Declan Ganley, the founder of Rivada Networks, has been threatened with arrest or imprisonment if he doesn’t appear before a New York judge to explain delays in payments he was ordered to make as part of a bitter $20 million debt dispute.
Mr Ganley has been accused by David Shuman, a New York investor who is also a shareholder in Rivada, of “failing [to] auction or sell property” and for “failing to make monthly instalment payments” of $20,000 as he was ordered by the court.
Judge Jennifer Schecter of the Supreme Court of New York has warned Ganley that he faces a contempt of court charge if he cannot explain the delays. If he is found guilty the “punishment may consist of a fine or imprisonment or both”, and if he fails to appear it “may result in [his] immediate arrest or imprisonment”, the court documents state.
The development is the latest in an ongoing dispute between Mr Ganley and David Shuman, a shareholder in Rivada, to whom Mr Ganley owes about $20 million arising out of a default debt judgment secured in a US court.
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As part of that ruling, Mr Ganley was required to surrender shares in Rivada, to pay Mr Shuman $20,000 a month in instalments, and to auction off certain assets he owned here in Ireland, including some vehicles, land and a pub in Galway.
According to claims by Mr Shuman’s lawyers in filings to the Supreme Court of New York, Mr Ganley has fallen behind on both the auction of assets and the instalment plans.
In one filing, Mr Shuman’s lawyers argue that Mr Ganley did not make his first mandated payment on the scheduled date of June 1st. They payment was instead not received until June 3rd.
When it arrived, the documents show, the payment had not been made from Mr Ganley but from Karl Rove and Company. Karl Rove is a well-known Republican Party strategist and lobbyist, as well as a shareholder in Rivada.
The legal papers filed by Mr Shuman’s attorney allege that “no explanation has been offered as to why Mr Rove’s company made the June 3 payment or why it did not make such a payment in July”. The legal papers also state that at the time of the filing of the papers on July 11th the second mandated payment had not been made.
[ Clock ticking for Declan Ganley over Rivada satellite planOpens in new window ]
In a separate filing they argue that Mr Ganley has also been late remitting money related to the sale or auction of various Irish assets, the proceeds of which were ordered by the court to be sent to Mr Shuman to help satisfy the debt judgment.
In the filing, Mr Shuman’s lawyer states that the periods for the auction or private sale had passed with no remittance of the funds to Mr Shuman.
Mr Shuman’s lawyers added that Mr Ganley’s lawyer had sent an email in which “he indicated that money is not yet available to remit to [Mr Shuman], but there is a private sale agreement in place to purchase the property”.
According to the filings the buyers were in the midst of obtaining a mortgage, with the sale likely to be finalised by the end of the following month.
Mr Shuman’s lawyer characterised this as “yet another example of [Mr Ganley’s] long-standing pattern of defiance of this court’s orders and his stubborn refusal to pay the judgment justly rendered against him”, and asked the court to find him in contempt.
The judge has ordered that a hearing will be held on August 5th in which Mr Ganley will have to show cause that an order should not be made finding him in contempt in relation to the delayed payments.
She also wrote in her order that “a warrant [could] be issued for [his] arrest until and unless his noncompliance is cured”, as well a possible $1,000-a-day fine.
“Declan has fully complied with the wage-garnishment order and is still seeking to sell the other property subject to court order,” a spokesman for Mr Ganley said in response to questions from The Irish Times. Mr Ganley has repeatedly insisted that the debt has already been satisfied.
Separately, Rivada is raising billions of dollars to build out a private, un-hackable, satellite-based internet communications system called the OuterNet.
In an interview earlier this month with Handelsblatt, a German newspaper, Mr Ganley said the company had booked orders with more than 100 clients worth close to $15 billion in total.
He also said he had raised funding from more than 70 investors include a sovereign wealth fund from the Middle East, private-equity firms and billionaire investor Peter Thiel, whose name Mr Ganley said “helps a lot in the talks”.
Karl Rove had also invested in the project, he said.
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