Thursday, June 28, 2012 12:29 pm
THR’s finances exposed
Silver and gold dominate Parsons divorce case
Testifying under subpoena issued by the legal team for Parsons’ estranged wife Jennifer, Green said that he first met Jeffrey Parsons last September, when he called the entrepreneur known for dealing in precious metals and invited him to lunch.
“From the day I met him, I wanted silver,” Green testified.
He got it.
In a series of transactions, Green last year sold Parsons or his company, THR and Associates, a home in Panther Creek, a Cadillac Escalade and a share of a jet. Green received $600,000 in silver for a 50-percent share in the Cessna jet, $100,000 in silver as an upfront fee for the home, which THR is purchasing on a contract for deed as Parsons’ personal residence, and $10,000 in silver and an equal amount in cash for the Escalade.
Jennifer Parsons is concerned that uncontrolled spending is eroding marital assets before her divorce is settled. In January her estranged husband agreed to go on a money diet and signed court documents in which he promised to hold living expenses to $25,000 a month and not acquire any airplanes, boats or other vehicles without court permission. He also agreed to put $135,000 a month into escrow while the divorce case is pending.
Green last week testified that Parsons, after signing the January agreement, purchased a 33-foot boat with silver coins. Green said he bought the boat around Easter for $115,000 and sold it to Parsons, THR’s sole shareholder, for $150,000 in silver.
“I wanted silver, he wanted a boat, so we exchanged,” Green said.
When Parsons took the stand, he said the silver used to acquire the boat was worth $60,000 – what THR had paid for the metal – not $150,000, as Green had testified. Parsons said that the boat was sold about two weeks ago for $90,000 to a brokerage, but he could not recall the brokerage’s name.
Parsons discussed the transaction after Sangamon County Associate Judge Steven Nardulli overruled an objection by Gregory Scott, Parsons’ attorney, who said that testimony about the boat was beyond the scope of questioning, which at that point had centered on vacation property owned by THR in the Ozarks, where Parsons owns another boat called Dirty Money, according to U.S. Coast Guard records.
“Quite frankly, Mr. Scott, this boat transaction interests me a lot,” the judge said.
The Internal Revenue Service is also interested.
“I was asked a question yesterday in an IRS interview about a boat,” said Frank Kopecky, a certified public accountant for THR, who took the stand during the second day of the two-day hearing called to examine THR’s finances and hear pleas by Jennifer Parsons to safeguard money.
There was no shortage of venom. Jeffrey Parsons testified that his estranged wife took jewelry, including gold, silver and diamonds, from the company to the point that a police report was filed in May of last year. Parsons said that he has given his current girlfriend a diamond ring but no other jewelry.
“She looks good without it,” Jeffrey Parsons testified as he looked directly at his estranged wife, then smiled.
Kopecky told the court that THR didn’t pay federal payroll taxes for the fourth quarter of 2011 or the first quarter of this year. Delinquent federal taxes total more than $3 million, the CPA said. Parsons is facing an additional IRS lien of nearly $3.2 million for unpaid 2010 income taxes. The company recently amended tax returns to include $600,000 in silver sales that had been inadvertently omitted from returns, Kopecky said.
THR told the IRS that it would stay current on payroll taxes starting the second quarter of this year, plus pay $25,000 a week to catch up on delinquencies, Kopecky testified, but the company fell behind about three weeks ago. Now, Kopecky said, all proceeds from liquidation sales at J. Parsons, THR’s retail outlet on Freedom Drive that opened in November, and a Clearlake Avenue warehouse are supposed to go to the IRS.
Lawsuits have also been rolling in. THR employees sued in March, claiming that they have been shorted on wages. Masco Packaging and Industrial Supply of Springfield last week won a judgment of more than $44,000 after suing Parsons and THR for failing to pay for packaging and shipping materials. Lead It Corp. of Springfield has also sued, saying that it is owed nearly $105,000 for software design and consulting. Lead It’s lawyers call Parsons the alter ego of THR.
“The corporation is a sham, is not properly organized or capitalized, and is run as a ruse to avoid personal liability for Defendant Parsons on debts to suppliers, customers and employees as well as to the state and federal governments for a variety of taxes owed to those governments,” the plaintiffs allege in the lawsuit against Parsons and THR filed on June 14.
THR employees travel the country buying coins and other valuables, but the company recently laid off workers, and hundreds of checks written to consumers have bounced. Kopecky testified that THR once held as many as 160 buying shows a week, but the number is now down to 15. The company is selling real estate, including the Ozarks vacation property and homes in Sangamon County, to satisfy the IRS and other creditors, Scott told Nardulli during a May hearing in the divorce case.
Peggy Ryan, attorney for Jennifer Parsons, said last week that Jeffrey Parsons is late with more than $400,000 required by the January agreement and a later deal in which he agreed to pay $200,000 for repairs to the couple’s home in Athens, where Jennifer Parsons lives. She asked Nardulli to order Jeffrey Parsons to immediately put $450,000 into trust.
Ryan told the court that her client’s estranged husband is awash in cash. Bank records show deposits of $74 million into one bank account alone this year, Ryan said. The Gold Center in Springfield, which processes scrap precious metal, paid $43 million to THR between January and May, Ryan said, and Heritage Auctions, a Texas company that sells antiques, coins and other collectibles, paid $14 million to THR during the first three months of this year.
“There are choices being made about what to pay, and my client is not one of them,” Ryan said.
Nardulli cut Jeffrey Parsons’ attorney short and ended the hearing while the lawyer argued that his client is tapped. The judge said that he would not hesitate to put the company into receivership.
“I’m just warning you Mr. Scott: Mr. Parsons is going to have me as a business partner if he doesn’t start meeting his obligations,” Nardulli said.
Contact Bruce Rushton at email@example.com.