A&O Update: John Spalding's Reply to Previous Post
John Spalding wrote a lengthy comment to my last post about A&O that is listed below:
Mr. Thomas,
Your conclusions are misplaced. First and foremost, my wife and I are creditors in the A&O bankruptcy mess. I hear we are in the top five of investors who have lost money. A&O is trying to place companies that should not be bankrupt with companies that have financial problems to rid themselves of all their liabilities and attempt to avoid paying further interest. A&O's claim is that the Mississippi escrow company ran off with $2 million or $4 million, depending on which document you believe. What's a $2 million error between friends? The real question should be--how much should have been with the escrow company in Mississippi to pay premiums and where is that money? I believe the answer is closer to $12 million. Coincidentally, the SEC in the W Financial mess, involving Adley Wahab and Michael Wallens, accuses Wahab of receiving an improprer transfer of $10 million after Wahab's assets were frozen from Mackert.
Were I the trustee, the first order of business would be to see what policies had lapsed or were about to lapse and determine how to keep insuance companies from further lapsing any policies. Then I would try to figure out where the money is. I offered to talk with the Trustee last Friday. I have met with and spoken under oath with the Texas State Securities Board on at least three occasions and didn't "take the nickel", as you inaccurately suggest.
Not all insurance polices are created equally. Perhaps some of the policies should be allowed to lapse rather than pay exhorbitant premiums on something that should not pay for a number of years. I don't know, but if I were the trustee, I would be trying to figure it out.
You failed to mention that Bayou City Escrow was included in one lawsuit and then DISMISSED because it did not do anything wrong. It completely followed the terms of the Escrow Agreement between it and investors.
Finally, any suggestion that Bayou City Escrow was ever contracted to purchase policies, pay the bond premiums or prepay insurance premiums is inaccurate. There may be some other company who was retained to do so, I do not know, but I know Bayou City never was.
Thanks for allowing me to clarify.John Spalding
I still don't believe that Mr. Spalding's law firm should be representing other A&O investors and asking those investors to waive conflicts, but I appreciate him taking the time to respond to my earlier post.
Mr. Spalding, you will soon get your chance to talk with the Trustee and the other investors at the 2004 exam. I hope because out of true concern for "us investors" that you, being so close to those we think defrauded us, that you might be able to shed full light on this scheme. I would hope you will not try any delay tactics because you and I want to get to the bottom of this matter. I hope your memory is a little better than Mr. Mackert's. Would you be so kind as to bring any and all documents related to any and all matters concerning "A&O entities" with you at that meeting? Also, since you allegedly sold similar life settlements, supposedly through Consolidated Wealth Holdings, could you please bring all that information-I met a lady at the BK meeting who invested with you and she's very concerned about her investment. Did you properly inform your investors of the C&D of PCI by TDI as well as the SEC action in California filed in August of 2007, before the sale of your investments? Maybe you can show her that the investment is a lot different than A&O. Can you bring the bank records for Bayou City with you and be able to explain in detail where the funds were transferred to? Since you won't be "using the nickel," will you not be using any phrases like "i do not recall," "I'm not aware of," "not to my recollection," "I don't have that information with me," etc.
One more thing, would you please tell me who your sales agent was for the purchase along with any and all documentation of your purchase? Where did you purchase the policies you sold through CWH and where or from whom did you purchase the bonds?
Mr. Spalding, you looked pretty chummy with Mr. Allmendinger at the Halloween benefit you held at your house and along with your wife's email sugggests you're on pretty close terms with him. Are you attempting to say that Mr. Allmendinger took too much money out of the company and left only a third of what was necessary to keep the policies surviving? I think your estimate of $12 million for the escrow fund by the way is far too low which brings up the term PONZI scheme. You and I both know that even if PCI was legit, they required the NINE years of premium payment schedules-not to see how they looked on paper but for the management to actually pay them! No re-insurer in their right mind would allow the cash value to be depleted and want to take over a skyrocketing premium. Have you told the Trustee what your associates: Allmendinger, Oncale, and Wahab did with "yours" and my money?
After listening to the recording of the 341 meeting, it looks more and more like none of us will ever see our money again. And I sincerely hope that everyone involved with this scam ends up serving time in prison for fraud, starting with "Mr. A,Mr. O, and Mr. W". I wouldn't be surprised if the Blue Diamond purchase was made by a sham company set up by those 3 to get their cash out and leave everyone else hung out to dry, especially since most of the dealings were done by corporations domiciled in the Carribean and Costa Rica. This all sounds like a bad episode of Law & Order. The only thing missing is a dead body of some poor insured who didn't die quickly enough for his policy to pay off...The weird thing is that none of this would have come to light had the title company in MS not fallen victim to the real estate crash and its owners embezzled the money for the policy premiums. I will continue to monitor this case, and assist prosecution of any/all people in this case if I can.
Who would even think of using a title company that's run out of an attorney's office, to place $4.6 million dollars supposedly escrowed to pay SOME of the premiums of a company with over a hundred million dollars in sales? Tell me Mr. M why you had to travel out of state to find an attorney to escrow the money when there are plenty of attorneys in Houston. Did you have a falling out with Mr. Spalding since he obviously enjoyed his relationship with the DUO then TRIO? Did he or the SENIOR escrow agent refuse to do it this time? Or did you snub him and is that why he's willing to throw charges at you. Of course he knows it's unlikely you'll reveal him because you'll jeopardize yourself. It makes him look better especially when his all of a sudden ex-law firm continues to recruit investors so the investors hold the Spaldings harmless-thank God for the American legal system (I'm still hoping for the FED calvary anytime soon). You won't see me signing with "which rhymes with Bitchie!" Understand this, $4.6 became ~$2.5 million in one year and the $2.5 would be lucky to last the year as many more of the policy premiums were set to explode. What a joke, Mr. M, for suggesting the escrow would last six years. Even your old escrow company, I mean Mr. Spalding, states you should have escrowed $12 million- although I think that's way too low. I know just ONE of the policies should have had more than $3 million dollars alone besides the escrowed premiums which would have accounted for most of the entire escrowed amount. So $4.6 million is SQUAT! Mr. M must have realized that he needed to devise a plan with another SIMILAR lawyer (Mr. C with over $13 million dollars in claims) in order to point the finger away from Mr. M. Like Sacramento, PCI was never going to pay off and Mr. M knew it. Mr. M also knew there wasn't enough money to even pay the premiums to keep the policies afloat till term because TOO many took TOO much and there wasn't enough left (sounds like a PONZI scheme to me). The F. TRIO plus Mr. M needed someone that knew how banks operate-maybe someone like the other Mr. W, who worked for Chase before he was handpicked for his obvious banking experience. I wouldn't be surprised if the other Mr. W worked at the same branch where Mr. Spalding did his banking since Bayou City accounts were at Chase as well. An banking insider could be adept at making it difficult for authorities to track the money by sweeping clean the money trail.
Someone might look for attorney firms that run businesses out of their office besides Mr. C with Pretige Title, like Spalding's Bayou City Escrow, Inc. or like GlO-CPAs in the same office as Glaw, Londergan, and O'Neill (Oh, I see GLO). Mr. M, I will SCREAM if you mention one more time that GLO performed an audit. READ the GLO report-even a non-lawyer can read it, it says they didn't perform an audit-they simply said that the numbers that management showed them were deposited-they did not wish to express an opinion on compliance because either you would be very upset or they would be sued. Mr. M , you couldn't remember a full name of any accountant that you let inspect all of the records entrusted with you?
I like how Mr. M states he noted irregularities at Prestige Title in March of this year when he knew full well that many of the policies had NO premiums paid for several months. Did Mr. M think in his legal opinion that it was OK to ENCUMBER our investments by loaning the cash value to pay the premium when essentially ALL the agreements state the DEBTOR (A&O) would not do so?
Mr. M I don't know how you can keep a straight face when you talk about Blue Dymond, Physician's Trust and especially Mr. Stephenson. I don't know what the legal terminology is but I know there is some principle that all lawyers know regarding authority in any contract. I can't say I bought a business by signing a contract with the company janitor-you can't say you wrote a contract between the F. TRIO and someone whose authority you or the F.TRIO had NO idea.
Also, many contracts state that any sale or change of address or venue would cause a prior notice to investors-how could you write a contract that you should have known would void investors rights? Just maybe, Mr. M, you had much more to do with this than you would like to say. You sold insurance policies to A&O and you wrote the sales contract back in August of 2007- yet you act as if you knew nothing about the A&O situation before you became "manager."