Stem cell investor fights IRS debt
U.S. tax agency claims $3.8 million owed
Guardian Business Editor
The co-founder and key financial backer of a stem cell treatment facility in Grand Bahama is in the midst of a court battle to have $3.8 million in debt to the Internal Revenue Service (IRS) discharged due to alleged inability to pay.
As Parliament yesterday debated the Stem Cell Bill, which would put in place the legal framework to govern stem cell research and treatment in this country, it emerged that Matthew Feshbach, CEO of the Okyanos Heart Institute, declared bankruptcy in the Florida courts in June 2011.
Since this time, Feshbach and his wife have been seeking to have a $3.8 million debt relating to 2001 tax liabilities discharged, alleging that in 2011 their joint assets amounted to just $138,000, according to documents filed in the Middle District of Florida’s Tampa Division of the U.S. Bankruptcy Court.
A government minister, who declined to go on record, said yesterday that the Christie administration is unaware of Feshbach’s court battle with the IRS.
Okyanos Heart Institute is at present the only stem cell facility to have received government approval to operate in this country and was mentioned by name several times during yesterday’s parliamentary debate.
In an April 4, 2013, filing for a motion for a summary judgment on Feshbach’s desired discharging of the IRS debt, the Feshbachs’ attorneys describe the pair as “honest and unfortunate debtors” who cannot pay their creditors.
In a declaration dated November 12, 2011, Matthew Feshbach stated the “massive tax liability from 2001 arises from ‘phantom income’ triggered by changes in the tax code that affected some of the hedge fund positions I was managing”.
“We are not millionaires,” said Feshbach in the declaration to the court. “In fact, the very generous appraisal of our assets recently obtained by the Chapter 7 trustee in our case showed that all of our assets totaled $138,000.”
In support of his claim that he is unable to pay the IRS, Feshbach stated in court filings that he became “seriously ill with chronic pelvic pain syndrome” in 2008, “curtailing his ability to restart and investment business, interview for employment with an investment firm or otherwise engage in meaningful business opportunities.”
Court documents show a hearing took place on Tuesday relating to the motion for a summary judgment on the question of discharging Feshbach’s IRS liabilities. The outcome of that hearing is at present not clear. The matter was previously set down for trial on August 20, 2013.
Feshbach has stated that he has not sought to evade his debts and engaged in “numerous attempts to work with the IRS prior to seeking bankruptcy.” Court documents filed on his behalf state that he paid the IRS $5.62 million in principal taxes due, interest and penalties since 1999.
The former hedge fund manager has described the Okyanos Heart Institute, set to be based in Freeport, Grand Bahama, as offering “a new option, standard of care and quality of life to patients with coronary artery disease (CAD), utilizing cell therapy technology from the growing field of stem cell therapeutics.”
According to information on the Okyanos Heart Institute website, Feshbach co-founded the facility with Manuel Vianna, who lists Feshbach’s now defunct hedge fund operation – MLF Investments – as a former place of work on his LinkedIn profile.
MLF Investments was liquidated in 2008, according to Reuters news agency, after it “suffered a reversal of fortunes”. Prior to founding MLF Investments, Feshbach, the article notes, had been “one of the most famed short-sellers of the 1980s” gaining “praise and vilification” for his strategy of betting on stock declines.
In a statement to Guardian Business on Tuesday, Okyanos spokesperson Erika Mansur had described how Okyanos Heart Institute intends to undertake a hiring drive should the Stem Cell Research Bill be passed by the government.
Mangrum said that construction of the facility would be completed by “the end of the year.” Late last night the Bill was still being debated in the House of Assembly.
Contacted for comment yesterday Mangrum said she would supply a statement to Guardian Business today on the issue of Feshbach’s court case.
July 18, 2013