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| Forms and Instructions - Recent Status - Chapter 11 Trustee Reports - Creditor's Comm. Updates - Contact Information |
January 24, 2003 Press Release Evergreen Security, Ltd. R.W. (Bill) Cuthill, Jr. Trustee 1031 W. Morse Blvd., Suite #200 Winter Park, FL 32789-3750 Telephone: 407-644-7455 Facsimile: 407-628-5277 Email: rcuthill@cuthilleddy.com PRESS RELEASE January 24, 2003 For additional information contact R. W. (Bill) Cuthill, Jr. R. W. (Bill) Cuthill, Jr., Chapter 11 Trustee for Evergreen Security, Ltd., filed another round of lawsuits against two fund custodians, a CPA, a director and his company, an investment advisor and twenty-six brokers. These suits were filed in Federal Bankruptcy Court at Orlando, Florida on January 23, 2003. According to Cuthill, "This should be my last round of suits filed in the Evergreen bankruptcy case."
The fund custodians include Bank of N.T. Butterfield & Son Limited and its affiliates, Hamilton, Bermuda; and Bear Stearns & Co., Inc. and its affiliate, New York, NY. These custodians were the custodians for the Evergreen securities portfolio. The suits against these custodians allege they did not perform adequate due diligence upon accepting Evergreen's business, nor did they properly inquire about wire transfers out of the fund when the managers and owners raided the fund of over $34 million from 1997 to 2000, ultimately forcing the fund into bankruptcy. The suits seek damages in the amount of the wires of over $34 million and for the insolvency in the fund of over $200 million. Clarence Riggs, CPA, Winter Park, Florida, represented ABP International Services and its related companies from 1992 to 1997, providing tax compliance and planning services. ABP was the manager of Evergreen from its inception to April 1, 1998. The suit alleges that Mr. Riggs was provided a complete financial picture during his review of the tax returns of ABP and its related companies, which would have shown him that Evergreen's new investors were providing the funding to pay interest and principal repayments to the earlier investors of the ABP related companies. The suit continues to allege that Mr. Riggs was negligent in continuing to provide services, which allowed Evergreen to continue to increase its liabilities to new investors. The suit seeks damages which will be determined at trial. Patrick Thompson, Nassau, Bahamas, was one of the Directors of Evergreen when it filed for bankruptcy in 2001 and during the time when William J. Zylka, Evergreen's beneficial owner, took $27.7 million from Evergreen. Mr. Thompson was a principal and president of Lions Gate Management, Ltd., Nassau, Bahamas. Lions Gate, an Evergreen broker, was previously named as a defendant to recover commissions paid to it. Lions Gate provided corporate management services to twenty-one international business corporations who invested over $4.4 million in Evergreen. Mr. Thompson was also the trustee for hundreds of Costa Rican and Bahamian trusts set up for investors to invest tens of millions of dollars into Evergreen. The suit alleges Mr. Thompson did not perform his fiduciary duty as a director of Evergreen, which allowed Evergreen to deepen its insolvency to over $200 million and for Mr. Zylka to take over $27 million from the fund. The suit seeks to recover $436,374 of commissions from Lions Gate and Mr. Thompson and to recover $27,000,000 from Mr. Thompson for his breaches in fiduciary duties as a director. Evergreen used West Side Advisors, LLC, New York, NY as its investment advisor from January 1998 to January 2000. Gary Lieberman, New York, NY, was an officer and director of West Side The suit alleges West Side was negligent in its duty to Evergreen allowing it to deepen its insolvency to over $200 million. The suit seeks damages from West Side and Lieberman for the amounts of fees paid to West Side, $6,421,641 and the deepening insolvency of Evergreen, which will be determined at trial. Evergreen used over one hundred independent brokers to sell its certificates around the world. Many of these brokers were insurance or security brokers, financial planners or tax attorneys. The brokers as a group were paid almost $17 million in commissions. Cuthill previously filed suits against seventy-five of the brokers to recover over $8 million of the commissions. He later dismissed suits against twenty-eight of the brokers due to lack of evidence of payment to them. Yesterday Cuthill reopened four of the previously dismissed suits and filed suits against twenty-two additional brokers in US Bankruptcy Court. The four reopened suits were against: Luther Hanson, Charleston, West Virginia; Chris Benson, Parkland, Florida; Donald E. Wallace, Sarasota, Florida; and Robert M. Bly, Knoxville, Tennessee. The twenty-two new suits were against: Keith Burant, Turks & Caicos; Phyllis J. Wordhouse, Plymouth, Michigan; Bill Black, Ft. Lauderdale, Florida; Reed Markle, Canada; Tommy Huff, West Monroe, Louisiana; Rick White, Charlotte, North Carolina; Chuck Condo, Cleveland, Tennessee; Mark Wright, Sarasota, Florida; Frank DeMaria, Winter Park, Florida; Lawrence C. Stewart, Jr., Winter Haven, Florida; Edward E. Hurst, Oak Hill, Florida; Bert Cutler, Clearwater, Florida; Robert Bedford, Auburndale, Florida; Nelson Ramirez, Hollywood, Florida; Camilo A. Calvo, Lakeland, Florida; Patrick Thompson, Nassau, Bahamas; Stephen Larkin, Scotch Plain, New Jersey; Peter Knoblauch, Canada; Alternative Financial Corporation, Canada; Richard Burke, Melville, New York; Jim Bridgeforth, Clearwater, Florida; and Bill Brown, Orlando, Florida.
Evergreen was formed primarily to operate as an offshore mutual fund. Like a mutual fund, investor dollars were pooled to purchase various investment vehicles denominated as certificates. Evergreen began selling certificates sometime in the early 1990's. Evergreen sold certificates through a variety of lawyers, brokers, and financial advisors. Although most of the marketing material indicated that the investments were in U.S. mortgage-backed securities, in fact, almost all funds were placed in mortgage-backed securities derivatives ("MBS Derivatives"). MBS Derivatives are highly risky, and, over time, Evergreen did not make enough profit on its investments to pay the interest on the certificates, much less other operating expenses. In addition to the financial problems of Evergreen caused by the poor return from the MBS Derivatives, additional serious problems were created by the direct withdrawal of investors' money by or for the benefit of the various managers and owners. By the end of 1995, the liability for investments within Evergreen totaled approximately $45,000,000. As of December 30, 2000, the liability for investments within Evergreen totaled approximately $214,000,000. By the end of 1995, the cash and investment assets in the Evergreen Trust totaled approximately $26,000,000. As of December 30, 2000, the cash and investment assets in the Evergreen Trust totaled less than $3,000,000. Cuthill has prepared quarterly reports to Evergreen's Official Creditors' Committee, since his appointment as trustee. These reports are posted on the Committee's web site at www.evergreencreditorscommittee.com. |
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| Official Committee of Unsecured Creditors for Evergreen Security, Ltd. |