Pulaski County Circuit Judge Chris Piazza on Monday rejected a proposed $18 million offer to buy assets from embattled photo and sports memorabilia dealer John Rogers.
"I'm going to say we're not going to sell at this point," Piazza said at this morning's hearing.
The cash offer from Red Alert Media Matrix Inc. included a billion shares of unregistered illiquid stock in the asset-less concern.
Red Alert filed asset purchase agreements with the court on Friday that indicated Michael McAfee, the court-appointed receiver of the Rogers assets, had signed off on the deal on June 4.
However, Jess Askew, attorney for the receiver, said the filing by Red Alert was a misrepresentation.
"His signature was conditional on Red Alert agreeing to a separate order," Askew said. "The receiver now wants the court to approve his rejection of the Red Alert offer."
Askew said that McAfee's endorsement was contingent upon Red Alert providing proof of funds by Monday's hearing, posting a $500,000 non-refundable deposit with the court and delivering the remaining $17.5 million by July 5.
"There has been fraud perpetrated by John Rogers in this deal," Askew said of Rogers' involvement in the Red Alert proposal. "They can't put any (money) up, and they need to go away."
Rogers is the subject of a criminal probe by the FBI and the focal point of a series of fraud allegations by banks, business associates and investors. Financial claims against him and his business ventures total about $50 million.
The June 2 proposal of $18 million by Red Alert was its third offer. The shell company, led by Tim Holly of Atlanta, offered $28 million cash in April and a billion shares of stock. Red Alert's original January bid was $59 million, all cash.
"With a signed asset purchase agreement, we can go get the money," said Rickey Hicks, attorney for Red Alert. "Our investor is standing ready with the funds."
The Red Alert proposal also drew opposition from several creditors.
"It doesn't look right," said Kevin Keech, attorney for Arthur Jaffe and Paul Jaffe of North Bergen, New Jersey. "It doesn't smell right. We might be going from one scheme to another scheme."
The Jaffes claim an ownership stake in some of the assets Red Alert intended to buy such as the Detroit News collection and the Ponzini collection. The collection primarily consists of tens of thousands of professional baseball player photos shot on 35mm color film from the 1980s and 1990s by Michael Ponzini.
Keech also suggested the case is better suited for bankruptcy court given the diversity of jurisdictions touched by the litigation.
Some creditors were especially troubled by Red Alert's inclusion of so much unregistered stock that carried an audacious $1 billion value.
"That's a lot of paper," said Tim Cullen, who represents George and Steve Demos of Kenosha, Wisconsin, in their $3.5 million breach of contract and fraud claim against Rogers.
"We have no idea what supports the valuation of these shares," said Amy Lee Stuart, attorney for David Hoffman of Santa Cruz, California. "If this isn't fraudulent, it's a concept that doesn't exist."
Hoffman is seeking $80,000 owed on the $325,000 sale of his namesake video and photograph archive in May 2012.
According to Jacksonville's First Arkansas Bank & Trust, Rogers deceived the bank into loaning him $1.5 million to fund the purchase.
In other orders at the hearing, Piazza approved:
- A request by affiliates Digital First Media of New York to enter the case. In a separate lawsuit, Digital First accused John and Angelica Rogers of fraud, breach of contract and selling its copyrighted images and asked for the return of its newspaper archives.
- Digital First's request for a temporary restraining order to prevent the sale of its disputed archives. Rogers acquired the archives of 21 newspapers operated by Digital First.
- A settlement contract between the receiver and Fairfax Media Management PTY Ltd. to complete an archive digitization contract. Fairfax rescinded its $244,000 sales contract with Rogers after learning that he was selling photos before providing a digital copy of its archives. The Fairfax photos came from the Sydney Morning Herald and other publications in Australia and New Zealand, as well as some photographs from non-Fairfax sources.
- A $150,000 working capital loan request by McAfee to fund the Fairfax contract. The loan is from First Arkansas Bank & Trust.
- The receiver's request to sell part of the epic George Burke & George Brace Collection of an estimated 250,000 original negatives of baseball players.