ABQJOURNAL NORTH: Former Executives Seen Removing Items

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Wednesday, November 25, 2009

Former Executives Seen Removing Items

By Jackie Jadrnak
Of the Journal
      The trustee for the former Thornburg Mortgage has gone to court to try to force two of the company's former executives to turn over two computers and about 40 boxes of materials.
       Larry Goldstone, the former chief executive officer and president, and Clarence Simmons III, the former chief financial officer, were seen on surveillance cameras removing the items (with the help of others) on the day they were asked to leave Thornburg's offices, according to a complaint filed Monday in U.S. Bankruptcy Court in Maryland.
       Joel I. Sher, the trustee appointed by the bankruptcy court to run Thornburg, also asked the court to order those former executives to refrain from altering or destroying anything in those boxes or on those computers' hard drives. The complaint states that, based on “their continued flagrant disregard for the demands of the Trustee, the Trustee has reasonable (cause) to believe that unless enjoined and restrained, Goldstone and Simmons will dispose of or alter such property.”
       The complaint contends the property was removed on Sept. 11. Goldstone and Simmons resigned from Thornburg Mortgage amid allegations that they used the company's resources and employees to help start up a new business, SAF Financial Inc.
       Last month, Thornburg Mortgage filed a lawsuit alleging the inappropriate use of its resources for the executives' new company, along with a claim that Goldstone and Simmons got bonuses totaling $232,000 that were not properly approved.
       In Monday's complaint, the Thornburg trustee contends that the removed boxes “may contain important evidence relating to the investigation the Trustee must undertake concerning the affairs of the Debtors (Thornburg) and the actions of Goldstone and Simmons.”
       The court filing includes a copy of an e-mail from Sher to Mark Salzberg and Samuel Rosenthal, attorneys for Goldstone and Simmons, that indicates those attorneys have said that 18 of the boxes and the two laptop computers are in their Washington, D.C., offices.
       Those attorneys did not respond to a phone call from the Journal seeking their comment.
       In the e-mail, Sher rejected an offer from those attorneys to review the contents of the boxes while in their office and to have an outside consultant make a copy of the computers' hard drives, after which they would be wiped clean.
       “To protect the integrity of the process, all of the boxes must be shipped to TMST's office in Santa Fe,” he wrote, referring to the name under which Thornburg Mortgage is operating while in bankruptcy. “To the extent any material in a box is clearly and without question personal property of your client(s), that material will be turned over to them.
       “To the extent any material is an asset of the Debtors or the ownership of the material is in question, the material will remain in my possession subject to further order of the Bankruptcy Court,” Sher wrote in the Nov. 17 e-mail.
       He also demanded return of the computers, with all information intact, adding, “Your clients had the right to use those computers for company purposes only and, frankly, I view their taking of them to amount to a theft of estate property.”
       Thornburg Mortgage, once one of Santa Fe's major private employers, filed for Chapter 11 bankruptcy protection in May.
       Founded in 1993, the company specialized in making “jumbo” mortgages to relatively wealthy borrowers with good credit. But the firm was ensnared in the overall collapse in the mortgage investment market, initially spurred by subprime loans made to people with shaky credit.

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