NY Court summary To all of those posters on Stockhouse over the years, please know that much of the information disclosed regarding Danzik, his checkered past, and in particular the National Beef fiasco, has been incredibly helpful in assisting in bringing Danzik to justice. We are not quite there yet – any additional information that any Stockhouse poster has and is willing to provide, will be treated with seriousness and complete confidentiality. Danzik appears to have skated for what seems like decades, and is finally in a position to get all that he truly deserves. Any information you may have, please send to Jeffrey Eilender at jeilender@schlamstone.com.
The following provides a summary of the first three days of the Danzik’s contempt trial (which is before a judge, not a jury).
Before taking testimony, Justice Kornreich granted the CWT parties’ motion to strike the defenses of Danzik and RDX as to the CWT parties claims, because of his rampant discovery violations. Justice Kornreich basically said that the conduct of Danzik and RDX were an affront to the Court and a threat to the Court system. As a result of this ruling, there will be a default judgment of approximately $7 million against Danzik personally and RDX (counting the interest), plus an automatic right to an accounting and the ability to freeze and seize his assets. This ruling also puts to bed Danzik’s specious claims that that there was anything wrong or improper with the Carthage fuel.
The judge also ruled that because of Danzik’s violations of its orders, that at the contempt hearing the court will automatically infer that the stolen $5 million in Tax Credits went to Danzik personally and that he has the money to repay it.
After these rulings, former RDX CFO Candy Blazar took the stand and spent three days testifying against Danzik. The highlights of her testimony are:
--she was fired by RDX (Danzik and Ker) because she reported Danzik to Tony Ker and Glenn Davies (RDX other board members) for stealing the Tax Credits, looting RDX through sham transactions with Danzik Applied Sciences and misappropriating RDX’s receivables. Davies, an independent director, strongly protested her firing and the “reinstatement” of Danzik after he was temporarily “fired.”
--throughout 2013-2015, Danzik obtained millions of dollars from RDX simply by calling or emailing Candy and demanding wire transfers (typically several hundred thousand at a time) for bogus reasons—eg a prepayment for a reactor or a split water system which ultimately were never delivered. Months after these wires were sent (typically in advance of auditors coming to review the books), he would submit backdated invoices with false billing details with zero back up. Candy believes Danzik stole at least $6 million this way. She went through numerous transactions, wire transfer requests and purported invoices, showing how the Danzik Applied Sciences invoices were fraudulent.
--Danzik was the secret owner or controller of various companies (likely shells) through which he either billed RDX or took RDX receivables. For example, Danzik publically announced a significant franchising contract – in actuality, Danzik sent money from Carthage to a shell company, forwarded that money to another shell company, and then “made a payment” on the franchising contract to RDX, thus “creating” revenue for RDX which was reported in RDX financials.
--turns out that it wasn’t $3.2 million in tax Credits that he stole from the CWT parties, but about $5M. Danzik filed for the remaining $1.8M in tax credits (despite claiming they were fraudulent in court and in sworn affidavits), then hid the $1.8 million in deposits by having Candy open a secret bank account at a small local bank, deposit the checks there, and instructed her to not book those deposits on RDX/RES books. The vast majority of the $1.8 million was then immediately transferred it to Danzik’s private escrow account. This money was never disclosed to CWT Parties in discovery in violation of the Court’s orders, nor was it disclosed in the financials of RDX filed with SEDAR.
--Candy described in chilling detail how Danzik withheld documents from discovery that he had been ordered to produce which would have revealed the receipt of the additional Tax Credits and how he then later produced some of them by fraudulently modifying them so as to both hide what they were really saying and to make it look like he had produced them earlier.
--A day after the Court issued its May 5th TRO restraining RDX assets, Danzik invented a new company—M2R Licensing LLC—which had never existed before and wasn’t even incorporated yet to steal a $240,000 receivable from National Beef. He also used M2R Licensing to take an $80k receivable from Stanford university, and used his nephew’s company to take another receivable—all in stark violation of the May 5th order.
--Candy also described how Danzik forced her to sign a false affidavit and showed how various affidavits that he had filed in New York and Canada were false.
--Among other things, Candy explained that Danzik submitted sworn affidavits to the New York Court falsely stating that RDX had no receivables but at the same time submitted an affidavit in the Canadian bankruptcy listing a several million of receivables that RDX owned (which included those he had stolen by fraudulently assigning them to his own companies or friends, like Tony Ker).
All in all a good three days for American Justice. Candy finished her direct testimony Friday morning. Because of the judge’s schedule, the trial will not resume until January 5th, at which time it should go through January 8th. Can hardly wait until Dennis takes the stand. As the court is open to the public, all are welcome to observe.