Platinum Protection allegedly in default on $10m note
AMERICAN FORK, Utah—Platinum Protection has defaulted on a promissory note of more than $10 million that it agreed to pay when it bought out the company’s startup investors in 2011, a recently filed lawsuit charges. Those former investors have since been charged with operating a real estate Ponzi scheme, and the lawsuit seeks to recover the funds as part of that case.
The four main founders of Platinum Protection—a formerly prominent summer-sales-model security company based here that has been struggling in the past year with financial and legal problems—agreed in the summer of 2011 to buy out the Jacobson family’s interest in the company. Wendell Jacobson and his son Allen provided the primary startup capital for Platinum, which was founded in 2006.
The price tag to buy out the family was $11.5 million, according to the recent lawsuit. Platinum paid $1.1 million cash to the Jacobsons at the closing and also gave them an interest in a Hawaiian real estate business, and agreed to pay them the remainder of the purchase price—more than $10 million—in regular installments through 2021, the lawsuit says.
Just months after the buyout, in December 2011, the U.S. Securities and Exchange Commission filed a lawsuit accusing Wendell and Allen Jacobson of having run a $220 million real-estate Ponzi scheme. Platinum CEO Jared Hallows has told Security Systems News the company had no knowledge of the Jacobsons’ alleged wrongdoing, and Platinum has not been charged in that case.
Now, however, the court-appointed receiver in charge of the Jacobsons’ assets has filed a lawsuit against Platinum, its four founders, and Cascade Alarm Holding, a company formed and owned by the Platinum founders. The lawsuit, filed in December by receiver John Beckstead in U.S. District Court in Utah, alleges they’ve defaulted on the note of more than $10 million they agreed to pay as part of the buyout. No payments have been received since February 2012, the lawsuit says.
February 2012 was when the leading summer-sales-model company abruptly laid off most of its employees.
The company also was sued then by its former primary dealer, Dallas-based Monitronics, which claimed Platinum owed it more than $2 million for bad accounts and loss of revenue guarantees. CPI Security Systems, a North Carolina-based monitoring company, also sued Platinum, alleging Platinum had defaulted on a $700,000 loan from CPI. The CPI lawsuit was settled last May and Monitronics that month voluntarily dismissed its lawsuit.
Attempts to reach Platinum’s lawyer and the company’s four founders—Hallows, Chance Allred, Keith Dyer and Jacob Pruitt—for a response regarding the Beckstead allegations were not successful by SSN’s deadline.
The lawsuit seeks damages that are equal to or greater than the amount still owed under the note, interest, costs and attorney fees. The receiver also asks to foreclose on Platinum’s collateral, as defined in the buyout agreement, and sell it to recover the funds still owed.