Matthew Feshbach, CEO of the Okyanos Heart Institute; the only stem cell facility to have received government approval to operate in in The Bahamas ...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

Stem cell investor fights IRS debt

U.S. tax agency claims $3.8 million owed

Alison Lowe
Guardian Business Editor
alison@nasguard.com

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

thenassauguardian

Leadenhall Bank and Trust Company Limited Licence Suspended

Craig A. Gomez has been appointed as receiver of Leadenhall Bank and Trust Company Limited, and is authorized to assume control of Leadenhall’s affairs in the interest of its creditors - and to exercise all the powers of a receiver under the Companies Act, 1992 

Bank Licence Suspended

 

By Candia Dames

Nassau, The Bahamas

19th July 2005

 

 

 

 

The Central Bank of The Bahamas announced late yesterday that it has suspended the bank and trust licence of Leadenhall Bank and Trust Company Limited to protect the interests of depositors of the bank.

In addition, Craig A. Gomez has been appointed as receiver of the bank and is authorized to assume control of Leadenhall’s affairs in the interest of its creditors and to exercise all the powers of a receiver under the Companies Act, 1992.

The Central Bank did not go into specifics regarding why it took this action.

But Leadenhall in recent years has been plagued with legal troubles.

In 2003, federal authorities in the United States filed petitions in seven federal courts in an attempt to secure the records from MasterCard accounts at Leadenhall.

The U.S. government has been targeting persons it believes used credit and debit cards issued by offshore banks to hide income from U.S. tax collectors.

The Internal Revenue Service has already announced that more than 1,200 people have admitted that they used offshore accounts or credit cards to avoid paying over $100 million in taxes.

U.S. authorities believe these cards allowed tax evaders and fraudsters to access their offshore funds by using the card in the United States for cash withdrawals and purchases.

In 2004, a New York doctor pleaded guilty to money laundering charges.  It is alleged that he ran more than $200,000 of taxable income through Leadenhall accounts and other accounts.

Earlier that year, Leadenhall had been thrust at the centre of a major fraud case in which a U.S court appointed receiver had been seeking to recover millions of dollars allegedly owed to creditors and investors in an elaborate scheme involving the channeling of funds into Bahamas-based accounts.

Leadenhall Bank provided credit card and other financial services to residents in the United States and provided a broad array of services to and engaged in nefarious activities with an entity in the Cayman Islands called Morningstar Ltd., a suit had alleged.

The Bahamian bank was also the partner of AXXESS INTERNATIONAL, which provided credit and debit card services around the world.

Liquidators and receivers had been seeking to hold Leadenhall and AXXESS INTERNATIONAL accountable for being a part of "a conspiracy to defraud."

It was alleged that the U.S-based operators of a business enterprise called "Cash 4 Titles" developed a multi tier marketing enterprise, which eventually involved the use of the Cayman Islands, Bahamas and United States entities - and individuals in a joint venture to defraud investors in the scheme.

It was further alleged that between 1993 and December 1994, the Cash 4 Titles made loans of up to $1,000 to consumers with poor credit histories, and charged interest rates as high as 25 percent per month.

Liquidators at the time had insisted that certain clients were being bilked in the process.  It was a claim William Jenings, managing director of Leadenhall, had dismissed as "totally spurious".

Executives of The Bahamas-based bank could not be reached last night to respond to the Central Bank’s decision to suspend their licence.

The Central Bank announced that the suspension became effective yesterday and will last for a period of 90 days or such shorter period as shall be determined.

In the past, the Central Bank has taken action to suspend a bank’s licence before revoking it, but there has been no indication that that will be the case in this particular instance.

The Government of The Bahamas has been fighting to avoid the kind of publicity that has surrounding certain alleged transactions of Leadenhall, seeking to protect the reputation of The Bahamas as a well-regulated financial services jurisdiction with a zero tolerance approach to money laundering and other financial crimes.

It’s why the parliament of The Bahamas passed a controversial package of financial bills in 2000 after being blacklisted by the Financial Action Task Force.