| Akazoo Sued
By SEC Hired Randy Mastro Now Order on
Carve Out of $27 Million at SDNY
By Matthew
Russell Lee, Patreon
BBC
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UK - Honduras
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SDNY COURTHOUSE,
June 21 – The SEC sued
Akazoo for fraud.
Akazoo hired
Randy Mastro.
On October
7, 2020 U.S. District Court
for the Southern District of
New York Judge Alvin K.
Hellerstein held a proceeding.
Inner City Press covered it.
At
issue was whether Akazoo can
keep spending money, for
example on D&O insurance.
Otherwise, Mastro
said, no one will work for the
"good guys" at the New Akazoo.
Judge
Hellerstein, praising him,
said no written order would be
necessary beyond the oral
representations. He said he
would meet with the parties
again on October 14. Inner
City Press covered this as
well.
On October
14 Mastro was talking about
the D&O carve out, and
saying he had all interested
parties on board. Judge
Hellerstein worried aloud
about someone coming in later.
We got this, Mastro in essence
said.
On October 22 the
SEC filed a proposed order:
"Asset Freeze 1. Except as set
forth in Paragraph 3 below,
the Company’s assets,
including all funds and assets
owned or controlled by the
Company in whatever form they
exist and wherever located,
shall remain frozen and the
Company shall not incur
further liability until
October 27, 2020, which is the
date of the parties’ next
scheduled appearance before
the Court. 2. The Company
agrees to provide a copy of
this Stipulation to all
officers, directors,
employees, and any other
person acting on behalf of the
Company. 3. Subject to the
requirements of Paragraph 8
below, the Company can
disburse immediately up to
$2.6 million in respect of
certain basic operating
expenses and accounts payable,
including, but not limited to,
a D&O insurance premium
payment of $1.25 million.
Accounting 4. The Company and
the SEC have reached agreement
in principle on the scope of
information the Company will
provide to satisfy the SEC’s
request in the Emergency
Application for a sworn
accounting, and the Company
will produce such information
(a summary in the form of the
excel documents previously
provided by the Company with
the titles “Akazoo
Disbursements 7.27.2020” and
“Akazoo Aggregated Cash
Analysis (1.2018-4.2020) and
information sufficient to show
cash holdings in all bank
accounts owned or controlled
by the Company, updated
through October 16, 2020)
within one week of the date of
this Stipulation. 5. Upon
delivery of the accounting
summary, the Company will
provide an attestation of the
accuracy of completeness of
this accounting summary from
an appropriate representative
from FTI. Repatriation 6.
Akazoo represents that, prior
to the SEC’s filing of its
Emergency Application, the
Company initiated the process
of transferring the vast
majority of its remaining
funds held in overseas
accounts to a bank account
held in the United States. The
Company further represents
that, on October 2, 2020, it
received confirmation from
Citizens Bank (headquartered
in Providence, Rhode Island)
that the Company’s previously
initiated incoming transfer of
$30 million had successfully
been completed. 7. The Company
represents that it also
maintains approximately 20
bank accounts overseas (many
in the name of affiliated
entities) in locations such as
the United Kingdom,
Luxembourg, Greece, Poland,
Cyprus, Spain, and Ghana."
Now on June 21,
2021, this order has been
docketed: "ORDER: On the
consent of all appearing
parties, the Court hereby
orders that the terms of the
stipulation so ordered by the
Court on October 23, 2020
shall be further modified to
increase the carve-out amount
set forth in Paragraph 3 of
the stipulation by an
additional $27 million. See
ECF Nos. 40, 55. As agreed
among the parties, this
additional carve-out of $27
million shall be used as
follows: The Company will
transfer $26 million to the
investor settlement escrow
accounts as contemplated under
the governing settlement
agreements, and the remaining
$1 million will be used by the
Company to address certain
accounts payable. No funds
will be distributed from the
settlement escrow accounts
until all conditions of the
governing settlement
agreements have been
satisfied."
The case is
Securities and Exchange
Commission v. Akazoo S.A.,
20-cv-8101 (Hellerstein)
***
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