In 2006, a $45 million lawsuit was pending in a dispute with Vick's original sports agents. [210] Several lucrative endorsement deals soured. [213]
After the dog fighting indictments were announced in July 2007, financial claims against Vick escalated. His financial affairs strained, Vick was unable to meet scheduled payments and other obligations. [214] Within several months, he had been named in numerous lawsuits by banks and creditors for defaulting on loans, some of them related to business investments. [215] [216] The dog fighting property near Smithfield, Virginia, had been liquidated earlier, and in November 2007, Vick attempted to sell another of his homes. [217]
Bankruptcy
On July 7, 2008, Vick sought Chapter 11 bankruptcy protection [220] in U.S. Bankruptcy Court in Newport News after failing to "work out consensual resolutions with each of his creditors," according to court papers. The initial filing, which was incomplete, listed assets of less than $50 million and debts of between $10 million and $50 million. The seven largest creditors without collateral backing their claims were owed a total of $12.8 million. The three biggest unsecured creditors were Joel Enterprises Inc., owed $4.5 million for breach of contract; Atlanta Falcons, owed $3.75 million for a pro-rated signing bonus; and Royal Bank of Canada, owed $2.5 million in loans. [221]
Major financial obligations
Joel Enterprises of Richmond was listed as one of Vick's larger creditors. Sports agents Andrew Joel and Dave Lowman claimed Vick signed a contract with their firm in 2001, nine days before he announced he was leaving Virginia Tech early and declaring himself eligible for the NFL Draft. With his mother as a witness, Vick signed a five-year marketing agreement that anticipated a wide range of endorsement activities using Vick's name, likeness, voice, and reputation. Joel's cut was 25% of all deals, excluding Vick's NFL contract, according to the agreement. [222] Vick attempted to end the relationship with Joel Enterprises a few weeks later, and entered into another relationship with other agents. In 2005, Joel Enterprises sued Vick in Richmond Circuit Court for $45 million in compensatory and punitive damages for breach of contract. After the Virginia Supreme Court denied a Vick motion and ruled that the civil trial could proceed in December 2006, [222] the parties agreed to submit the dispute to binding arbitration for resolution instead of a formal civil court trial. The outcome of the case was an award of $4.5 million to Joel. [223]
The Atlanta Falcons sought to recover a portion of Vick's $37 million 2004 signing bonus. A reduced amount of $20 million was awarded to the Falcons in binding legal arbitration, which Vick disputed. The sides agreed to reduce the amount to between $6.5 and $7.5 million. [224] The bankruptcy court was advised of this Vick-Falcons settlement agreement on April 3, 2009.
On September 20, 2007, the Royal Bank of Canada filed a civil lawsuit in the U.S. District Court in Newport News against Vick for more than $2.3 million over a loan tied to real estate. [225] [226] [227] The suit claimed Vick failed to meet a September 10 deadline to repay. [228] On May 7, 2008, the court granted a motion for summary judgment against Vick for default and breach of a promissory note and ordered him to pay the bank more than $2.5 million. [229]
On September 26, 2007, 1st Source Bank, based in South Bend, Indiana, claimed damages of at least $2 million in a federal lawsuit, alleging Vick and Divine Seven LLC of Atlanta refused to pay for at least 130 vehicles acquired to be used as rental cars. The bank's Specialty Financing Group provided financing for rental car fleets. [230]
Wachovia Bank also filed a federal suit in October 2007 in Atlanta seeking about $940,000 from Vick and Gerald Frank Jenkins, a business partner. The bank claimed the two men and their business, Atlantic Wine & Package LLC, defaulted on a May 2006 loan of $1.3 million to set up a wine shop and restaurant. [231] [232] [233] [234] Jenkins, a retired surgeon who owned Atlantic Wine since 2004, brought Vick in as an investor. [235] [236] [237] In May 2008, the U.S. District Court in Atlanta granted a summary judgment in favor of Wachovia. The judgment of $1.11 million included the initial principal balance, interest accrued, fees, overdrawn accounts, and legal fees. The order provided that further interest could be accrued. [212]
The United States Department of Labor filed another lawsuit in federal district court in Newport News on March 25, 2009, alleging Vick and others violated federal employee benefits laws by withdrawing $1.35 million from a retirement plan sponsored by MV7, one of Vick's companies. The money was held in trust under pension laws to fund retirement plans for nine MV7 employees. The Labor Department simultaneously filed a complaint in federal bankruptcy court to prevent Vick from discharging his alleged debt to the MV7 pension plan. [238] The complaint alleged that some of the funds were used to pay restitution ordered in his dogfighting case. [239]
Early proceedings
In August 2008, trustee W. Clarkson McDow Jr. was appointed to manage Vick's bankruptcy. The trustee noted in court documents that Vick "has limited ability to arrange his finances and limited ability to participate in the bankruptcy case on an in-person basis." McDow wrote in court documents that it appeared Vick had "routinely relied upon others to make financial decisions for him, giving them discretionary control over large sums of money". McDow named Mary Wong and David A. Talbot as people who had obtained broad written authority to act as his attorney-in-fact over all of his financial affairs. [240]
Vick had hired Wong, a business manager in Omaha, Nebraska, in the fall of 2007 on the recommendation of Falcons teammate Demorrio Williams. Wong helped cash in some of Vick's investments to provide restitution funds required by the federal court in his criminal case. According to a document filed by one of Vick's attorneys, she used a power of attorney from Vick to "wrongfully remove" at least another $900,000 from his various accounts. Court papers also alleged Wong "caused certain business entities owned by [Vick] to be transferred to her." Vick learned later that Wong had been permanently barred from working with any firm that traded on the New York Stock Exchange as the result of taking more than $150,000 from two elderly widows she met while working at Wells Fargo. [241]
Vick next turned to Talbot, a medical school graduate from Hackensack, New Jersey who claimed to have expertise in financial management. Vick later told the court he met Talbot in April 2008 through his brother, Marcus. [242] Talbot was to be paid $15,000 per month and took possession of one of Vick's cars, an $85,000 Mercedes-Benz. Vick later discovered that Talbot's résumé contained numerous false statements. Talbot had been accused of defrauding church members in New Jersey. The New Jersey Attorney General started legal action against Talbot for securities fraud over an alleged scheme to defraud investors of more than $500,000 by offering them "asset enhancement contracts" to be used to build a new church. [241] U.S. bankruptcy Judge Frank Santoro ordered that the Mercedes-Benz Vick gave Talbot be repossessed and sold, and that Talbot appear at a hearing on September 5. [243]
Paul K. Campsen, one of Vick's lawyers, told the court that Vick "has supported his mother, brother, fiancée and his two children" over the years. [244] He said Vick's financial problems included average monthly expenses of $12,225 for several large homes his family and friends were living in and a monthly income of just $277.69. [245]
Reorganization plan
Vick's attorneys filed a first plan of reorganization through bankruptcy on November 12, 2008. [246] Under the plan, Vick was to sell three of his six homes. Vick's expenses, meanwhile, included support payments of approximately $30,000 a month. They included $14,531 a month to his mother, $12,363 a month to his fiancée and two daughters, and $3,500 a month to his former girlfriend Tameka Taylor, with whom he had a child. Creditors challenged Vick's spending plan given his loss of salary and suspension from the NFL. Vick's attorneys told the judge on November 13 that Vick "has every reason to believe that upon his release, he will be reinstated into the NFL, resume his career and be able to earn a substantial living." [206]
After creditors objected to the initial reorganization plan, Vick appeared in person before Santoro at a hearing in Newport News on April 2, 2009. [247] Santoro had decided not to allow testimony by video in March, saying he needed Vick in the courtroom to assess his demeanor and credibility. [248] Vick testified that he intended to live a better life after prison. He said his crime was "heinous" and felt "true remorse". [249] Near the end of the hearing, Santoro rejected the plan as unsound, saying that it was too strongly predicated on Vick's return to the NFL and the substantial projected income it would bring, neither of which was assured. [250]
The judge commended Vick for trying to work out his financial mess after years of poor choices, but told Vick the numbers did not add up. [251] [252] Santoro adjourned the case and told Vick to work with his advisers to create a new plan, suggesting Vick begin by liquidating one or both of his Virginia homes, as well as three of the cars he intended to keep, and "buy a house more within his means." [253] Vick had testified that he felt obligated to provide for friends and family because of "where he had come from." Santoro told Vick that while that was commendable, "You cannot be everything to everybody. If you do, you're going to be nothing to anybody." [250]
On April 28, attorneys met with Santoro and said they made substantial progress on a revised plan. They reported having settled all disputes with Vick's creditors, including Joel. On August 27, Santoro approved the revised reorganization plan. It was supported by all of Vick's creditors but one who was owed $13,000. Every creditor was to be paid back in six years on the condition that an estimated $9 million in assets be liquidated. Vick was allowed annual living expenses of $300,000 under the plan. [254] He could spend up to $3,500 a month for rent in Philadelphia and $750 for "utilities and miscellaneous". He was to pay $3,712 a month on the mortgage for his house in Hampton, Virginia, where his fiancée and two children lived, and could pay up to $1,355 per month in private school tuition for his children. Vick was also given up to $472 a month in car-related expenses. His mother was allowed $2,500 per month, and his former girlfriend Tameka Taylor was allotted $3,000 per month to support their son, Mitez. [255] Vick was not required to pay creditors during his first season with the Eagles. Vick paid his agent, Joel Segal, $32,500 in 2010, $104,000 in 2011, and would pay him $160,000 each year from 2012 to 2015 for a total of $776,500. He paid bankruptcy lawyers $748,750 in 2010, $1 million in 2011, and a total of $2.6 million. [255]
