The Digital Altitude Receiver has opted not to pursue recovery efforts against Paradise Media Ventures and owner John Souza.
In light of that being the last outstanding action for the Receivership, the Receiver has filed for discharge.
As a merchant provider to Digital Altitude, Paradise Media Ventures (PMV) was paid $600,000 in early 2018.
The company soon realized it had overpaid PMV $300,000, and requested a reversal of the $600,000 transfer.
PMV’s bank refused the reversal, and Souza (right) ghosted attempts by Digital Altitude to get him to send the overpayment back.
In the meantime Digital Altitude was shut down by the FTC, and a Receivership appointed.
Upon learning of the dispute, the Receiver filed a $515,000 clawback lawsuit against PMV and Souza.
Souza defended the clawback motion, essentially arguing he was entitled to keep the stolen consumer funds.
The court denied the Receiver’s motion, recognizing there was a legitimate dispute that would need to be resolved via additional litigation.
To that end the Receiver explored the possibility of pursuing a civil case against PMV and Souza in Georgia.
Ultimately however, cost-benefit analysis saw the Receivership abandon the idea.
As stated in the Receiver’s March 11th Motion to Discharge;
PMV was apparently to have been paid $600,000 in settlement, but according to the Receiver’s calculations received $1,105,000 in settlement payments plus $10,000 in settlement-related overpayments.
The Receiver demanded return of the funds, but Mr. Souza, PMV’s principal (through his counsel) disputed the Receiver’s demand and the Receiver filed a motion to compel turnover which this Court denied (determining that the matter was subject to legitimate dispute).
The Receiver also sought, and was granted, authority to be reappointed to allow the Receiver to give notice of his appointment in Georgia for purposes of pursuing litigation there against PMV.
The Receiver made repeated attempts to settle the matter both before and after the turnover motion was brought and denied, but to no avail.
In the course of those efforts, Receiver prepared a Complaint for filing in the State court in Georgia, and presented it to counsel for PMV.
However, after conducting an extensive cost-benefit analysis with respect to bringing the litigation, without any engagement at all from PMV concerning its willingness to discuss potential settlement, and without waiver of any rights or interests any of the Receivership Entities may have with respect to the matter, the Receiver has determined that it is not in the best interests of the receivership estate to move forward with litigation in Georgia against PMV.
In an email received by BehindMLM yesterday, Souza incorrectly asserted the case was dropped
as they had no case and understood that if they attempted to pursue it they would most probably end up losing my countersuit.
You really believe that they did a cost benefit analysis and decided against it?
Come on…. you cannot be that naive.
At the end of the day Souza’s litigation was the last consideration for what has overall been a pretty weak Receivership recovery wise.
It’s by no means a clear-cut choice, but understandable why the decision was made to drop recovery.
Pursuing the matter in George would take who knows how long, further drain already limited Receivership assets and, as with any case, there’s no guarantee of winning the case.
In defense of his company being overpaid to assist a pyramid scheme that bilked consumers out of $54 million, Souza justifies keeping the money because he was underpaid.
When we terminated the agreement with DA due to non-payment way before they were closed down they owed us almost 2M on unpaid Bill’s for over 16 months.
On top of it all we discounted our offerings to them significantly.
Souza doesn’t appear concerned that the money he kept or claims he’s owed was obtained via fraud.
We went in trusting was was told to us and we lost like everyone else.
We got paid 500k after they owed us 2.5M of our services at a 90% discount.
We lost our asses on the deal
That is the truth.
In addition to not pursue litigation against Souza, the Receivership has also abandoned efforts to sell 314,000 shares of Falcon Oil & Gas.
The shares appear to be illiquid and not of significant value.
The Receiver’s efforts to monetize the shares have been unsuccessful to date.
Given that this is the only remaining asset, and its prospective limited value, the Receiver, does not believe it is in the best interests of the receivership estate as a whole to hold the receivership open and delay distribution of the receivership funds to the FTC for payment of consumer redress until those shares can be monetized.
The shares were obtained as part of the FTC’s settlement with Digital Altitude CTO Alan Moore.
As a whole, there is no doubt that the Digital Altitude Receivership is one of the weakest instances we’ve seen.
Net winners were not pursued, multiple recovery efforts were dropped and overall the Receivership only managed to recover $2.1 million.
Digital Altitude was a $54 million dollar pyramid scheme.
Of the amount recovered, the Receivership billed $250,213 (13%). As of February 7th, 2020, the Receivership is sitting on $1.68 million.
After final requested fees are paid out, the amount left to be distributed to Digital Altitude victims is just $1.488 million.
This amount is to be turned over to the FTC for distribution to Digital Altitude victims, pending court approval.
A hearing on the motion has been scheduled for June 15th.
Update 15th October 2020 – As per an October 5th order, the Digital Altitude Receivership has been formally closed.