Mac Parker seeks to have case thrown out
MIDDLEBURY — In a strongly worded motion, lawyers for Addison storyteller and entertainer Malcolm “Mac” Parker have asked the Washington County Superior Court to dismiss a suit by state securities regulators that alleges Parker violated the Vermont Uniform Securities Act.
The State Department of Banking, Insurance, Securities and Health Care Administration, known as BISHCA, claims Parker was selling “securities” without a license when he raised funds from private individuals to help him produce “Birth of Innocence,” a film he is creating. A motion for summary judgment filed on Parker’s behalf last week says the funds were given as promissory notes, not stock.
“The absurdity of this prosecution is readily apparent to all but the state. Neither the U.S. Congress nor Vermont’s own Legislature could have intended that securities laws be used against Mac Parker in the manner urged by BISHCA,” says the motion, filed by Wanda Otero-Ziegler of the law firm of Langrock, Sperry & Wool in Middlebury.
Parker’s motion lays out a multi-pronged argument why BISHCA’s claims have not basis in law. First, it provides evidence explaining why Parker’s fund-raising instruments are, by terms defined in Vermont law, promissory notes and thus not subject to the state’s registration requirements. Specifically, it points out that what Parker referred to as “investment agreements” did not fit the legal definition for an investment because they made an unconditional commitment to make a specific repayment with a specific interest rate, provided for repayment at a definite time, and expressly stated that the people making the loans to Parker claimed “no rights or interest” in “Birth of Innocence.”
“Thus, although the loans in this case were intended to assist Mac in creating ‘Birth of Innocence,’ it is clear that repayment terms were in no way tied to or conditioned upon the film’s success,” the motion states. “Indeed, many of the loans have already been repaid in full, although the film project is obviously not yet completed.”
It also argues that BISHCA doesn’t have jurisdiction in the case, that the people who lent Parker money were reasonable, and that because of Parker’s track record selling his work those people had a reasonable expectation of getting repaid.
The motion also refuted a claim that Parker was involved in a “Ponzi scheme” — in which a broker pays off early investors by roping in new investors and skimming off a percentage.
“Simply using loan funds to retire old debt, without more, is not illegal,” the motion said. “It happens every time a person refinances a mortgage, transfers a high interest credit card balance to a lower APR account, or consolidates multiple student loans through a consolidation loan from a new lender, just to name a few examples. What distinguishes a Ponzi scheme from this common practice is the element of fraud.”
The motion points out that Parker years ago took out a $2.5 million life insurance policy which in the case of his death would pay back his lenders.
Otero-Ziegler in the motion also referred to affidavits from people who had lent Parker money to create the film. In the affidavit of Christopher and Karen White, for instance, a Vergennes couple describe what they saw when they saw a nearly completed cut of “Birth of Innocence”: “What we viewed left an immediate and lasting impression. A well-crafted film, beautiful to view, containing an arc of narrative that was both inspired and profound. A narrative touching on universal truths and our own greatest potential … There was no doubt for us that this was a project of real worth with an absolute audience.”
The state has until March 2 to file a court brief refuting Parker’s claims. Otero-Ziegler said the court at that point could throw the case out or set a timeline for the two sides to proceed with the case.
“If the ruling is favorable, that will essentially end the case,” she said.
Otero-Ziegler noted she has told BISHCA officials that Parker is willing to discuss a negotiated settlement that would be mutually agreeable, but they have said they won’t negotiate until they get more information from Parker.
“Mac cooperated with them before, he has really cooperated at every step,” she said.
Otero-Ziegler acknowledged that there might not have been a problem if Parker had not used the term “investment agreements” in the promissory notes he drafted without the aid of a lawyer. But she said he still has the law on his side.
Parker released a new DVD version of his popular “Let’s Go to the Farm” video just before Christmas. Sales have been slow, Otero-Ziegler said, because Parker has not had money to market it. But she said it was now or very soon would be available on Amazon.com, which could help sales.
In the meantime, friends and some of the people who have lent Parker money have started the Mac Parker Defense Fund. They will hold a fund-raiser this Saturday, Feb. 13, at the VFW Hall off Exchange Street in Middlebury. Doors will open at 9 a.m. and an auction will begin at 10 a.m.
Items up for bid will include antiques, memberships to the RehabGYM, personal coaching services, $1,000 worth of advertising from Williston Publishing and Promotions LLC, handcrafted items, books, art work and more. Trips to Colorado, Sanibel Island, Fla., and Ireland will also be auctioned. There will also be food and tag sale tables.
For more information about Saturday’s event cal 802-352-4244 or 802-623-7961, or email [email protected] or [email protected].