A lawsuit filed by White Winston Select Asset Funds in the Suffolk County Civil Court of Massachusetts has led to a seizure of the all of the assets and cash on hand of Multi Media Platforms Worldwide, which had promoted itself as the world’s largest gay media conglomerate.
Bobby Blair, the founder and CEO, acknowledged to SFGN on Wednesday, that a court order granting a preliminary injunction and temporary restraining order had effectively shut down the company. Its entire staff was informed they had been let go, and it was announced that its publications would not be hitting the newsstands this week.
MMPW had been publishing Florida’s Agenda, LA’s Frontiers, Wirld Maps, formerly Fun Maps, and Next Magazine in New York and Florida.
Its capacity to operate was effectively terminated this week when the Honorable Paul Wilson, a Superior Court judge, entered an order granting the plaintiff’s request for relief solely on the strength of the complaints and pleadings filed by attorneys for White Winston, which was seeking damages in the amount of $1,750,000.
The defendants are Multimedia Platforms, Columbia Fun maps, and New Frontier Media Holdings, all recipients of loan financing by White Winston earlier this summer.
A hearing on the preliminary injunction has been set for October 4, 2016, before the judge. While the case was filed on September 22, and served upon the defendants a week ago, no attorney has filed a notice of appearance for Blair or the defendants as of this date.
The allegations included in the complaint charge that the management team of Multimedia, headed by then CEO Peter Frank, engaged in fraudulent and deceptive trade practices, along with negligent misrepresentations, in order to induce the transaction.
The complaint says that the loan was approved in order to keep Multimedia afloat, with their company then assigning its assets and proceeds back to White Winston’s clients, the ‘credit facility.’
The monies from the credit facility would not be advanced at once, but provided for MMPW to draw upon the funds, as needed, subject to the plaintiff’s approval. During the period of August 8 to September 1, 2016, MMPW submitted and received five funding requests in the amount of $140,367.71.
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Each draw required the defendants to certify that the funds were needed to cover their operating expenses and “no event of default under any of the loan documents exist.”
However, incumbent upon the defendants was an obligation to immediately supplement the closing with various documents and records outlining and authenticating its collections, receivables, and collateral.
The complaint reads: “Only due to the defendants need for a cash influx to prevent a default on their other notes, White agreed to close and fund the loan on short notice, with the majority of due diligence to be conducted immediately post-closing.”
Consequently, MMPW executives were to meet with the lenders right after the closing, one of whom flew from Boston to LA, only to be stood up for an entire seven days. That was their first sign something was amiss.
The plaintiffs were first told that Peter Frank had a serious illness, but subsequently learned that was false, that he “had been out on an unexcused absence for six weeks.” The plaintiffs then learned that MMPW’s CFO had not been attending to the defendant’s finances for over six weeks.
Next, they discovered that three of the four members of their board of directors had filed papers with the SEC announcing they had resigned and left the company.
White Winston then alleged these facts are all part of the fraud warranting the restraining order Judge Wilson granted the plaintiffs.
The complaint alleges that while it took advantage of these advances, the defendants also engaged in other misconduct constituting unjust enrichment, breach of good faith, and deceptive practices.
The plaintiff, White Winston, says the loan was based upon White Winston securing a priority lien over all of MMPW’s assets and receiving MMPW’s daily revenues and receivables in a “lockbox.”
According to the complaint, that never happened. Instead of depositing all of its proceeds in a secure account to pay back the loan,between July 26 and September 9, MMPW only put away $604.75.
When White Winston balked, saying MMPW represented there should be over a hundred thousand dollars in the account, they only added another $23,943.
Then the plaintiffs discovered they were being screwed in yet another way. They accused MMPW of diverting these funds, which should have been paid to White Winston, into a secret account the defendants had failed to disclose at the closing.
To make matters worse, the first payment on the July loan was due on September 1. MMPW failed to pay it. They defaulted. When they had not cured the indebtedness by September 9, White Winston then issued a ‘Notice of Default’ under the terms of the master loan.
Despite having received the sums of over $140,000 since July, White Winston learned that on September 16 that the MMPW CEO was on his unexcused absence “due to substance abuse issues,” and that the company’s payrolls were not met.
On top of that, as White’s accountants attempted to verify and authenticate MMPW’s representation in securing the loan, they found multiple abnormalities.
In its due diligence, the plaintiff, alleges, they uncovered signs that the defendants may have falsely ‘cooked the books’ in order to secure the loan in the first place, representing that cash and receipts due them were false from the outset.
As a result, in the second count of the lawsuit, the defendants were accused of “failing to exercise reasonable care and competence in their representations” prior to the closing of the transaction.
All these acts, the plaintiffs allege, were done willfully and knowingly, and unjustly enriched the defendants. MMPW purportedly violated the Massachusetts General Laws, by engaging in unfair and deceptive acts in trade and commerce.
If proven, representations such as these can potentially lead to Securities and Exchange inquiries, and even federal criminal charges as it involves interstate commerce.
The court granted an order providing the plaintiffs the preliminary relief and temporary restraining order they sought. Barring them from: “conveying, transferring, concealing or otherwise disposing of any cash collateral or accounts receivables under their ownership or control, or under the ownership or control of any of defendants’ wholly owned subsidiaries, until further order of this court.”
A hearing to extend or terminate this injunctive relief is set for Tuesday, Oct. 4. Meanwhile on Wednesday, Blair, now the lone remaining executive officer of MMPW issued a statement saying he intends to “fight the case vigorously,” laying blame on the “new management team” employed in July to operate and run MMPW.
“They screwed up, and i have to fix it,” he said.
Blair said he was already talking with his lawyers, but refused to name who they were.
In its most recent quarterly filings with the SEC, MMPW had warned that the financial viability of the company was in doubt, and that it was millions of dollars in debt, likely to close with no further financing. This loan was a tool to save them. With its collapse and the judicial seizure, neither the immediate or long-term prognosis for MMPW is good.
Once a star amateur tennis player, Blair’s dream was to create worldwide online and print portals for LGBT media, and its website broadcast that his million dollar properties had global impact and reached 7.9 million readers.
The immediate impact of the Boston lawsuit is to effectively shut down all the publications in all the venues, at least until such time as the court releases any of its assets. Even then, with their offices closed, no revenue streams coming in, and employees without pay, seeking new jobs, the likelihood of starting up again is problematical at best.
Employees at Frontiers in LA have already alleged in small claims lawsuits they have not been paid for weeks. But that may prove to be the least of MMPW’s problems, as their offices in NY, LA and South Florida have now closed, or to use Blair’s own words to his friends, in ‘suspension’ until he figures out his next move.