Law Firm Seeks $500K In Fees | Cyphermint execs leave creditors, attorneys, accountants hanging
Cyphermint Inc., the defunct, Marlborough-based developer of mobile payment system technology, has so far failed to pay Worcester law firm Mirick O’Connell more than $500,000 in fees.
Cyphermint was developing software that allowed users to pay bills through their cell phones and self-service kiosks. The technology was created in Russia during that country’s banking crisis in the early 1990s. Engineers who developed that technology came to Marlborough to launch Cyphermint in 2000 and went out of business in early 2008.
Mirick O’Connell, specifically partner Joseph Baldiga, is the trustee appointed by U.S. Bankruptcy Court to usher the company through Chapter 7 bankruptcy proceedings, which began nearly two years ago and concluded earlier this year with a judgment by a U.S. District Court jury against Cyphermint’s former executives.
The case was moved from Bankruptcy Court to District Court upon request from the debtors.
Bad Debt
The jury found that the executives had paid themselves hundreds of thousands of dollars immediately before the company was forced into bankruptcy liquidation by creditors. It ordered former CEO Joseph Barboza to pay about $500,000 of the $773,624 he allegedly owed the company. It reached a $60,000 settlement with former CFO Robert Bowdring.
June 30, Mirick O’Connell filed an application for allowance of compensation and reimbursement of expenses with the U.S. Bankruptcy Court claiming the firm was owed $568,428.
It also filed an application for fees and expenses of accountant totaling $114,682.
And that’s not all that hasn’t been paid. Early in the case, in 2008, a company called C.A. Acquisition Corp. bought Cyphermint’s intellectual property. C.A. agreed to pay $161,000 up front and pay another $150,000 over the following two years.
“They (C.A.) have defaulted on that, and I’ve filed a complaint, but we’re giving them time to try to get (the company) up and running. They’re talking to investors,” Baldiga said.
Baldiga said a complaint has been served against several Russian investors suspected of taking money from the company immediately before bankruptcy proceedings began.
Far from being a mysterious, cloak-and-dagger tale of deceit and international intrigue, the Cyphermint case is relatively standard for a tech firm bankruptcy, Baldiga said, and it remains to be seen whether the company’s creditors will see any of what’s owed them.
“It’s not that unusual for there to be not a lot of value,” Baldiga said. “Even though millions were put into the technology, it would take millions more to make it successful.”
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