Ross Hansen.
Calvert's Declaration
March 7, 2019 1:00PM ESTThe first item Calvert addressed in his declaration was Judge Alston's request that Calvert "state your due diligence prior to entering into an agreement with" the CEO Calvert hired. While Calvert mentioned that he interviewed the candidate and liked his sales forecast, and that the UCC interviewed him as well, I saw no mention of any active steps beyond that (such as checking references, or probing interview questions).
As I previously mentioned, Calvert (remember, he touts that he is a licensed Private Investigator) said "I investigated why" payments had been made to Atkins Intellectual Property. He mentioned questions about copyright issues on coins NWTM has sold. However, his whiz-bang PI skills apparently didn't detect that Atkins filed a trademark application about 2 months before the main $1,585 payment. Hmmm.
Calvert stated that NWTM received 8 (yes, eight) grand jury subpoenas. No further details about the subpoenas were given (they will be presented to Judge Alston for in-camera review, where they will not become public).
Calvert was asked about $1.2M of coins sold in 2016 after Calvert took over NWTM. He provided a 3-page list complete with order #, customer name, date shipped, month and year, and amount. Some of the customers are clearly individuals or businesses, while a few customers have names of "SHOWROOM", "Employee Mint", and "SALES SAMPLES". He stated that this inventory was mostly numismatics, and that "NWTM continued the business of buying and selling numismatics during the bankruptcy case." This is news to me, that NWTM was in the business of buying numismatics.
He mentions the sale of a spectrometer for "approximately $4,000" and who it was sold to, but oddly I cannot find the name of the buyer in any monthly operating report.
Calvert was asked to address what is left in the case. He mentioned liquidating the inventory, resolving items seized by the King County Sheriff in 2016, claims based on transfers made by Diane Erdmann, and paying administrative claims. He mentions nothing of the NWTM name, website, customer list, copyrights, trademark, and other intellectual property.
Judge Alston's request for more information from Calvert includes: why he checked "no" on monthly operating reports suggesting that no payments were made to professionals when in fact they were, why Calvert reimbursed himself and/or his company Cascade Capital without Court approval, the addition of some emails that Calvert did not include but was supposed to, clarification as to whether Calvert spoke with a specific attorney, and why the remaining tasks have not been completed and when Calvert expects them to be completed.
UPDATE March 7, 2019 7:20PM EST: This came from Northrup's declaration, but it "belongs" to Calvert. It came out that on November 16, 2017, 6 weeks before NWTM shut down without notice to employees, Calvert let the UCC know that he was preparing to do exactly that. Despite having a $10M offer to buy the company, Calvert presented the UCC with a 3-page "NWTM Close Down Action Items" list, with 52 items and a timeline for each. Some would say that he expected not to get the $10M (remember that the buyer, Gary Anderson, tried unsuccessfully raising the $500K downpayment via GoFundMe), others would praise Calvert for being pro-active.
Professionals Filed Their Declarations
March 7, 2019 10:05AM ESTThe bankruptcy professionals -- Mark Northrup (the attorney who represented the unsecured creditors committee), Mark Calvert (the Trustee), and Michael Gearin (the attorney representing Calvert) have all filed declarations that Judge Alston required of them. This was done late Monday.
I have gone over the declarations fairly thoroughly, but there is a bit more I still need to go through. One of the first things that I noticed was that Calvert seemed to blatantly ignore a number of requests, made at least one pretty big (yet not serious) error, and provided non-details (e.g. giving names, dates and dollar amounts of coins sold, but no hint as to what was sold). The error I noticed was Calvert's "investigation" showing that Atkins IP solely provided copyright advice (when in reality they filed a trademark application, likely accounting for most of the payment). Less than 24 hours after the filing, however, Judge Alston sent Gearin a letter listing 5 items that Calvert omitted (and 1 that Gearin omitted), and asking them to file the missing information by tonight.
In separate posts, I will go over some of the details discovered.
Ross Aware of Potential Fraud in 2015
February 18, 2019 1:40PM ESTRecently filed court documents show that on September 22, 2015 Ross Hansen asked Greg Fullington (NWTM's General Counsel) to look into the criminal charges against Hannes Tulving, Jr., and assess what sentence Hansen might receive for the same charge based on his criminal history. The next day, Fullington asked for permission to, among other things, audit the stored metal. Hansen denied the request, instead asking Fullington to draft a document explaining his concerns.
On September 28, 2015, Fullington sent a letter to Hansen, including:
- "It is my opinion that NWTM and Ross Hansen are more likely than not engaging in business practices that amount to fraud, misappropriation of customer funds, and Ponzi scheme pursuant to 18 U.S.C. 1343 and 17 C.F.R. 180.1. It is my belief that these business practices expose NWTM and Ross Hansen to criminal and civil liability."
- "NWTM has used some of the [metal customers stored] to fulfill bullion orders" (note the "has used", not "may have used")
- "Any statement that is sent to customers stating that they have a certain amount of stored bullion, when in fact they do not, is fraud."
- "NWTM is using customer payments to fulfill other customer s orders, pay debts of NWTM, and return money to previous customers who did not receive their orders. These actions are keeping NWTM in business. ... No audit is necessary to realize these activities are taking place at NWTM. ... these business practices are a violation of the law"
More Questions for Professionals
February 2, 2019 10:30AM ESTThe hearing can be summed up when Judge Alston referred to Gearin, Neu (who works a bit with Gearin), and Northrup as excellent lawyers with a great reputation... but that something happened here, maybe he will never know what, that is deeply disturbing. One recurring theme was information withheld from the court, such as the fact that NWTM was administatively insolvent if liquidated (e.g. a "fire sale" wouldn't result in enough money to pay all the professionals).
One key takeaway for Calvert is that Calvert was loaning the company money and not reporting it as loans. The judge even included one loan for $8,907.56 for various expenses that NWTM paid Calvert, where the Monthly Operating Report listed a payment payable to "Transfer" (not "Mark Thomas Calvert"), with a description of "TRANSFER" (not "Payback of loan" or "For expenses incurred"). Wow! Not only was he supposed to check the box saying that he loaned money, he hid it as "TRANSFER" (which to someone naive like me would sound like it was going to another NWTM account).
One key takeaway for Gearin is that Gearin kept making it sound like the company was administatively solvent, when in fact it was not, and Judge Alston might have made different decisions if he had known that.
One key takeaway for Northrup is that he forwarded a letter from a client to Gearin, possibly breaking attorney-client privledge.
Judge Alston had another list of questions for the professionals, that they must include in declarations due March 1 March 4.
Hearing Audio
February 1, 2019 8:15PM ESTThe audio for the February 1, 2019 hearing is now available.
I haven't listened to it all yet, but it sounds like new declarations are required, and the hearing has been continued until March 13.
Corrections
January 30, 2019 10:30AM ESTThose who read my site usually know that I have nearly an addiction for trying to get to the bottom of the truth (that's the point of the "... the buck stops here ..." at the top of the page). My goal when starting this site was two-fold: to provide easy access to facts about silver (and gold), and to debunk myths.
With NWTM, the Trustee provides very limited information, so I often have to post educated guesses. And while he is quick to attack my site (he claims that I have apparently "made a habit of spreading false and defamatory rumors and unsupported speculation" in docket 2016, and says that a letter I wrote to the court "is full of factual inaccuracies, hearsay, innuendo, and irresponsible speculation" in docket 1950), I am not aware of any time until yesterday that he pointed out any errors. When I find out about errors on my site, I correct them.
In this case, he pointed out that the $260K order that I reported on was mostly fulfilled, and just a portion (with a customer value of a bit over $7,000, and silver content of a bit over $3,000) was lost or stolen. Some questions remain, but I am satisfied with his answer.
He also included the results from a CPA firm that looked at accounting information from Sierra Mint, and concluded that Sierra Mint indeed paid for new dies.
Gearin stated that the items that Sierra Mint has for sale on Amazon (through their own account) are product produced by Medalcraft. That does not really contradict anything I have said, as it just becomes a matter of whether Sierra Mint or Medalcraft is using NWTM designs and copyrights. Gearin also said that Sierra Mint's phone number is on the NWTM Amazon account to provide customer service.
I wish that Calvert and/or Gearin would contact me when they are aware of what they believe to be misinformation on my site, which would allow it to be corrected more quickly.
$240K Loss: Inside Job?
January 28, 2019 7:15PM EST
I wrote last month about a $260K order that was stolen in 2017, that NWTM apparently paid $240K to replace.
A few facts: The company, W. R. Berkley, had an art design prepared on March 15, 2017, by Marty Colwell, for 100 1oz silver medals with gold plating ("Silver/Gold Select"), jobs A057451/A057452. The company sent a wire transfer for $122,500 on March 22, 2017. The company owed NWTM about $140,000 as of late July, 2017 when Wagner learned that the order was missing, and it appears they paid for it (a $143,200.98 payment was made on October 3, 2017, although who paid it is not certain). The package was shipped via UPS.
There are many questions about this that need to be answered:
- How many coins were ordered? It seems clear it was 194 pieces. However, the art sheet says 100, and Wagner initially says 800. Colwell corrects the 800, saying it was actually 194 pieces. Colwell refers to 194 pieces in another email.
- What metal and weight were the coins? I believe it was 194 1oz gold coins, which would have had a value of about $240K, in line with the price paid. However, Berkley had previously had 1oz silver coins produced by NWTM, the art sheet refers to "Silver/Gold Select" (gold plating), and two emails vaguely refer to silver.
- Was the package shipped uninsured? This is a key question. There seems to be nothing suggesting that the package was insured, and the I doubt that Colwell would give up his commission on the order if the loss was covered by insurance. Did NWTM normally ship high value packages uninsured?
- Was the package shipped with no return address? Wagner wrote "we should have had our phone number and return address on the package." Is it possible in this day and age, where virtually all packages are shipped with computer generated labels, that there was no return address?
- Why did it take over 3 months to discover? How in the world could NWTM have a $140K invoice 90 days overdue without anyone noticing that the order was never delivered? Did we not try even once to contact them to ask why this Fortune 500 company was not paying?
- Why did Wagner think this was an overseas order? The initial email from Wagner indicated an order of 800 coins, shipped overseas.
- Why did NWTM have to ask the customer for tracking and the address it was shipped to? Emails indicate that when asked for the tracking information, Colwell contacted the customer to get it and the address the order was shipped to. Why didn't NWTM have the tracking number and shipping address of a $260K order?
- Did NWTM file a police report? I suspect that they did not.
So there are some questions that really need to be answered, and strong signs that this could have been an inside job. And if the Trustee did not file a police report, and it was an inside job, what can be inferred from that?
Anyone have any details on this order? Feel free to share (you can send anonymous tips on that page).
UPDATE January 30, 2019 10:00AM EST: Gearin filed information with the court showing that only an order with about $3,300 of silver was stolen. I was right that the company paid about $260K ($261,550), and put down a $122,500 deposit. However, it was for 7,000 1oz silver coins to be delivered to about 70 locations. Only the 194 silver coins sent to the Irving, TX location were stolen/lost. While there are still a few questions, they are now very minor given the comparatively small amount.
Many Objections...
January 25, 2019 6:20PM ESTThere have been many objections to the fee applications. By my count, there have been 21 objections: 2 last week, 10 on Tuesday of this week, 5 on Wednesday, 3 yesterday, and 1 today.
Unfortunately, the majority were by uninformed creditors, who are hoping that creditors will be paid before the professionals, with no further reasoning. While I would love that, bankruptcy laws normally require professionals to get paid first (which makes perfect sense: otherwise, what person would offer to work on a bankruptcy case?).
However, there have been several cogent arguments for not paying the professionals. These include several people who have asked about concerns such as Sierra Mint using NWTM assets without paying, the $260K order that was shipped uninsured and was stolen/lost, the $80K uninsured cash shipment (and the cash shipment of an unknown amount that was stolen/lost). The NWTM CEO filed an objection, as did one of the members of the creditors' committee. Although objections were due today, it is likely that some more will surface next week.
UPDATE January 30, 2019 10:00AM EST: The stolen coins were only worth about $3,300, just a small part of the $260K order.
CEO Made Offer to Buy NWTM Assets
January 25, 2019 12:50PM ESTNWTM CEO Bill Atalla filed a declaration yesterday, indicating that he made a proposal earlier this month (through his attorney) to buy the intellectual property assets of NWTM and to take the store inventory on consignment. And that neither Calvert nor Gearin has responded to the offer.
This is critical, as it involves what Sierra Mint is doing. The offer included among other things the Amazon Store (which Sierra Mint appears to have taken over), the NWTM trademark (which Sierra Mint is using at the Amazon Store), the NWTM copyrights, art, and designs (which Sierra Mint has been using). If Calvert entertained this offer, it would at least make it appear like he has nothing to do with Sierra Mint (people are concerned of wrongdoing; anything ranging from making promises to Wagner to funding Sierra Mint, although I have seen no evidence of such). But Calvert ignored the offer, as he has done numerous times before. Can we say 'suspicious'?
Calvert looked the fool by simply saying he believes Wagner when Judge Alston asked him to investigate Sierra Mint's usage of NWTM assets. So this begs the question: if Calvert isn't colluding with Wagner, why ignore the offer? If the assets are worthless, as suggested in court, why not work with Atalla to try get some money for creditors? I believe Calvert would have a financial duty to look into such an offer.
It seems that every action that Calvert takes involving Wagner and Sierra Mint makes it look like the two have some sort of agreement. Hopefully, Calvert will address this at the hearing. The only way I can see of distancing himself from Wagner is an unbiased investigation of the Sierra Mint business. Or accepting an offer for the assets Sierra Mint is using.
Declarations: Key Takeaways
January 23, 2019 3:00PM ESTThe professionals either did a really lousy job with their declarations, or are hiding something (remember, there is $2M cash sitting in the bank riding on these declarations: they have a strong incentive to be as forthcoming as possible). Some key takeaways:
- Northup admitted that he immediately forwarded a (probably confidential and/or priviledged email) from the UCC co-chair to Gearin. Judge Alston said it would be "stunning" if this happened, that it might amount to "ratting out a client"; the judge appears to believe this would violate basic rules of conduct. Northrup uses the excuse that the co-chair intended the document to become public, but it never became public because Northrup never forwarded the letter to the court.
- Gearin admitted to contacting UCC members directly, rather than through their attorneys, something that may be a violation of basic attorney ethics. Northrup at the December 7 hearing tried to use the excuse that there was a "joint defense" as part of the confidentiality agreement UCC members signed. Gearin instead declared that he originally asked Northrup to take care of getting emails from UCC members, but they agreed for Gearin to do so, and that Northrup was aware that Gearin was contacting the co-chair directly (which resulted in his resignation the next morning, although Gearin claims he did not require it). Northrup does not recall giving this permission, but believes it wasn't necessary as Gearin was contacting the UCC members as individuals, not the UCC itself (despite the fact that Gearin originally approached Northrup to have Northrup take care of it, and Northrup purportedly offered the co-chair advice about not resigning). Northrup apparently sat on the fact that he was expected to ask UCC members for emails, and never told them.
- Calvert was asked both [1] about the dies, which has been a big issue since the beginning, and [2] about any auctions. He failed to disclose that thousands of dies were sold at auction in December, 2018. This is an issue because he failed to disclose this in his declaration, he never filed an application for employment of the auctioneer, and it really looks like he was hiding these assets (despite the fact that their value is minimal).
- Calvert appears to have lied under penalty of perjury when he wrote of the inventory "The whole process was recorded on NWTM security tapes." However, I had previously discovered that while the inventory in Dayton was recorded on security tapes, there is nothing suggesting that the inventories at the other 2 locations were recorded.
- Calvert was asked to "unbundle" his time entries, with the specific example given of his company billing for 11 hours for multiple tasks, and that while Judge Alston admitted it would be a pain, it was something that Calvert inflicted upon himself. Calvert did not unbundle the time entries, even keeping that 11 hour billing entry the same.
- Calvert gave as an explanation why Edgar Chacon was paid $26,000 in August 2018 for "EXP REPORT" that they were "out of pocket expenses." For someone tasked by Calvert to ship $80,000 of cash uninsured, $26,000 may be considered an "out of pocket" expense! Calvert did list a few samples of what each payment was for, but each payment covered multiple expenses, which were not broken down.
- Judge Alston inquired about an expense entry on May 31, 2018 of "Review P. Wagner contract", and asked Gearin and/or Calvert to include any contracts in their declaration. Gearin included a copy of a contract dated July 5, 2018 that Wagner apparently proposed on August 14, 2018. And Calvert said that was the only contract. So why did they not address the May 31, 2018 contract, that in court was represented as the one-and-only Wagner contract?
- Northrup in a December, 2018 filing refers to a "plan [of Wagner] to take over the China business" that he communicated to a UCC member (the exact quote was taken from me, who got it from a filing by the UCC member). Yet Calvert declares on page 9 "I did not learn of a plan to take over the Chinese business by Mr. Wagner" (instead referring to a "business plan" (actually financial projections) to reorganize NWTM). This goes to the core of the shenanigans: An attorney and the Trustee have reported information that conflicts. So who is right?
Gearin's Declaration
January 22, 2019 1:35PM ESTAt the December 7, 2017 hearing, Judge Alston asked Gearin for a declaration.
First, Gearin was asked to provide authority for why Calvert could reimburse $31,000 of expenses without disclosing them in the monthly operating reports. I see nothing in his declaration addressing this.
Next, Calvert and Gearin were asked to "both" explain why statements were made that if a liquidation occurred, the estate would be administratively solvent. I see nothing in his declaration addressing this. Perhaps Gearin believed that Calvert's explanation was sufficient, but Gearin was specifically asked to address this.
Next, Gearin was asked to provide emails related to the resignation of the co-chair. He provided those. I'm covering the details of those separately.
Gearin needed to address whether he received the letter from the UCC co-chair that Northrup was instructed to forward to the court (that Northrup never forwarded to the court). He admitted that he did receive a copy of the letter, forwarded from Northrup.
At the hearing, Gearin said that he had permission from Northrup to make demands of the UCC members directly, rather than through Northrup. He said "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." He reiterated this in his declaration, stating that he and Northrup agreed that Gearin would email the UCC members. However, Northrup states that he has "no recollection of formally authorizing [Gearin] to contact Committee members". Hmmm.
Gearin was asked what he said in a 42-minute phone call with the co-chair the day before the co-chair's resignation, and he did provide details (again, I'll be addressing that issue separately).
Northrup's Declaration
January 21, 2019 8:50AM ESTAt the December 7, 2017 hearing, Judge Alston asked Northrup for a declaration.
The first issue was the resignation of the co-chair of the UCC. It is complicated, but putting the pieces together, it seems that the co-chair offered to Northrup to resign, but was told that it was not necessary. It seems clear that he did not want to resign, but accepted that it might be necessary, and was willing to do so if needed -- and only did very shortly after Gearin went after UCC members individually with an email whose subject started with "Litigation Hold Notice". It seems from my reading that the resignation was done under the belief that it would help protect him against legal action.
Judge Alston asked if the UCC voted for a forensic audit (Northrup had responded at the hearing "not formally"). In Northrup's response in the declaration, he says that 2 UCC members demanded an audit of Calvert's books, but that the UCC never voted to have an audit. He says that they voted to have a financial advisor, and that Northrup "understood Ms. Barrick s principal potential duties to include reviewing monthly operating reports and financial projections, particularly including projections which the Committee expected the Trustee to present as part of a Plan of Reorganization." It is unclear how Northrup did not understand her duties to include an audit of the books if 2 UCC members were demanding that. It is also unclear how one UCC member stated that the UCC "voted to demand a forensic audit of Mr. Calvert's books", but Northrup says they did not. And it is unclear why Northrup says no vote was taken to have an audit if he was aware that 2 UCC members demanded an audit.
Next, Northrup was asked to address whether the UCC approved the omission of some information from the UCC's response to the employment of a production manager (removed from a draft were their concerns that there was already a production manager, and what authority the manager would have to make personnel decisions). Northrup stated that Calvert opposed giving the manager the requested authority, and the prospective manager agreed. As for approval by the UCC, Northrup says that he wrote to the "point person" saying that Northrup was "recommending" a change of course, and the point person responded "Do what you think is best from the legal perspective ... So what would your amended text now say?". Northrup did not include any evidence that the UCC approved the change, aside from one member both saying to do what Northrup thinks best and asking to see the new text (in other words, that is NOT authorization).
After that, Northrup was asked if the UCC wanted Northrup to take action to remove Calvert, and if so, why no action was taken. Northrup stated "At no time did the Committee ever cast a vote to have the Court remove the Trustee". Judge Alston asked if the UCC wanted the action, not if they voted. Northrup said he responded to the letter he was sent by the UCC co-chair requested Calvert be removed, but did not include a copy of it.
Judge Alston asked to see the email of the UCC co-chair resigning if there was one. There was a phone call on March 14, 2017 where Northrup says the co-chair said he "would voluntarily resign from the Committee." This seemingly conflicts with the information from the co-chair, who said he offered to resign, and that Northrup said it was not necessary; Northrup did not deny this account. The co-chair specifically told Northrup on March 20, 2017 that he had not resigned, just offered to, and that Northrup said it was not necessary. The next day, Gearin sent his demand letter to UCC members (that may have been a violation of lawyer ethics), and by the next morning at 8:40AM the co-chair sent his official resignation to the U.S. Trustee, apparently under the impression that he would not be pursued legally if he resigned.
Judge Alston asked Northrup how the disclosure of a settlement agreement could have been confidential if the agreement stated in it that it was to immediately be filed for approval. Northrup said that UCC members had been told that "strategic litigation information" was confidential. Northrup did not further address Judge Alston's question of how this specific information could have been confidential. Further, the information was disclosed by Northrup at the very end of a lengthy email response to the co-chair responding to his demand to have Calvert removed, in a sentence "By the way, good news, the Trustee has reached a settlement with Mr. Bressler." That was the source of the information that was given to Ross, with no hint that it was confidential or strategic litigation information.
Next Northrup was asked the purpose of hiding the existence of a settlement agreement from Ross. I do not see this question addressed. This is critical, because if there was no benefit to keeping the existence of the agreement from Ross, and the agreement said to file it immediately, it could not have been confidential. If it was not confidential, the forced resignation of the UCC co-chair was a serious problem.
Then Northrup was asked if he forwarded to Gearin the letter from the co-chair demanding the removal of Calvert. Northrup responded at the hearing that he did not remember; Judge Alston said that wasn't acceptable, that this may be the most critical question of the day, that he was concerned that Northrup "ratted out a client". Gearin responded at the hearing that he wasn't certain if Northrup forwarded him the letter (yet billed $270 to read and respond to it). Judge Alston said there was an allegation that the letter was forwarded by Northrup to Gearin, and it was be "stunning" if Gearin received it from Northrup. Northup forwarded the co-chair's email to Gearin 28 minutes after the co-chair sent the email. Northrup used the excuse that the co-chair demanded the document to be filed with the court as a public document. But, Northrup's action of not adhering to the demand turned it into a private document! I'm sure that the co-chair would have been thrilled for the email to have been forwarded to Gearin -- after it was filed with the court.
Northrup was also asked to include if he was given permission by the co-chair to forward the email. Northrup chose not to address that, so presumably he did not have such permission.
Finally, Northrup was asked if he authorized Gearin to contact the co-chair about the disclosure of confidential information. Northrup declared that he does not recall giving such permission. Northrup also said that it was OK for Gearin to do so, since the UCC's attorney does not represent individual members, and Gearin's email was sent to UCC members individually. However, Northrup also included an email showing that Gearin, upon seeing the letter from the co-chair demanding the removal of Calvert, requested that Northrup initiate an investigation. So Gearin originally tried to go through Northrup, not individually member, which seems to kill Northrup's argument that the UCC's attorney should not represent a UCC member individually.
Calvert's Declaration
January 20, 2019 11:50AM ESTHere, I'm going in order by what Judge Alston asked Calvert for at the December 7, 2018 hearing. I'm not including everything, since there is quite a bit of "housekeeping" (verifying that certain things happened correctly, that did). Remember, Calvert was asked these questions in order to get paid. If he omits information, he could easily get paid less than requested. If I was asking a judge for over $2,000,000 for me and my company (although there is only enough cash to pay about 40% of that), I would provide every last detail, and not skip a single thing.
The judge asked Calvert if he had any consignment/auction agreements, and that if so, they should have been reported in the monthly operating reports (UST-17 "Other Information", question 1). Calvert fessed up to the Holabird auctions I have been reporting, including a copy of one contract -- but it does not include the dies (Holabird auctioned off thousands of the dies that Ross Hansen had collected though NWTM). This omission is especially problematic as the judge also had asked about the dies (more on that below). There is also the question of whether Calvert needed permission to hire the auctioneers. Calvert points out that docket 1772 authorizes him to "sell, whether by public auction or private sale(s)" the remaining NWTM property, but 11 USC 327 requires approval of auctioneers. Does Gearin think that the court made a blanket approval of any/all auctioneers -- especially one that has connections to the case (Fred Holabird looked at buying NWTM, either directly or through Rodger May).
The judge asked Calvert to explain why $31K of his expenses were not disclosed in the monthly operating reports (UST-14 "Payments to Attorneys and Other Professionals (requires court approval)"). He explained what the expenses were for, but not why the payments weren't listed. I guess not explaining is better than writing "I goofed" or "I'm incompetent" or "I don't really understand those forms." Gearin was asked to provide authority for why the expenses did not need to be properly disclosed, and Gearin's response was the same: ignore the question and not answer it. Better to remain silent and be thought a fool than to speak and to remove all doubt?
The judge asked about the store inventory, where it was located and when it was obtained, and if it was obtained during the case. Calvert answered at the hearing that it is stored in Kirkland, Washington. But his declaration under the penalty of perjury does not seem to mention where it is located or when it was obtained. Again, silence: Calver did not answer.
There were questions about when the estate was considered administratively insolvent (meaning that the professionals might get paid some money, but there wouldn't be enough for creditors). Some things occurred in the case that would not have if the estate had been considered administratively insolvent since the beginning (e.g. creditors would not have had to file claims). The response was basically that there was hope that the company would become profitable (which seems valid to me), but this is a complex issue I haven't looked too far into.
Calvert was asked to answer whether he learned in 2016 of a plan to take over the China business. Calvert denied that, saying that Wagner prepared a "basic business plan" to reorganize the company based on having almost all operations done in China, and provided a copy of the plan (really just financial projections). Calvert's denial under penalty of perjury conflicts with Northrup's statement (p5) that he shared a plan to take over the China business with a UCC member.
Then the judge asked about an expense entry regarding a contract with Wagner. Calvert said in his declaration that Wagner produced a draft of a consignment agreement that was never finalized, that would have required court approval. The contract would have allowed Wagner to sell NWTM stock/store assets, send all payments to NWTM, and NWTM would pay Wagner a commission. It would have Wagner transfer the assets into local storage in Western Washington, and sell them on Amazon and eBay, shipping assets to warehouses as necessary, with Wagner owning and managing eBay/Amazon accounts. The inventory has been transferred to Western Washington, an 11 minute drive from Wagner's house, Wagner has taken over the Amazon account, Wagner has sold NWTM assets, yet there is no sign of Wagner making payments to NWTM. Yet Gearin said Wagner made the proposal in August, 2018 (which expense applications confirm to be August 14), the contract was dated July 5, 2018, but the original expense entry Judge Alston asked about was from May 31, 2018!
Judge Alston next asked about dies, as it was a concern to the court and creditors: how many were there at the beginning, how many now, and where are they located? Calvert came up with "NWTM possessed thousands of dies." Huh. 400,000? 5,000? He clarified that there were 12,037 NWTM dies created for custom jobs, with the remaining NWTM dies (no number given) being for stock product. He says that he saw no evidence that the dies in China were owned by NWTM, and if they were, they might be impossible to recover. He did not state how many dies were there at the beginning, did not mention Medallic dies, did not mention how many stock dies were given to Medalcraft, and did not mention the 1,000s of dies Holabird auctioned in December.
Judge Alston stated that local bankruptcy rules require for extradordinary expenses a statement of the date incurred, a description, the amount, and necessity. Calvert went over some (but not all, e.g. photography), but not a specific list (the word "extraordinary" does not appear in his declaration). Calvert stated that a $6,000 payment originally listed as "MEALS - TRAVEL" was really "Hours Worked".
Calvert was asked about $26,000 of payments to Edgar Chacon in August, 2018 that Calvert had listed as "EXP REPORT" (at the hearing, Calvert said "I do not recall" what the expenses were for). Calvert has now declared that these were "out of pocket" expenses (who keeps $26,000 in their pocket?), for what appears to be equipment rental, airfare, supplies, postage, clean-up crew, and landfill costs(???). One example for a $8,427.91 payment to Chacon originally described as "EXP REPORT" was in the declaration as "EQ Rental, Supplies, Clean-up Crew Payment" -- that is all the detail given. Was Chacon writing checks to these people, or paying cash? Why would he write personal checks for equipment rental and clean-up crew, instead of NWTM? How did Chacon trust that he would be repaid the $26K, and not end up with an administrative claim? Is this related to the $80,000 of cash that Chacon shipped to Calvert, and/or the cash shipment Chacon sent to Calvert that was lost/stolen?
Calvert was asked to provide emails regarding requests for auctioneers; he did not.
Judge Alston also pointed out that the Trustee's company needed to eliminate "block billing", giving as an example 11 hours ($3,300) billed for "Sub-con review and analysis. Review of check activity per Homestreet. Obtain detailed activity from Homestreet bank activity; integrate into master bank data" that was in the "Investigation - Fraud" category, but then changed to the "Bank Database" category in the latest fee application. The judge said it would be a pain to unbundle, but it was self-inflicted. Calvert did not change a single thing with that entry.
Calvert, Gearin, Northrup Declarations Filed
January 19, 2019 9:45AM ESTThe Chapter 11 Trustee Mark Calvert, his attorney Mike Gearin, and the Unsecured Creditors Committee's attorney Mark Northrup have all filed the declarations that Judge Alston required before he could approve their fee applications. David Neu, who works with Gearin, also filed a short declaration.
I will be going through these and likely updating this post today. However, you can download the declarations: Calvert, Gearin, Neu, and Northrup.
Criminal Trial Moved to June, 2019 October, 2019
January 8, 2019 12:25PM ESTThe Ross Hansen and Diane Erdmann criminal trial has been postponed to
Hansen and Erdmann had requested the trial to be continued to October 21, 2019. While the judge agreed that a continuation would be necessary to ensure proper justice, he did not feel that it was necessary to delay until October.
UPDATE January 24, 2018 8:05AM: The prosecutors and the defense both requested the judge re-consider, and he has allowed the continuance: "JURY TRIAL is continued to 10/21/2019 at 9:00 AM in Courtroom 13106 before Judge Richard A. Jones."
What now? ACTION.
December 27, 2018 3:20PM ESTThe bankruptcy system in Seattle has proven to be dysfunctional, and has failed creditors. There is seemingly incontrovertible proof that bankruptcy fraud occurred, but the Trustee says "I believe [Wagner]", the Trustee's attorney told the judge "this did not happen", the UCC's attorney took no action, and the U.S. Trustee's office said it has taken whatever action (if any) it will take. The voices speaking for creditors appear to have been stifled.
Let's not let these professionals ignore what appears to be clear fraud. Let's not sit back and take it.
If the system worked, a Trustee with business skills would have taken over at the beginning, and fired Wagner rather than fear him. If the system worked, when the UCC voted for an audit of Calvert's books, it would have happened. If the system worked, when the UCC wanted Calvert removed, it would have happened. If the system worked, the Trustee would never allow a $240K loss due to a single uninsured package. If the system worked, the Trustee would not be shipping $80,000 of cash uninsured (who buys $80,000 of surplus equipment with that much cash?), after losing a $240K uninsured package. If the system worked, the UCC's attorney would get paid to accuse Wagner of fraud with no risk, and I wouldn't have to fear a lawsuit by stating the obvious. If the system worked, NWTM may well have survived, and brought a return for creditors.
Think of taking action here like voting: it's important to do. If you don't take action, you are essentially giving a vote saying "It's OK for this to happen."
STEP 1: In just a couple minutes, you can get educated on the the seemingly incontrovertible proof of fraud.
STEP 2: Take the action appropriate for you, given your time and resources (anywhere from a few minutes and free to hiring an attorney to sue). I've got a page explaining how to take action.
With a few minutes of time, you can potentially make a huge difference in the outcome of this case.
UPDATE January 30, 2019 10:00AM EST: The stolen coins were only worth about $3,300, just a small part of the $260K order.
Hearing Summary
December 11, 2018 8:05AM ESTIn 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 ESTI 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-priviledged 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.
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 ESTAUDIO 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 they 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.
UPDATE January 30, 2019 10:00AM EST: The stolen coins were only worth about $3,300, just a small part of the $260K order.
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.
UPDATE January 30, 2019 10:00AM EST: The stolen coins were only worth about $3,300, just a small part of the $260K order.
Calvert Feared Wagner Would Compete
December 5, 2018 8:35PM ESTIn 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 ESTCalvert 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 ESTI 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 ESTOn Friday, December 7, 2018, there will be a hearing primarily regarding the expense applications of the professionals. They are requesting:
| Professional | Fees | Expenses | Total |
|---|---|---|---|
| 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 ESTThe 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 ESTI 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 ESTI 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 ESTI 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 ESTAll 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 ESTThe 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 ESTOn 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 ESTPaul 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 ESTI 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 ESTJudge 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.
UPDATE January 30, 2019 10:45AM EST: On January 29, 2019, Calvert produced a letter (pp19-20) showing an independent report from a Seattle CPA firm showing that Sierra Mint did, in fact, pay for dies.
Trustee/Wagner Declaration Issue #3
Hiding the Trustee's Knowledge of Sierra Mint
November 15, 2018 8:55PM ESTThe 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.
Trustee Declaration Issue #2
The Wagner Memo
November 15, 2018 3:50PM ESTStarting 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 ESTIn 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 ESTNWTM 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 ESTOn 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 ESTI 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 ESTA 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 ESTIn 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 ESTHalloween 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 ESTI 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 ESTOn 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 ESTThe 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 ESTSomeone 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 ESTI 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 ESTI 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"
6,000 Pages of Emails
October 12, 2018 1:20PM ESTI 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 ESTWhen 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 ESTI'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.
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$150K on Post-Shutdown IT
October 8, 2018 1:30PM ESTNWTM 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 ESTThe 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):
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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 ESTIn 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 ESTI'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 ESTEach 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".
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 ESTOn 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.
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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.
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WARN Settlement Update
September 14, 2018 8:20AM ESTJudge 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 ESTThank 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 ESTWhen 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 ESTSomeone 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 ESTYesterday, 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 ESTAs 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 ESTIn 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 ESTIn 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 ESTBoth 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)
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Wanted: Calvert's Misinformation at about.ag
August 10, 2018 7:00PM ESTAs 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 ESTThe 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 ESTAugust 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 ESTMr. 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 ESTIn 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 ESTThe 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 ESTThe 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 ESTToday 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 ESTAs 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.
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Change in Wording...
July 20, 2018 8:30AMLater 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 2:50PMI 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 1:45PMThe 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 11:45AMAt 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 8:55PMOver 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 3:15PMChapter 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 8:05AMYesterday, 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 8:20AMChapter 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 9:00AMEvery 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 4:25PMToday, 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 4:25PMIn 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 3:05PMToday 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 11:55AMIn 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 5:20PMIn 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 1:45PMChapter 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 7:50AMThe 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 7:45AMThe 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 2:30PMJudge 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 3:30PMThe 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 2:00PMOn 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 8:25AMI 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 8:45AMI 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 3:50PMToday, 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 1:25PMAs 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 8:40AMI 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 4:30PMJudge 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 5:10PMYesterday, 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 8:30AMToday, 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
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 8:10AMMichael 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 1:40PMAs 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 10:05AMThis 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.
| Person | Position | Joined | Info |
|---|---|---|---|
| Mark Calvert | Part Owner Founder | 2009 | Chapter 11 Trustee for NWTM bankruptcy. Chapter 11 Trustee for $140M Ponzi Scheme. |
| Tod McDonald | Part Owner | 2011 | Did $225K of financial work for NWTM via Calvert's Cascade Capital. Lead financial investigator for a $140 million ponzi scheme. |
| Bruce Hull | Part Owner | 2011 | Bankrupt when he became a part owner. Disbarred in 2013 for embezzling over $100,000 from trust accounts of clients. |
| JM, BM, TM, DC, JB | Part Owner | 2011 | Referred by, and using disbarred attorney for mailing address. |
| WW | Part Owner | 2011 | Referred by, and using disbarred attorney for mailing address. Name does not seem to exist in the United States. |
| Jody Cannady | Employee | 2011 | Did $115K+ of financial work for NWTM via Calvert's Cascade Capital. Led the botched NWTM bankruptcy inventory. |
| Terry Cosgrove | Part Owner | 2012 | An expert in the fishing industry, that went to prison in 2017 for embezzlement. |
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 3:35PMI 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 9:35AMSomeone 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.
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Possible Recourse: Washington State 'Tort Form'
April 30, 2018 8:55AMI 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 7:25PMExperienced 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 4:35PMIn 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 4:35PMThe 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 4:25PMThe 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 1:45PMWhen 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 6:50PMLooking 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 1:40PMSince 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.
| Date | Description |
|---|---|
| Feb. 23, 2016 | $38M defamation verdict in Cohen case |
| Feb. 26, 2016 | Mr. Kornfeld suggests to Ross that Mr. Calvert become involved in discussions |
| March 1, 2016 | Mr. Kornfeld discusses the case with Mr. Calvert |
| March 5, 2016 | Mr. 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, 2016 | NWTM pays $10,000 to Larry Feinstein, a local bankruptcy attorney |
| March 18, 2016 | Domain 'existingbullionorders.com' registered |
| March 18, 2016 | Ross pays Hannes Tulving's criminal attorney a $25,000 retainer. The funds come from cash that Diane deposited earlier in the day |
| March 25, 2016 | Mr. Kornfeld advises Ross that Mr. Kornfeld and Mr. Calvert will not proceed. The reason for this is unknown. |
| March 25, 2016 | Ross 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, 2016 | Bankruptcy petition filed |
| April 5, 2016 | Ross' attorney files motion to hire Bill Weisfield of Elliott Bay Asset Solutions, LLC to be Chief Restructuring Officer |
| April 5, 2016 | Mr. Gearin communicates with Tracy Law Firm about objecting to hiring Mr. Weisfield as CRO, apparently as Mr. Calvert's personal attorney. |
| April 6, 2016 | Mr. 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, 2016 | U.S. Trustee files an objection to the motion to hire Mr. Weisfield |
| April 6, 2016 | Mr. Weisfield withdraws from consideration |
| April 7, 2016 9:30AM | Hearing on appointing a Trustee. |
| April 7, 2016 | Judge Alston signs order that the U.S. Trustee will appoint a disinterested person to serve as trustee. |
| April 8, 2016 3:10PM | U.S. Trustee requests the Court to allow Mr. Calvert to be the Trustee. |
| April 8, 2016 | Mr. 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, 2016 | The Judge allows Mr. Calvert to be the Trustee. |
Scheme To Prevent Bids for Medallic
April 22, 2018 12:15PMFrom 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
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.
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).
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?
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."
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?
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.
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.
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.
Both Hansen and Erdmann pleaded Not Guilty. A jury trial is scheduled for 6/25/2018 at 09:00 AM
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."
[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.
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?
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.
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 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.
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.]
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.
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."
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.
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!!"
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.
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
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.
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.
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).
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?
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).
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]
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]).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).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.More on Die Sales
April 21, 2018 9:00AM
The Trustee filed the March, 2018 monthly financial report, which I have been going over.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."...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.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.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.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.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.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.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."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.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.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.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.Was Some Missing Metal There?
April 10, 2018 1:05PM
I heard something interesting this morning.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.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.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.'$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).500,000 900,000oz of brass/copper; a lot, but imaginable.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.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).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.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).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).
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