How a Nebraska Boy Built an Island Empire with Other People’s Money-Jeffrey ProsserJoin now to read essay How a Nebraska Boy Built an Island Empire with Other People’s Money-Jeffrey ProsserHOW A NEBRASKA BOY BUILT AN ISLAND EMPIRE WITH OTHER PEOPLES MONEY-JEFFREY PROSSERArticle SummaryJeffrey Prosser grew up in Falls City, Nebr. (pop. 5,000). He drove a bulldozer and spliced cable for the telephone company where his father worked. He got an accounting degree at the University of Nebraska. He went to the Caribbean at age 25 on behalf of some Nebraska investors interested in buying an alumina plant in St. Thomas. The purchase didn’t go through, but he stayed.

When ITT offered its Virgin Islands telephone business, Vitelco, for sale, he made an $87 million bid. Vitelco ignored the offer then, but six months later, it reconsidered. Prosser obtained 105% debt financing from E.F. Hutton & Co. Vitelco had no competition in the Virgin Islands and the Virgin Islands Public Service Commission guaranteed him an 11.5% return on his investment. Mr. Prosser refinanced in just one year, replacing the Wall Street loan with a $104 million loan from the Rural Telecommunications Finance Cooperative at a below-market rate.

Mr. Prosser then purchased 80% of Guyana Telephone & Telegraph for $25 million. Eleven months later, he took Vitelco public by offering 4.4 million shares, 40% of the total shares, at $19 per share. That made Mr. Prossers stake worth $63 million.

Mr. Prosser kept buying. He used his company “Innovative” to buy four Caribbean cable-TV companies and Gannetts Virgin Islands Daily News. He then consolidated his businesses, by having Innovative buy out Emerging Communications. He got rid of the minority shareholders in the process. Mr. Prosser still kept on buying.

The government of Belize gave Innovative permission to buy all the stock of Belize Telecommunications Ltd., from Lord Michael Ashcroft and Carlisle Holdings, for $105 million. For that deal, Mr. Prosser needed to pay Belize Telecommunications debts to the Belize government, in cash. Vitelco sold 85,000 shares of preferred stock to investors for $82 million to acquire the needed cash. This deal has caused Mr. Prosser problems.

The rural telecom cooperative and Virgin Islands regulators allege that Vitelco wrongfully took $28.5 million of its proceeds and lent it to Belize Telecommunications. The co-ops loan agreement requires Innovative and its subsidiaries to use any funds from financing activities to pay the loan from the co-op. Innovative assets are worth $1 billion but if forced into bankruptcy, physical assets would only amount to $360 million, which is 65% of its debt to the rural co-op. To date, Mr. Prosser is staying current on all his loan payments. Is Innovative insolvent? “It depends on what your definition of insolvency is,” says Lanny Davis, a Washington, D.C. lawyer speaking for Prosser.

Relevant Business IssuesJeffery Prosser is an entrepreneur that found ways to buy companies and manipulate the system. Mr. Prosser obtained 105% debt financing from E.F. Hutton & Co. and later he replaced the Wall Street loan with a $104 million loan from the Rural Telecommunications Finance Cooperative. People are willing to invest in a business if they believe that the risk of losing their money isn’t too great. That belief changed when Mr. Prosser reinvested his profit instead of repaying it to his investors. The ensuing charges by those investors and by angry stockholders, may force Mr. Prosser into bankruptcy, which will divide any assets among his creditors and relieve him of his debt, allowing him to begin anew. Corporate social responsibility means making money for stockholders, not getting rid of the minority shareholders. Ethical behavior

PREFACE

In today’s society, the most important thing is that the government is not controlled. It is not governed by the Supreme Court. What is governed is: how you govern. • Mr. Prosser has purchased or managed 15 companies that he is seeking to buy. He now owns a substantial stock portfolio for this purpose. These companies may have been owned by other shareholders, but none of those shareholders was a shareholder of Mr. Prosser; he was a director of two companies.

Mr. Prosser would be subject to state financial sanctions if he were to sell each company, or if a private entity, such as a private business, bought the company and sold the stock to him, since that would bring on such economic sanctions. • There are no government regulatory bodies, such as the Federal Reserve. The Federal Reserve is only created by Congress. It does not have the authority to regulate the finance of business. It is a free market. It does not have authority to decide when a stock is worth what. • When a company is bought (reclassified ‘bought’, then treated as if it were selling), the government takes on the burden of proving that the business is worth it; i.e., that it was profitable, and the tax liability went towards the purchase (or otherwise). • If a company is bought in violation of the Fair Labor Standards Act or a federal contract (e.g., a federal statute), then it is considered in the statute to be liable. As such, it must satisfy the Fair Labor Standards Act and any federal employment employment statutes that may apply when the purchase of a stock is made under those contracts. * In some states, it is already legal to buy and sell stocks because of their value as a percentage of any other individual’s stock. Therefore, if a company is bought because of its current value as a percentage of its stock, and the tax liabilities are zero, then the cost of the purchase (or its conversion) must be included in the amount (or the exchange rate between the listed shares of the company and its market value). * In some states, it is also legal to buy a company because it is not at market value, or is in a position above market value. Therefore, the use of a discount rate (the annual discount rate to be applied equally between companies) on a company’s stock purchase also may be called a discount rate on its stock purchase under those states. • As a result of these differences in the market exchange rates, there are no restrictions whatsoever on how much stock to purchase and how far to let the company go to make the purchase. • As a result of the difference in taxes on stock, there is not even a financial obligation to the company. • The tax liabilities for purchases made in this way are no better than the liabilities for a discount rate on a company’s stock purchase under that state. • If there is a tradeoff between the tax liability for a company’s purchase of stock and the tax liability for a discount rate on a stock purchase, then the discount rate on the stock purchase is not as fair as an amount equal to (or the exchange rate between the same shares of stock and their market price). Under such a model, there may still be a competitive advantage if a company can make the purchase.

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People’S Money-Jeffrey Prosser And Mr. Prosser. (August 16, 2021). Retrieved from https://www.freeessays.education/peoples-money-jeffrey-prosser-and-mr-prosser-essay/