US District Court Case Dismissed
The case filed in the US District Court in Houston, Texas by MyAdvertisingPays (MAP) Limited (“MAP”) and Michael Deese against VX Gateway has been dismissed.
As we had predicted in an earlier Trustee Update, the Court ruled that disputes relating to the service agreement between VX Gateway Inc., in dissolution (“VX Gateway”) and MAP, must be heard in Panama; it specifically recognized Panama jurisdiction and the venue selection clause requiring such disputes to be decided by arbitration in Panama.
Many have been left wondering why MAP pursued a frivolous case in the US? Possibly it was because MAP had no credible or complete financial records and thus could not substantiate a claim to VX Gateway in the dissolution claims procedure; in this regard, it should be pointed out that although invited to do so, MAP never filed a claim in the dissolution. Let's state that again: MAP intentionally failed to file a claim (for itself or its members) in the dissolution proceeding for what it contended was $60 million; why?.
Similarly, lacking such financial records, MAP may not have been physically able to set forth a viable claim to an Arbitrator in Panama as required by the service agreement. Or perhaps, as we have said in an earlier Trustee Update, the case was filed by MAP in the US simply to buy time? Time to start a new company, or time to avoid facing authorities perhaps?
Our Legal Counsel in Panama feels that the burden of proof is higher in Panama for arbitration than in the US. In arbitration in Panama MAP will be required to support any claim with its own internal audited financial statements. They will not be able to rely on the financial records of third parties, which they have done so far.
The most recent “audit” put forth by MAP was not an audit made in the manner that will be required in such arbitration. Describing it as an audit in that sense of the term is deceptive and misleading. While it purported to be a “top-to-bottom study of the VX draws, and finally gross receipts to MAP”, it completely failed to take into account “withdraws and disbursements to MAP members, VX draws, and finally gross receipts to MAP”.
In fact, MAP’s auditor, Alpha Performance Verification Services, in its so-called “audit”, did nothing more than use Excel to summarize the financial statements of the processors. It excluded (omitted) any MAP financial transactions, processor fees or VX Gateway fees. Common sense and basic accounting tells us that, if the processor financial statements were incomplete or erroneous, the “audit” would likewise be incomplete or erroneous. This is commonly described as “garbage in ...garbage out”. Surely congratulations are in order for Alpha Performance Verification Services' fine work (not).
VX Gateway stands ready to participate in arbitration in Panama. We have had a complete and accurate audit conducted by CSB. Review of the CSB audit will leave no doubt that the lawsuit in Houston was specious and possibly intended by MAP or its legal counsel to mislead its members and the public.
While the case in the US was dismissed for improper venue and lack of the jurisdiction, the claims made in the case by MAP had no merits. The $60 million was never stolen. It is not even missing; it can be found in the CSB audit without difficulty.
MAP’s claim that these funds are “missing” or “stolen” is clearly erroneous. MAP admits it arrived at the $60 million dollar amount by simply deducting the dollar amount of “credit card sales” from “total sales”, that is, by using simple math as follows:
However, as is obvious to anyone familiar with the facts, sales were made not just via credit card transactions but also by payments directly from VXLOOP Accounts that were funded directly by customers from their bank accounts. The simple correct math then is:
Interestingly, as reflected in the CSB audit on file as part of the discovery provided by VX Gateway, the dollar amount of VXLOOP Account Sales, that is, the entry that is missing in MAP's math, almost exactly matches the amount MAP claims as “missing” or “stolen” (subject to fees and final audit).
Was this omission a simple mistake by MAP or deliberate deception? MAP was well aware of the substantial amount of sales paid by VXLOOP Account balances, as opposed to just the sales paid by card. This information was available in real time at the VX Gateway merchant back office to which MAP had 24/7 access prior to its breach of the contract. No company whose existence is based upon sales would simply ignore sales figures. MAP must be presumed to have made and kept copies of such records covering total sales. Put simply, the CSB Audit indicates that there is not and never was a missing $60 million.
Anyone can file a lawsuit in the USA; merely filing lawsuit is not evidence of the legality of the plaintiff’s business, nor evidence of an illegal act, nor proof of the merits of the case filed. A lawsuit is simply one party's claim against another party; it is just a claim, nothing more. All it takes to file a lawsuit is to be able to pay the legal fees.
Now that the distraction of the frivolous US lawsuit is behind us, we have submitted a formal complaint against GPN Data to the Mauritius Financial Services Commission.
VX Gateway's complaint can be summarized as follows:
As we have consistently stated, when and if money is received from GPN Data, VX Gateway will then pass through whatever share is then due to each of the respective entities or parties.
Final Settlement of Creditor Claims
All properly filed creditor claims received by 20 February 2017 have now been assessed by the Trustees of VX Gateway Inc., in dissolution (“VX Gateway”) and an advisory email has been issued to all registered claimants.
Claimants advised of a settlement payment must reply to the email with all the proper requested information, including the signed Banking Instructions Form, before Wednesday 8 March 2017. Payments will be processed by Friday 10 March 2017 for claimants who submit compliant documents by the due date. Non-compliant submissions will delay or prevent processing of payment.
Other than normal expenses of administration, VX Gateway owes no other money to anyone other than the registered claimants as of this date.
The unusual transactional behavior by myadvertisingpays.com (“MAP”) in August 2016 (a 90% drop in sales from the prior month) caused all of the processors to cease making payments to VX Gateway after 8 September 2016. As a service provider and by the terms of its contract with MAP, VX Gateway owes nothing to MAP unless and until it receives payment from the processors.
Accordingly, a number of remittance payments from MAP's VXLOOP account to customer VXLOOP accounts have been cancelled and reversed as MAP's VXLOOP account has insufficient cleared balance to fund the payments. People who seek payment of the balance in their account at MAP should contact Mike Deese, CEO and Director of MAP or MAP's law firm Hart David directly.
VX Gateway is attempting to recover additional sums owed to it by MAP in the form of legal damages through the lawsuit it has, upon advice of Panama legal counsel, filed in Panama against MAP and against Michael Deese individually who personally guaranteed payment of VX Gateway's fees.
There is also a large receivable owed to VX Gateway by GPN Data. GPN Data has withheld payment. When and if money is received from GPN Data, VX Gateway will then pass through whatever share is then due to each of the respective entities or parties.
In January of this year, VX Gateway challenged MAP's outrageous and false claims made in the lawsuit filed in US District Court in Houston, on its website, and repeated publicly elsewhere, by proposing that MAP join in commissioning an independent audit by a Big 4 accounting firm. MAP was advised that the audit would determine how much, if any, money is actually unaccounted for, and identify exactly who is holding any such funds. Not surprisingly, MAP refused repeated offers to agree to the audit.
Accordingly, VX Gateway has now, completely upon its own volition and at its expense initially, arranged with a Big 4 accounting firm for the independent audit to begin immediately. We shall soon all know the falsity of MAP's lawsuit and who is holding any unaccounted for funds.
Claim Period Now Closed
The period for registering a claim against VX Gateway Inc. in dissolution (hereinafter referred to as “VX Gateway” or “company”) has now closed. The Trustees will review all registered claims and communicate with the claimants over the next two months to confirm the settlement amount and verify bank account details.
Only people who have a balance in their VX Gateway account are eligible creditors of VX Gateway.
People who seek payment of the balance in their account at myadvertisingpays.com (“MAP”)should contact Mike Deese, CEO and Director of MAP or MAP’s law firm Hart David directly.
VX sues MAP
VX Gateway Inc. in dissolution has, upon advice of counsel filed a lawsuit against myadvertisingpays.com in the courts of Panama seeking total damages of US $14,481,922.00.
The lawsuit seeks recovery of the fees in the amount of US $5,878,706.00 due to VX Gateway for its services under the contract with MAP. All such fees were personally guaranteed by Michael Deese, also a Defendant in the lawsuit.
The lawsuit also seeks US $8,603,216.00 as damages for the loss of fees that would have been earned by VX Gateway had the contract not been breached by MAP and business as usual continued.
Legal counsel in Panama has advised that venue for the lawsuit is proper in Panama as required by the contract that existed between VX Gateway and MAP.
DISPUTE WITH myadvertisingpays.com (“MAP”)
VX Gateway Inc. in dissolution (hereinafter referred to as “VX Gateway” or “company”) has contended since the lawsuit was first filed by myadvertisingpays.com (“MAP”) that it is a specious claim, that is to say, it is a made-up fantasy. VX Gateway does not know the reason underlying the filing or perpetuation of the false claim.
There has been speculation that perhaps MAP has something to hide and is using the lawsuit to “buy time”. Questions were raised as to the need to mask internal financial problems during the launch of The Advert Platform (“TAP”). Questions were also raised about Mike Deese overpaying himself and about the reported transfer of eight million dollars to an offshore bank account facilitated by MAP’s attorney Jonathan Herpy of the Hart David law firm.
There has also been speculation that there is some active collusion between MAP and GPN Data. GPN Data is the party that has withheld payment, MAP is the party claiming payment. How is it that they are working together and the issue remains unresolved?
We express no opinion on those issues.
The amount being withheld by GPN Data is in the order of USD 14 million, as detailed in the Executive Summary by Trustees now on public record in case No. 4:16-CV-0354 in the US District Court for the Southern District of Texas Houston Division.
All other funds due to MAP from monies actually received from GPN Data have been paid to MAP in the normal course of business. The $14 million dollars is not a debt of VX Gateway; as a service provider and by the terms of its contract with MAP, VX Gateway owes nothing to the merchant, here MAP, unless and until it receives payment from the processor, GPN Data. When and if received from GPN Data all amounts payable to MAP from the dissolution will be paid.
There is not and never has been $60 million dollars missing or unpaid. Why MAP is making such a false claim is unknown. Perhaps this is the amount that MAP owes its customers? We express no opinion on this issue.
VX Gateway is a payment gateway service provider, and is paid only for its services. It has nothing else to gain or lose except its fees. Once money is received by VX Gateway from the processors it is paid out via automated software, net of VX Gateway’s fees, to the merchant, here MAP.
Accordingly, since the lawsuit was first filed, VX Gateway has suggested that an audit be done and that the records of Visa and MasterCard be obtained. SEE Trustee Update of 2 January 2017 (below).
In an effort to set the facts straight, VX Gateway offered, in an in person meeting with MAP attorney Matthew Vogler in Panama on 21 January 2017 and in follow-up correspondence, to equally share the cost of having an audit of all transactions done by a neutral third party such as one of the Big 4 accounting firms.
Nothing can be hidden in such an audit. The truth will come out. Every dollar will be traced from MAP through the gateway to the processor where then paid out or withheld and every dollar paid by the processor traced back through the gateway to MAP or related parties. The audit will tell us all exactly how much money is really involved and who received or is holding the money.
Refusal to agree to such an audit might suggest that MAP or a related party does indeed have something to hide. Again, we express no opinion.
To date MAP has failed to reply to this offer. To date MAP continues to work with GPN Data. Draw your own conclusion.
Because MAP has failed to cooperate in getting the audit as described, VX Gateway has received advice from its legal counsel that it may pursue the audit and charge the entire cost to MAP as an offset to any monies that may in the future be received from the processors.
Regardless of MAP’s failure to cooperate, VX Gateway will proceed in getting the audit done as described. Once done VX Gateway intends to be bound by the audit.
Many people apparently have claims against MAP; not all of those people have claims against VX Gateway. Only people who have a balance in their VX Gateway account are eligible creditors of VX Gateway and are encouraged to file a proper claim in the dissolution before 21 February 2017.
People who seek payment of the balance in their account at myadvertisingpays.com should contact Mike Deese, CEO and Director of MAP or MAP’s law firm Hart David directly.
VX Gateway in dissolution prepared this statement based on the information available to it, including information derived from public sources that have not been independently verified. No representation or warranty, express or implied, is provided in relation to the fairness, accuracy, correctness, completeness or reliability of the information, opinions or conclusions expressed herein. The financial information included in this presentation is preliminary, unaudited and subject to revision upon completion of the Company's closing and audit processes, as well as independent third party audits. This presentation is not a legal opinion, but general discussion, not intended to deal with or disclose particulars of any specific issue, legal, business, or otherwise. All applicable statutes and regulations control.
DISPUTE WITH myadvertisingpays.com (“MAP”)
It should be noted that Mike Deese signed a personal guarantee to make good any monies owed to VX
Gateway when he applied for VX Gateway services.
There would appear to be no good faith reason for MAP to oppose such a determination. At the instruction of Jonathan Herpy of Hart & David law firm, a total of USD 8 million, consisting of two (2) payments of USD 4 million each was paid to the law firm’s escrow account. Bearing in mind that VX Gateway itself will owe nothing until it is paid by GPN, one might ask first, as to money previously paid to MAP, where has the money gone?