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Battle Erupts Between Legal Titans Over Remnants of Failed Benrus

Tuesday, June 12, 2018

 

Giovanni Feroce, former CEO of the now highly litigated Benrus

Benrus was supposed to be the next great Rhode Island consumer product company, but now it is a battleground for some of the biggest names in Rhode Island’s legal circles. The once iconic World War II watch company went into receivership in December 2017 and is now a colosseum for a high-stakes courtroom clash.

On one side is Max Wistow — the master litigator who has made his mark in recovering $65 million in 38 Studios funds for the State of Rhode Island, was a lead litigator in the Station Fire case, and now serves as the special investigator looking into the collapse of the St. Joseph Health Service pension fund — the largest retirement fund collapse in Rhode Island history.

In the Benrus case, Wistow represents the receiver for Benrus, Richard Gemma.

On the other side is Mike Sweeney — one of Rhode Island’s top corporate attorneys and now the owner of the Benrus trademarks and the de facto, new Benrus company.

Neither party has anything positive to say about the mismanagement of former Benrus CEO Giovanni Feroce. He is now a GOP candidate for governor of Rhode Island and he refused to comment on this pending lawsuit.

Of the nine candidates now running for governor, a poll conducted by Harvard’s John Della Volpe, in partnership with GoLocalProv, found that Feroce is the least electable candidate. The poll was released last week - see results below.

In May 2017, Feroce appeared on GoLocal LIVE and claimed that the company was stable.  For Feroce, who had been snarled in a number of legal battles, the biggest battle was over the control of Benrus trademarks and he claimed in May that those battles were behind the company. 

"The number one issue is the stability of an organization. I'm happy it was amicably settled," said Feroce regarding the trademark issue which he claimed was settled at the time. "It's always a little odd to talk about yourself-- but I have to tell you the confidence I have." SEE THE INTERVIEW HERE.

However, just six months later the company was in receivership and Feroce was facing a slew of new legal challenges including a lawsuit by the NFL’s Buffalo Bills who were seeking about $1 million from Feroce personally for non-payment of a marketing deal.

Max Wistow, suing on behalf of the receiver

The Battle Between the Lawyers

To date, hundreds of court documents have been filed by Wistow on behalf of the receiver and Sweeney, his firm and related parties.

Wistow has made a series of serious allegations against Sweeney, his firm Duffy and Sweeney, and others who were tied to a loan to Benrus back in 2016 while the company was still operating.

One of the most serious claims against Sweeney made in the suit is that Sweeney and others are guilty of a civil racketeer influenced and corruption organizations act violation (RICO) — a claim best known when applied by federal law enforcement officials in organized crime cases.

“All defendants collected or participated in the collection of an unlawful debt…,” according to the suit.

Wistow, on behalf of Gemma, also asserts Sweeney and the firm Duffy and Sweeney violated numerous legal ethical standards.

Wistow, on behalf of Gemma, is also seeking millions against Sweeney and the other parties. The suit claims damages in the amount of over $2 million and that treble damages should be applied plus “interest, costs, attorney fees, punitive damages, and such further relief as the court deems just and reasonable” — the total could exceed $7 million.

Sweeney Fires Back

Sweeney denies the claims in the suit vigorously.

“We recognize that the receiver’s role is to attempt to recover money from the wreckage of Mr. Feroce’s serial business failures for the benefit of the unpaid creditors.  Unfortunately, this new action by the receiver is a clear attempt to reframe a valid and beneficial 2016 purchase order agreement as “a usurious loan” and then add frivolous and unsupported allegations against Mr. Sweeney and his law firm.  Ironically, the funding in question actually saved old Benrus at the time and allowed it to make enough profit to survive another year,” Sarah Kennedy, as a spokesperson for PalmLake Group, LLC in an email to GoLocal on Friday.

Mike Sweeney, one of the top corporate attorneys in RI

“The facts are set forth in Palm Lake’s motion for leave to file a complaint against the Receiver dated May 16. By early 2016, old Benrus was admittedly on the brink of failure. Under Mr. Feroce’ mismanagement, the company had run out of cash and was unable to secure any credit or investment.  As a result, old Benrus was about to lose its only order for '2016 back-to-school' backpacks and go out of business,” said Kennedy.

Sweeney and Feroce’s relationship had gone back years. Sweeney and his firm had worked with Alex and Ani when Feroce worked at the company and with Benrus.

According to Kennedy, Sweeney and others stepped in to help provide financing via a loan to assist Benrus, “With three days remaining to send funds to a factory in Vietnam and after he admittedly exhausted all other potential funding sources, Feroce approached Mr. Sweeney for help. In a good faith effort to assist, PLG agreed to provide capital to old Benrus by purchasing open purchase orders and the rights to the future receipts from an order of watches and backpacks.” 

“The biggest irony is that PLG charged 15% over cost for such high-risk purchase order funding – the same 15% old Benrus’ former supplier charged before Feroce defaulted on that supply agreement,” added Kennedy.

“Over the past seven months, the receiver has discovered that there remains nothing of value to be salvaged from the debris of Feroce’s company.  With many creditors and no assets, the receiver has engaged a well-known contingency fee lawyer who charges no fee but takes 40% off the top of any recovery,” Kennedy said referring to Wistow’s role in the case.

“One month before the receivership was filed, Feroce admitted in a court filing under oath that the PLG agreement was not a loan, but a purchase order purchase. Feroce has not retreated from that admission.  Yet, the Receiver has ignored it. We will vigorously contest this attempt to revise the facts of the case and expect to prevail. Further, the targets of these actions by the Receiver intend to seek sanctions and their attorney’s fees,” claims Kennedy.

The lawsuits are now pending in front of Superior Court Judge Michael Silverstein — best known for overseeing the 38 Studios case.

EDITOR’S NOTE: Sweeney is a minor investor in GoLocal24, the parent company of GoLocalProv.com.

 

Related Slideshow: GoLocal Statewide Poll - Conducted by Harvard’s Della Volpe - June, 2018

Prev Next

Registered Voters

Q1: Are you registered to vote in Rhode Island?

Total 501 100%
Yes: 501 100%
No: 0 0%
Don't know: 0 0%

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Gender

Q2: Are you ...
Total
Total: 100%
Male: 44%
Female: 56%

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Age

Q3: In which age group are you?

18-24:  7%
25-34:  16%
35-44:  15%
45-54:  20%
55-64: 17%
65+      25%

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Political Party

Q4: When it comes to voting, do you consider yourself to be affiliated with the Democratic Party, the Republican Party, Moderate, or Unaffiliated with a major party?

Democrat: 38%
Republican:14%
Moderate: 6%
Unaffiliated: 39%
Don't know/Refused: 3%

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Likely Voters

Q5: Next year, in November of 2018, there will be a statewide general election for Governor and many other state offices.  How likely is it that you will vote in this election?   Will you definitely be voting, will you probably be voting, are you 50-50...

 

Definitely be voting.............................. 81%

Probably be voting............................... 19%

All others.............................................   0%

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Top Issue

Q6: What would you say is the number one problem facing Rhode Island that you would like the Governor to address?
 

Taxes.................................................. .18%

Jobs and economy.............................. 16%

State budget.........................................11%

Roads...................................................10%

Education............................................  8%

Healthcare...........................................  5%

Corruption/Public integrity.................... 4%

Immigration..........................................  4%

Housing.............................................. ..2%

Governor............................................. ..2%

Homelessness.......................................1%

 

Other.. ............................................... 14%

Don’t know..........................................   6%

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Direction

Q7: In general, would you say things in Rhode Island are headed in the right direction or are they off on the wrong track?
 

Right track........................................... 19%

Wrong track......................................... 36%

Mixed.................................................. 45%

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Optimism

Q8: Thinking ahead several years, is your outlook about Rhode Island more optimistic or more pessimistic?   
 

Optimistic............................................ 52%

Pessimistic...........................................48%
 

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Finances

Q9: Over the last three years or so, has your family's financial situation improved, gotten worse, or not changed at all?
 

Changed for the better......................... 24%

Changed for the worse......................... 33%

Not changed at all................................ 43%

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Governor

Q10: Which of the following comes closest to your view regarding each of the following potential candidates for governor of Rhode Island?

Gina Raimondo, a Democrat

I am sure to vote for her:  9%

There is a good chance I will vote for her:  19%

It is possible that I vote for her:  24%

It is unlikely that I will vote for her:  18%

I will never vote for her:  31%

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Governor

Q11: Which of the following comes closest to your view regarding each of the following potential candidates for governor of Rhode Island?

Matt Brown, a Democrat

I am sure to vote for him:  4%

There is a good chance I will vote for him:  8%

It is possible that I vote for him:  40%

It is unlikely that I will vote for him:  30%

I will never vote for him:  17%
 

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Governor

Q12: Which of the following comes closest to your view regarding each of the following potential candidates for governor of Rhode Island?

Spencer Dickinson, a Democrat

I am sure to vote for him:  3%

There is a good chance I will vote for him:  7%

It is possible that I vote for him:  37%

It is unlikely that I will vote for him:  35%

I will never vote for him:  18%

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Governor

Q13: Which of the following comes closest to your view regarding each of the following potential candidates for governor of Rhode Island?

Paul Roselli, a Democrat 

I am sure to vote for him:  2%

There is a good chance I will vote for him:  7%

It is possible that I vote for him:  35%

It is unlikely that I will vote for him:  37%

I will never vote for him:  19%

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Governor

Q14: Which of the following comes closest to your view regarding each of the following potential candidates for governor of Rhode Island?

Allan Fung, a Republican 

I am sure to vote for him:  7%

There is a good chance I will vote for him:  18%

It is possible that I vote for him:  28%

It is unlikely that I will vote for him:  25%

I will never vote for him:  21%

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Governor

Q15: Which of the following comes closest to your view regarding each of the following potential candidates for governor of Rhode Island?

Patricia Morgan, a Republican 

I am sure to vote for her:  3%

There is a good chance I will vote for her.:   9%

It is possible that I vote for her:  32%

It is unlikely that I will vote for her:  35%

I will never vote for her:  21%

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Governor

Q16: Which of the following comes closest to your view regarding each of the following potential candidates for governor of Rhode Island?

Giovanni Feroce, a Republican 

I am sure to vote for him:  2%

There is a good chance I will vote for him:  5%

It is possible that I vote for him:  24%

It is unlikely that I will vote for him:  35%

I will never vote for him:  34%

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Governor

Q17: Which of the following comes closest to your view regarding each of the following potential candidates for governor of Rhode Island?

Luis-Daniel Muñoz, an Independent

I am sure to vote for him:  3%

There is a good chance I will vote for him: 6%

It is possible that I vote for him: 33%

It is unlikely that I will vote for him: 38%

I will never vote for him: 21%

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Governor

Q18: Which of the following comes closest to your view regarding each of the following potential candidates for governor of Rhode Island?

Joe Trillo, an Independent

I am sure to vote for him:  1%

There is a good chance I will vote for him:  8%

It is possible that I vote for him:  37%

It is unlikely that I will vote for him:  34%

I will never vote for him:  19%

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Governor

Q20: If the election for Governor were held today and the candidates were: Democrat Gina Raimondo, Republican Allan Fung and Independent Joe Trillo - for whom would you vote?        

Allan Fung, a Republican..................... 33%

Gina Raimondo, a Democrat................ 33%

Joe Trillo, and Independent.................. 16%

Don't know     18%

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Governor

Q20: If the election for Governor were held today and the candidates were: Democrat Gina Raimondo, Republican Patricia Morgan and Independent Joe Trillo - for whom would you vote?         

Gina Raimondo, a Democrat................ 39%

Patricia Morgan, a Republican............. 20%

Joe Trillo, an Independent................... 19%

Don't know ......................................... 22%

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Governor

Q21: If the election for Governor were held today and the candidates were: Democrat Matt Brown, Republican Allan Fung and Independent Joe Trillo - for whom would you vote? 

Allan Fung, a Republican..................... 35%

Matt Brown, a Democrat...................... 25%

Joe Trillo, an Independent.................... 14%

Don't know .......................................... 27%
 

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Governor

Q22: If the election for Governor were held today and the candidates were: Democrat Matt Brown, Republican Patricia Morgan and Independent Joe Trillo - for whom would you vote?        

Matt Brown, a Democrat...................... 30%

Patricia Morgan, a Republican............. 20%

Joe Trillo, an Independent.................... 18%

Don't know .......................................... 33%

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U.S. Senate

Q23: If the election for the U.S. Senate were held today and the candidates were: [ROTATE] Democrat Sheldon Whitehouse and Republican Robert Nardolillo - for whom would you vote?

Sheldon Whitehouse, a Democrat........... 53%

Robert 'Bobby' Nardolillo, a Republican.. 31%

Don't know............................................... 16%

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U.S. Senate

Q24: If the election for the U.S. Senate were held today and the candidates were: [ROTATE] Democrat Sheldon Whitehouse and Republican Robert Flanders - for whom would you vote?           

Sheldon Whitehouse, a Democrat........ 54%

Robert Flanders, a Republican............. 32%

Don't know.......................................... 14%

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Schools

Q25: If there was an election today, would you vote to approve or reject issuing $250 million in financing supported general obligation bonds to repair Rhode Island's deteriorating school buildings and bring them up to minimum standards called "warm, safe and dry"?

Net: Approve...................................... 74%

Definitely approve............................... 36%

Probably approve................................ 38%
 

Net: Reject......................................... 17%

Probably reject....................................   9%

Definitely reject....................................   7%


Don't know..........................................   9%

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PawSox

Q26: The Rhode Island General Assembly is in the process of negotiating a $40 million public financing deal with the Pawtucket Red Sox for a new stadium, hoping to bring a vote before the House and Senate this summer.  

In general, do you favor or oppose the use of public funds to help finance a new stadium for the Pawtucket Red Sox?
 

Net: Favor.......................................... 33%

Strongly favor...................................... 13%

Somewhat favor.................................. 21%
 

Net: Oppose....................................... 59%

Somewhat oppose.............................. 21%

Strongly oppose.................................. 38%
 

Don't know..........................................   8%

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Fane Tower

Q27: The City of Providence and the state of Rhode Island are considering a proposal by New York developer Jason Fane to build a 46-story luxury residence tower in Providence, next to a public riverfront park.  The developer will invest $250 to $300 million of his own funds.  The project is called the Hope Point Tower, it would be 170-feet taller than the Superman building and would require waiving height restrictions and the use of state tax credits.

In general, do you favor or oppose development of the Hope Point Tower?

 

Net: Favor.......................................... 39%

Strongly favor...................................... 13%

Somewhat favor.................................. 27%


Net: Oppose....................................... 50%

Somewhat oppose.............................. 23%

Strongly oppose.................................. 27%


Don't know.......................................... 11%

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Elorza/Traffic Cameras

Q28: How would you rate the job that Mayor Jorge Elorza has done managing issues related to speed cameras in Providence?

Net: Excellent/Good.......................... 26%

Excellent.............................................   6%

Good................................................... 20%

Net: Fair/Poor.................................... 74%

Fair...................................................... 29%

Poor.................................................... 45%

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Q29: Since it was launched in 2016, UHIP -- the Rhode Island program designed to improve customer service for those who receive federal benefits -- has run into significant problems, including long lines, cost overruns, lost applications, over- and under-charging of patients and families.   

Based on what you know at this time, what percent of 
blame for this do you assign to:
 

Deloitte, the consulting company who
produced the system........................... 53.3%

Governor Gina Raimondo, who has
been governor since the system
launch in September 2016................... 47.1%

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NIMBYism

Q30: Presently, there are local groups opposing the development of a natural gas facility in Burrillville, solar projects in Exeter, a LNG facility in Providence and wind projects in North Kingstown. 
Some people say that it is important for local groups to play a role in opposition 
of projects like these that could be dangerous or harmful to citizens; 

Others say that local groups have gone too far to the detriment of the state’s long-term energy needs. 

Which statement comes closer to your own view?

 

Local groups play an important role...... 46%

Local groups have gone too far............. 31%

Not sure................................................. 24%

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Corruption

Q31: Compared to other states, do you think there is:

More political corruption in RI................. 63%

Less political corruption in RI................   7%

About the same level as other states..... 30%
 

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Income

Q32: The next question is about the total income of YOUR HOUSEHOLD for the PAST 12 MONTHS.  Please include your income PLUS the income of all members living in your household (including cohabiting partners and armed forces members living at home).  

$50,000 or less.................................... 33%

More $50,000 but less than $75,000..... 18%

More $75,000 but less than $100,000... 16%

More $100,000 but less than $150,000. 13%

$150,000 or more................................ 10%

Don't know/refused.............................. 10%

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Ethnicity

Q33: What particular ethnic group or nationality - such as English, French, Italian, Irish, Latino, Jewish, African American, and so forth - do you consider yourself a part of or feel closest to?  

Net: White, Non-Hispanic..................... 82%

Black or African American....................   6%

Latino/Hispanic....................................   5%

Other....................................................   7%

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Geography

Q34: City/Town Into Region.

West Bay............................................ 28%

Metro-Providence................................ 28%

Blackstone Valley................................ 21%

South County...................................... 10%

East Bay............................................. 13%

 
 

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