John Rogers has been working closely with a would-be buyer of his former sports memorabilia and photo archive, according to a sworn deposition given by one of his many creditors. The proposal, $28 million in cash plus stock, is awaiting court review. It isn’t the first problematic business deal visited on Arkansas by Tim Holly and his Red Alert Media Matrix Inc.
The Atlanta businessman in his mid-60s worked with investors in Little Rock’s Soul of the South venture to secure new money and arrange a sale to rescue the financially troubled 2-year-old television network.
Those efforts came to naught when frustrated creditors and financiers grew weary of Holly’s claim to have access to $1 billion.
“We went ’round and ’round, and he could never provide funding or financial statements,” said one executive. “Proof of funds. Let’s have proof of funds.”
Red Alert’s first offer of $59 million in cash for the Rogers assets evaporated when Holly couldn’t provide verified funds to satisfy the court-appointed receiver, Michael McAfee.
On April 24, Red Alert made a new pitch directly to Pulaski County Circuit Judge Chris Piazza, who is facing a chicken-or-egg scenario: Which comes first, judicial approval of the proposal or proof of funds?
Rickey Hicks, Red Alert’s Little Rock attorney, indicated the money is all lined up this time, but “the investors aren’t going to move any money until the proposal is approved by the judge.”
Red Alert’s second proposal to acquire the assets of embattled photo and sports memorabilia dealer John Rogers plummeted to $28 million.
However, the new offer by Red Alert dressed up the 52 percent plunge in cash value with a shiny bow: a million shares of unregistered, restricted shares of common stock and the possibility of a public company stock play.
Red Alert’s proposal places an astounding valuation of $972 million on the shares. That valuation isn’t tied to the asset-less Red Alert Media Matrix, a shell company formed in Little Rock just six months ago.
According to Red Alert, its deal represents a whopping $1 billion transaction because the insurable value of the media assets amassed by Rogers purportedly totals more than $1.4 billion.
That’s a big number for a venture swamped by debts that total a fraction of its supposed value and unable to cash flow during the last five years, according to a forensic audit prompted by the Internal Revenue Service.
That state of insolvency could go back even further, but the corporate financial records maintained by Rogers are in such disarray that an assessment of operations prior to 2010 was deemed of questionable value.
The assets of Sports Cards Plus Inc., Planet Giant LLC, Digital Planet LLC and Photo Archive Partners LLC represent a financially distressed enterprise complicated by legal entanglements and the FBI’s criminal investigation of Rogers.
On paper last year, Rogers was removed from operational control of the companies by Jacksonville’s First Arkansas Bank & Trust, a lead creditor and the only party guaranteed full cash payment in Red Alert’s recent proposal.
The bank holds a $15.2 million judgment against Rogers and his quartet of ventures and would love to see Red Alert’s cash materialize.
“To the extent that our understanding is accurate, First Arkansas Bank & Trust has no immediate concern or objection and does not foresee filing an objection …,” CEO Larry Wilson wrote in a letter that Red Alert submitted to the court along with its proposed asset purchase.
“We appreciate this hard work and believe that the agreement, as proposed and as we understand it, might represent an acceptable resolution of this matter.”
In addition to a loss of operational control, Rogers also lost his direct ownership of the ventures through the property settlement in his speedy divorce.
However, Rogers, 42, has continued to meddle in the affairs and assets of his former holdings. According to sworn testimony, the North Little Rock businessman is working with Holly on the Red Alert bid and directed the unauthorized removal of assets under the care of the receiver.
Both items are addressed in a deposition given last month by Leo Bauby of Dixon, Illinois, a business associate of John Rogers.
Bauby was deposed after McAfee, the receiver, discovered that a shipment of archive photos was sent to Bauby in February on the instruction of John Rogers.
Bauby returned the photos to McAfee after he learned Rogers had no legal right to the material. The photos represented a partial payment by Rogers on a debt to Bauby.
In an April 30 court filing, McAfee called the removal of assets a theft of property by Rogers. McAfee also noted that Rogers amassed more than $1.5 million in unpaid federal payroll taxes associated with his North Little Rock companies.
How involved is Rogers with the Red Alert proposal?
“He told me that he’s in contact with Mr. Holly quite often and that he was involved in the dealings and had kind of a ground-floor understanding where the negotiations were and were not,” Bauby said in the April 3 deposition. “In other words, he was very well wired into what was happening.”
In a recent telephone interview with Arkansas Business, Bauby said Rogers frequently used the pronoun “we” when talking about Holly and the Red Alert proposal. Rogers even arranged a three-way conference call with Holly to talk about possible future opportunities for Bauby if the sale to Red Alert closes.
“What John did tell me is that when the sale happens, all the lawsuits and all the cases or whatever will be settled, and he’ll be made whole, and he’ll have money to pay me,” Bauby said in the deposition. Bauby is owed more than $100,000 by Rogers.
“I’m hoping that he will be a person of his word,” Bauby said in an interview with Arkansas Business. “It concerns me, when I see all of these stories of wrongdoing, that I might be a victim. I’m hoping I’m not.”
In one of his last financial dealings with Rogers, Bauby loaned him $30,000 on Jan. 30. He said Rogers claimed he didn’t have any money because creditors had garnished his bank accounts.
The money was wired to two different accounts: $10,000 went to the Dallas office of the Fox Rothschild law firm and $20,000 went to Crystal Sweeney of North Little Rock, described by Rogers as his girlfriend.
“John requested monies to be sent to his law firm so that he could have representation in the upcoming sale of his company,” Bauby said in the deposition. “The [$20,000] John requested he said he needed to live on, because he didn’t have money, and he needed some help until the sale would be completed.”