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tboll

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Reply with quote  #16 
Who ended up getting the leftover $600,000 that were the cash/metal assets of the old BDI?  And who got the money that the mother paid to purchase the business?  And am I hearing you right in that we are no longer "creditors" to the new company so if it goes under in a couple of months, then that's the end of this story?
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JG

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Reply with quote  #17 
Quote:
Originally Posted by tboll
Who ended up getting the leftover $600,000 that were the cash/metal assets of the old BDI?  And who got the money that the mother paid to purchase the business?  And am I hearing you right in that we are no longer "creditors" to the new company so if it goes under in a couple of months, then that's the end of this story?


From what I understand, money that hasn't been doled out to professionals is in the BullionDirect Litigation Trust, the same one that any proceeds from Bullion Universe will go to. That Trust is also looking into various people/organizations it might be able to sue to get money.

You are correct, you are not creditors of the new company. If for some reason they make a profit and do not pay the money to the BullionDirect Litigation Trust, then I believe the Trust would become a creditor. But if the business simply fails, that's the end of that potential recovery. However, if memory serves (it was slightly convoluted), Charles' mother and stepfather put in about $200K-$300K. Between that and the fact that any money going to creditors might help their son, they do have some incentive to see this through.

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tsphillis

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Reply with quote  #18 
JG,

Your interpretation of the repayment clause looks correct to me. I'd like to confirm my understanding of the Plan that account holders who had a cash balance and/or "stored" bullion are going to be treated as "Class 5 General Unsecured Claims". That means we are 5th in line (out of 6) for reimbursement should the new company produce enough profit within the 7 year period. Not dead last, but close...and the biggest as far as number of people and total money owed.

The Disclosure Statement is actually an interesting read. It provides some details regarding the demise of Bullion Direct...it even eludes to possible embezzlement by CM and others within the company. The failure looks to be mostly due to poor integration between the business accounting and the trading platform. The lack of timely and accurate information led to poor decisions and produced opportunities for CM and others to "fudge" the numbers. I haven't read the entire document, but I don't think it covers what remedy the new owners plan to implement to correct this. It would be nice to see the Bullion Universe business plan...I'm curious as to how they plan to fix this problem, and how serious they are about making former BD customers whole.

If you think about it, making the Class 5 claimants whole early (before the 7 year limit) would be smart business. I did some market making on the BD website and would consider it (in a bigger way) on the new platform IF the financial issues were addressed.
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JG

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Reply with quote  #19 
Quote:
Originally Posted by tsphillis
JG,

Your interpretation of the repayment clause looks correct to me. I'd like to confirm my understanding of the Plan that account holders who had a cash balance and/or "stored" bullion are going to be treated as "Class 5 General Unsecured Claims". That means we are 5th in line (out of 6) for reimbursement should the new company produce enough profit within the 7 year period. Not dead last, but close...and the biggest as far as number of people and total money owed.

The Disclosure Statement is actually an interesting read. It provides some details regarding the demise of Bullion Direct...it even eludes to possible embezzlement by CM and others within the company. The failure looks to be mostly due to poor integration between the business accounting and the trading platform. The lack of timely and accurate information led to poor decisions and produced opportunities for CM and others to "fudge" the numbers. I haven't read the entire document, but I don't think it covers what remedy the new owners plan to implement to correct this. It would be nice to see the Bullion Universe business plan...I'm curious as to how they plan to fix this problem, and how serious they are about making former BD customers whole.

If you think about it, making the Class 5 claimants whole early (before the 7 year limit) would be smart business. I did some market making on the BD website and would consider it (in a bigger way) on the new platform IF the financial issues were addressed.


It is not very clear how the classes work, as our good buddies handling the Bullion Direct Estate are afraid to share information.

Class 1 is for administrative claims, basically to pay for bankruptcy expenses.

Classes 2-3 are for government agencies, which *should* be minimal (the IRS filed a $2M claim, but that almost certainly will be reduced to $0 -- otherwise I'm sure someone would sue Dan and Joe, as they claimed that Bullion Direct never made a profit).

Class 4 is for priority claims. This is where it gets dicey. Dan and Joe have never commented on this. Some people claim that the first $2,775 of their claim is subject to priority, which *might* be the case if paid money for metal that they never received (e.g. the cash could be considered a "deposit" on the metal). But would they just treat those who requested it as priority (which wouldn't be fair), or just treat all cash-for-metal claims with the first $2,775 as priority?

Everything else would be Class 5 (except for shareholders in Bullion Direct; I *do* feel bad for the small shareholders, who paid money for their shares, as opposed to Charles who destroyed the company, and Charles' old partner Vivek who owned 40% and as an accountant should have known what was going on and perhaps could have prevented it).

So for those that would not be part of the priority claims, really the big question would be how many people are getting priority claims. My calculations *suggest* around $700,000 of priority claims if Bullion Direct gives them to everyone who paid for catalog orders (but the records Dan and Joe gave the court are too poor to calculate it accurately).


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tboll

Senior Member
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Posts: 292
Reply with quote  #20 
So off subject but back to the tax question (ie. how do you file the loss)... with this arrangement, assuming BU stays in business for 7 years, previous BDI account holders will not know until the end of 2024 exactly how much they lost/failed to recover.  Is that the earliest we can file the loss?
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JG

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Reply with quote  #21 
Quote:
Originally Posted by tboll
So off subject but back to the tax question (ie. how do you file the loss)... with this arrangement, assuming BU stays in business for 7 years, previous BDI account holders will not know until the end of 2024 exactly how much they lost/failed to recover.  Is that the earliest we can file the loss?


There is one way to file earlier.

The IRS states "If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. You must reduce your loss even if you do not receive payment until a later tax year."

I've got more information at the page at http://about.ag/BullionDirectTax.htm


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tsphillis

Junior Member
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Posts: 11
Reply with quote  #22 
Quote:
Originally Posted by JG


It is not very clear how the classes work, as our good buddies handling the Bullion Direct Estate are afraid to share information.

Class 1 is for administrative claims, basically to pay for bankruptcy expenses.

Classes 2-3 are for government agencies, which *should* be minimal (the IRS filed a $2M claim, but that almost certainly will be reduced to $0 -- otherwise I'm sure someone would sue Dan and Joe, as they claimed that Bullion Direct never made a profit).

Class 4 is for priority claims. This is where it gets dicey. Dan and Joe have never commented on this. Some people claim that the first $2,775 of their claim is subject to priority, which *might* be the case if paid money for metal that they never received (e.g. the cash could be considered a "deposit" on the metal). But would they just treat those who requested it as priority (which wouldn't be fair), or just treat all cash-for-metal claims with the first $2,775 as priority?

Everything else would be Class 5 (except for shareholders in Bullion Direct; I *do* feel bad for the small shareholders, who paid money for their shares, as opposed to Charles who destroyed the company, and Charles' old partner Vivek who owned 40% and as an accountant should have known what was going on and perhaps could have prevented it).

So for those that would not be part of the priority claims, really the big question would be how many people are getting priority claims. My calculations *suggest* around $700,000 of priority claims if Bullion Direct gives them to everyone who paid for catalog orders (but the records Dan and Joe gave the court are too poor to calculate it accurately).




Thanks, JG. I sent a message off to Bullion Universe's Customer Service identifying myself as a claimant in the case and asking for a business plan. We'll see if they respond and how. If they agree to let me have a copy, it may be under a non-disclosure. If so, I may be able to talk them into letting me summarize or comment on the parts that address my concerns. It's likely I'll need to keep it to myself.

My opinion is the same as yours: giving them the benefit of the doubt serves the financial interests of the victims of CM's stupidity. I would throw more support their way if I knew more about how they plan to make us whole, and how they plan to prevent it from happening again.
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