Three former employees of MGT Construction – the longtime local general contractor that fell into bankruptcy in February – must face questioning and turn over documents this month to the firm’s liquidation trustee as he continues his investigation into the company’s finances in search of money to be recovered for creditors.
Subpoenas were issued last week summoning Michael Logan Sr., MGT’s former longtime president, along with his son, Michael Logan Jr., and Patrick Lindsey. They must testify May 22 in a so-called 2004 examination, the bankruptcy court’s version of a deposition, which allows the trustee to question, under oath, those with knowledge of a debtor’s operations.
Logan Jr. had worked in business development at MGT, while Lindsey had been the company’s director of operations.
A separate set of subpoenas last week ordered the Logans and Lindsey to turn over all documents relating to “accounting on any construction project that MGT performed or on which MGT solicited a construction contract.”
The dates in question for those documents are Jan. 1, 2014 to Feb. 22 this year. That’s the day the company was put into Chapter 7 bankruptcy liquidation, later revealing it owes more than $28 million to more than 500 creditors, while claiming only around $50,000 in assets.
The Logans and Lindsey also must produce personal tax returns from the last four years, as well as anything documenting communications between them and any past or present employee of MGT, its sister company Thalhimer Realty Partners and their parent company Thalhimer.
They must turn the documents over by May 16 to law firm Kepley Broscious & Biggs, which is representing MGT’s Chapter 7 trustee, Harry Shaia, in the case.
MGT’s accounting has been a point of interest early in the bankruptcy case.
At a creditors meeting last month, Mike Kain, a consultant hired to man MGT as it’s being unwound and liquidated, said the company’s accounting and reporting of profits on construction jobs was “faulty and the losses on jobs were not apparent until it was too late.”
A separate lawsuit, filed last year in Richmond federal court against various Thalhimer executives related to its employee stock plan, brought to light allegations of an accounting scheme at MGT. The lawsuit, filed by former Thalhimer property management head Steven Brincefield, claimed that Michael Logan Sr. “admitted to participating in an accounting scheme.”
Thalhimer has said in court documents in that case that it discovered the scheme in fall 2016, but the details have yet to be fully fleshed out.
Douglas Burtch, an attorney with Burtch Law representing Logan Sr. in the bankruptcy proceedings, said Tuesday that his client “has done nothing wrong,” as it relates to the Brincefield allegation.
“Mike Logan did not participate in any accounting scheme and Mike Logan did not admit to participating in any accounting scheme,” Burtch said, emphasizing that Logan is not named as a defendant in the Brincefield lawsuit.
“We are confident that when everything comes out the allegation will be proven false.”
As to the subpoenas in the MGT bankruptcy, Burtch said Logan will fully comply with what’s asked of him.
Neither Logan Jr, nor Lindsey, according to court records, have attorneys listed as representing them in the MGT case.
The upcoming deposition sessions are not public hearings and will be held in the offices of law firm Kutak Rock, which has been hired by Thalhimer to represent it as the largest creditor in the case.