Utsick Investors May See 30 Percent

As the receivership case of promoter Jack Utsick’s Worldwide Entertainment Group lumbers on, court-appointed attorney Michael Goldberg notified investors in an August 24th letter that after 18 months of identifying and securing assets, he now expects them to recover no more than 30 percent of their allowable claims in the case.

The letter was sent 10 days after Goldberg issued his fifth report to investors, regarding WE, The Entertainment Group Fund, American Enterprises, Utsick, and Robert and Donna Yeager.

The Yeagers and their company have cooperated with Goldberg and their involvement in the receivership has largely been wound down.

Since announcing the discovery of an alleged fraudulent funds transfer by a former Utsick assistant, Goldberg wrote in his August 14th report that he received a court order July 11th granting partial summary judgment of a suit filed against Lyn Chong and her husband, Kevin Karl Wills Jr.

The pair was accused of making an illegal transfer and unjust enrichment, with the court essentially ruling that the money the couple received was excessive compensation, according to Goldberg.

The attorney agreed to a settlement in which the couple will voluntarily turn over assets including approximately $1.45 million in accounts, a waterfront house purchased for $1.4 million, a BMW, $24,000 in cash, and artwork. They are also to apply for tax refunds to recapture the $1.8 million paid to the IRS from the $5 million allegedly transferred from Utsick company accounts.

Aside from the Chong case, Goldberg recently has focused on unfinished business in the Pacific Rim – particularly in pursuing interests in New Zealand and Australia, including a valuation of WE’s investment in Auckland’s new Vector Arena and retaining local attorneys to represent WE in its case against Michael and Kevin Jacobsen regarding their partnership in a "Dirty Dancing" tour.

Goldberg reports he is continuing his pursuit of $1.7 million he claims is owed in receivership from Australia’s Michael Chugg Entertainment. Goldberg alleges in the report that a forensic accountant determined that Chugg wrongfully kept millions of dollars in venue rebates that should have gone to his partnership with Utsick. In addition, Goldberg accused Chugg of not personally attending mediations but sending an attorney to represent him instead.

Chugg has consistently disputed Goldberg’s characterization of the case since it was learned the receiver filed a suit in U.S. Federal Court in Florida in February. The complaint was dismissed as out of the court’s jurisdiction, and Goldberg has pursued the case in Australia.

"The matter is currently in a confidential arbitration," Chugg told Pollstar. "We respect that process. We are confident it will reveal the true picture about Jack and our relationship with him."

But Chugg did take issue with the content of the latest receiver’s report and again denied suggestions of wrongdoing.

"We regard the latest report (like many of the others) as containing content that is grossly inaccurate and misconceived. The conclusions reached and the threats made are inappropriate and not supported by the facts," he said.

"Certainly, any allegation of fraud or any other kind of wrongdoing on the part of Michael Chugg or his companies is strenuously denied and will be vigorously defended. We all look forward to the matter being resolved sensibly and hope that the Receiver comes around to this point of view," Chugg continued.

"We’re getting on with another great year and we’ve got some great tours coming up."

In the meantime, Goldberg has notified investors that some of them may qualify for an accelerated tax deduction treatment for money invested in Worldwide Entertainment under Internal Revenue Code Section 165, "which allows fraud victims to lower their tax bills by claiming theft losses."

Utsick, the Yeagers and their companies were accused in April 2006 of several Securities and Exchange Commission violations that resulted in losses of more than $300 million to approximately 3,300 investors.

It should be noted that while the SEC pursued complaints alleging Utsick, the Yeagers and their companies violated SEC agency law, the case was filed as a civil, not criminal, matter. The parties agreed to a settlement that included an agreement to place the companies in receivership and freeze the assets of all parties, without admission of guilt or wrongdoing.