Joe Elkind Ft Lauderdale and John Bennett went into business in 1997 and formed a company called, Net Management Services, Inc. Net Management Services, Inc., was an internet adult entertainment company. The company experienced explosive growth initially grossing some $600,000 in its first year and then, in its last year some time in the early 2000’s it was grossing approximately $4 million dollars monthly. The company was also highly profitable. The financial documents showed that the company was netting approximately $1 million dollars a month.
At or about the time when it was doing these types of sale figures, Mr. Bennett and Mr. Elkind retained Becker Poliakoff and attorney Richard J. Allan Cahan, for the purpose of what they believed was lawful tax avoidance and lawful asset protection.
Mr. Cahan sold them on what could only be described as a harebrained scheme whereby, they essentially sold the company to themselves. He formed a Bahamian trust for each of Bennett and Elkind. Each trust was the beneficial owner of a company above it which was owned by a Cayman Island hybrid corporation above it. These Cayman Island hybrid corporations ultimately owned the assets of the original Net Management, which had been sold to Virtual World Holdings, which was a company owned through this scheme. Mr. Cahan recommended to Mr. Bennett and Mr. Elkind that the appropriate trustee for these trusts should be the Private Trust Corporation in the Bahamas.
After this ownership scheme was put into place, Mr. Bennett, with the direct assistance of Mr. Cahan, used the ownership scheme which was commonly referred to as the term “Breakers Structure” to exclude Mr. Elkind from the business.
As a result, suit was brought in the United States on behalf of Joe Elkind Ft Lauderdale and it was sent to the Bahamas as the ownership agreement, which controlled the relationship between the parties, the Omnibus Ownership Agreement provided that all disputes had to be settled by arbitration in the Bahamas. The arbitration in the Bahamas proceeded but was never formally tried after a series of legal maneuvers in the United States. Mr. Bennett sued Mr. Elkind for battery. In that case, the Court ruled that Mr. Elkind had the right to do discovery of all the financial information in the United States because of Mr. Bennett’s lawsuits.
As a result, this was all done while the Private Trust Corporation held legal ownership of Mr. Elkind’s interest and owed him a fiduciary duty. When discovery was had, it revealed that Mr. Bennett had been siphoning off assets from the Breakers Structure to various other mirror structures and other companies that Mr. Bennett had been setting up with the help of Mr. Cahan. At the end of the day, Mr. Elkind was forced to settle with Mr. Bennett without full detailed evidenced financial information, for a payment from Bennett to Elkind in the amount of $18 million dollars.
After we completed the case against Mr. Bennett, we proceeded against Richard J. Allen Cahan and Becker Poliakoff, they, like the Private Trust, were carved out of the release. That case was settled for the limits of Becker Poliakoff’s liability insurance of $5 million dollars. Incident thereto, we had a valuation done of the company but not including Mr. Bennett’s diversion of assets and theft of funds prior to the case. It placed the value at $120 million dollars, which meant that Mr. Elkind’s interest was valued at $60 million dollars. Adding in the stolen entities by Mr. Bennett, the corporation had an estimated value of $400 million dollars at the time of the diversion of assets and entities.
In proceeding on the case against Mr. Cahan, we were provided with an affidavit from an attorney by the name of Miranda Monroe Evans. She was house counsel for the Private Trust Company. Ms. Evans testified that Mr. Cahan was paid kick-backs for referrals of clients to the Private Trust Company. This was a very telling fact because Mr. Cahan was clearly on Mr.
Bennett’s side as was revealed in the litigation against him. Therefore, it made clear that there was a conflict of interest that was in existence with the Private Trust Company, as they were in business with and following the instructions of, Richard J. Allen Cahan, who was favorable to John Bennett and unfavorable to Joseph Elkind.
When we settled with John J. Bennett Jr., we specifically carved out any claims against the Private Trust Company as trustee of Joseph B. Elkind’s trust. Our basis of a claim against the Private Trust Company was simple; they were Mr. Elkind’s trustee and they simply failed to protect him from the theft that was occurring when they were in control of all the assets.
Of note, I have prepared three fraud reports setting forth the evidence of Bennett’s theft. If they are of interest to you, we can provide them to you.
Please let me know if you have any questions!!
3 Replies to “Narrative on Joseph Elkind”
With thanks! Valuable information!