Epstein testimony before the Economic Development Commission, USVI

1 GOVERNMENT OF THE VIRGIN ISLANDS OF THE UNITED STATES ECONOMIC DEVELOPMENT COMMISSION --PUBLIC HEARING THURSDAY, November 15, 2012 12:43 p.m. to 2:32 p.m. Port Authority Conference Room St. Thomas, Virgin Islands --MEMBERS PRESENT ALBERT BRYAN, Chairman NATHAN SIMMONDS, Vice Chairman LYNN MILLIN MADURO, ESQ., Member RANDOLPH ALLEN, Member JOSE PENN, Member STAFF PRESENT PERCIVAL CLOUDEN, CEO JENNIFER NUGENT-HILL, ACEO HENRY SMOCK, ESQ., Legal Counsel FRED HANDLEMAN, ESQ., Director of Legislative & Legal Affairs MARGARITA BENJAMIN, Director of Applications STEPHANIE BERRY, Director of Compliance BETH HOFFMAN, ESQ., Investigator SEMELE GEORGE, Public Relations DORENE LEWIS, Board Liaison PORTER'S COURT REPORTING, INC. P.O. Box 11303 St. Thomas, Virgin Islands 00801 TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 2 1 I N D E X 2 ITEM 3 No. 1 Meeting Called to Order 3 4 No. 2 Roll Call 3 5 No. 3 Review and Approval of Agenda 4 6 No. 4 Cases for Public Hearing 7 8 9 10 11 DESCRIPTION a. b. c. Southern Trust Company, Inc. DIAM Management Asset Recovery Management, Inc. PAGE 6 41 65 (Hearing Adjourned.) --- 12 13 14 15 16 17 18 19 20 21 22 23 24 25 TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 3 1 PROCEEDINGS 2 THE CHAIR: Good morning. I'd like 3 to call to order the Economic Development Commission Public 4 Hearing. 5 Can I have a roll call, please? 6 MR. PENN: Commissioner Bryan. 7 THE CHAIR: Present. 8 MR. PENN: Commissioner Simmonds. 9 MR. SIMMONDS: Here. 10 THE CHAIR: Commissioner Allen. 11 MR. ALLEN: Here. 12 MR. PENN: Commissioner Penn, 13 present. 14 Commissioner Smith. 15 THE CHAIR: Excused. 16 MR. PENN: Commissioner Millin 18 THE CHAIR: Late. 19 MR. PENN: Mr. Chair, you have four 17 20 Maduro. members present. 21 22 THE CHAIR: Having established a quorum are there any changes to the agenda? 23 MS. HILL: 24 afternoon. 25 being here. Mr. Chairman, good I'd like to thank all of the board members for I'd like to acknowledge the presence of the TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 4 1 staff that's here relating to the EDC Public Hearing and to 2 introduce starting with introducing our new Director of 3 Compliance, Miss Stephanie Berry. 4 her to the team. 5 deal of skills and we look forward to her adding to the EDC 6 program with a very varied background that she brings. 7 is a Ph.D. candidate in industrial psychology and management 8 and is quite familiar with the government processes. 9 want to welcome our new Director of Compliance and to also And we'd like to welcome And she is bringing to the table a great 10 acknowledge -- I know that my counsels have all been 11 introduced to her by e-mail. 12 She So we Welcome, Stephanie Berry. Attorney Smock is here, Counsel to the Board, 13 Attorney Beth Hoffman, our investigator, and our Public 14 Relations representative, Semele George, and of course our 15 Executive Assistant to the Board is with us today. 16 happy that she's here. 17 are here. 18 She's feeling better. We are Glad that you And, Mr. Chairman, in response to your question 19 with regards to changes on the agenda, the agenda as is 20 presented to you is as it is. 21 in your drop box were amended because counsels have all 22 agreed, Counsel Erika Kellerhals and Attorney Roberts agreed 23 to shift their clients presentations. 24 Asset Management, sir, as you deem appropriate. 25 THE CHAIR: The original document you had So we will start with Asset that's what's on TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 5 1 the agenda. 2 3 MS. KELLERHALS: I think we are going to go first, Southern Trust. 4 MS. ROBERTS: I thought we had MS. HILL: You are going to go 8 MS. KELLERHALS: Yes. 9 MS. HILL: That's right. 5 agreed -- 6 7 10 first? apologize. 11 12 You did say that. MS. ROBERTS: And we would like DIAM to go before Asset Recovery. 13 14 I MS. HILL: the agenda. 15 That's the reorder of Thank you. MR. PENN: Mr. Chair, I'd like to 16 move that the agenda be amended that Southern Trust 17 Management Company be the first item for public hearing to 18 be followed by DIAM Management, Inc. and then Asset Recovery 19 Management, Inc. So moved, Mr. Chair. 20 THE CHAIR: Second? 21 MR. ALLEN: Second. 22 THE CHAIR: Properly moved and 23 24 25 seconded. All those in favor? (Chorus of Ayes) THE CHAIR: Opposed? TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 6 1 (No Response) 2 THE CHAIR: 3 Abstention? (No Response) 4 THE CHAIR: 5 Motion to accept the agenda as amended. 6 MR. PENN: So moved, Mr. Chair. 7 THE CHAIR: Second? 8 MR. SIMMONDS: Second. 9 THE CHAIR: Properly moved and 10 seconded. 11 THE CHAIR: 13 Opposed? (No Response) 14 THE CHAIR: 15 Abstentions? (No Response) 16 18 All those in favor? (Chorus of Ayes) 12 17 Motion carries. THE CHAIR: The agenda stands approved. Cases for Public Hearing, Southern Trust Company. 19 Who speaks to this matter? 20 MS. KELLERHALS: I do. 21 THE CHAIR: Mr. Smock, could you 22 swear in the testifiers? 23 24 25 (Thereupon Erika Kellerhals, Esq. and Jeffrey Epstein were duly sworn in by Attorney Smock.) TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 7 1 MS. KELLERHALS: Good afternoon, 2 Chairman, Commissioners and Staff. 3 opportunity to come before you today and speak with you 4 regarding my client, Southern Trust Company, Inc. 5 I appreciate the I'm here today with Mr. Jeffrey Epstein who is 6 the President of Southern Trust. 7 introduction covering the business and its compliance with 8 the statutory requirements of the EDC program, I'm going to 9 turn the floor over to Mr. Epstein and he will talk to you a 10 11 And after a brief little bit about the new business model. Southern Trust, which will be located on the 12 Island of St. Thomas is applying for benefits under Category 13 IIa as a designated service business. 14 and running it will provide cutting edge consulting services 15 to companies around the world lying in part upon the use of 16 biomedical and financial informatics. 17 this company is going to range from individual consumers to 18 scientist, to investment companies looking to create new 19 strategies using what's called mine information. 20 get a few housekeeping out of the way and on the record 21 before Mr. Epstein explains to you exactly what it is they 22 are going to be doing. 23 And once it gets up The client base for I want to Southern Trust is going to meet all the statutory 24 requirements including that with respect to capital 25 investment. In fact Southern Trust has indicated in their TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 8 1 application will exceed the statutory investment requirement 2 of $100,000.00. 3 We've also set out a detailed employee benefit 4 plan. And one of the things that's noted about the plan 5 itself is in addition to providing generous lead packages, 6 life insurance and a donated leave program, the company 7 actually includes one hundred percent employee and dependent 8 coverage for health insurance. 9 the cost of all health insurance. So the company will absorb And they have agreed to a 10 minimum $50,000.00 per year charitable contribution in 11 addition to the mandatory contributions to the Territorial 12 Scholarship Fund and the Department of Labor database. 13 those of you who know Mr. Epstein he has been a long-term 14 resident of the Virgin Islands know that he has given 15 generously over the course of the last 11 years to various 16 charities in the Virgin Islands. 17 And We did request as part of the application a 18 waiver of the employee requirement for the first five years 19 down to five employees. There were a couple of different 20 reasons for doing that. One is as Mr. Epstein explains and 21 as we explained in the application, there are some very 22 specialized job positions needed by virtue of the business 23 model and what the business itself would be doing. 24 anticipated that getting to maximum capacity and finding the 25 right employees will take a significant period of time. And it's And TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 9 1 as a result of asking for that waiver of the employment 2 requirement down to five, we are also asking that the 3 percentage residency requirement also be amended from 80 4 percent to 50 percent for the first five years. 5 I'm now going to turn the floor over to Mr. 6 Epstein and he can talk to you a little bit about his 7 background in this business in particular. 8 MR. EPSTEIN: Thank you. 9 What's happening in today's environment is the 10 fact that most everyone here has a computer in front of 11 them. 12 wanted to know whose genetics determined your current 13 circumstance, if you wanted to get financial advice, if you 14 wanted to get medical advice you would go to one doctor. 15 You would, hopefully, choose the right doctor and he would 16 according to his experience say, fine, maybe you have a 17 stomach ache and we have in response to your problems three 18 or four solutions. Most of the time if you look back 25 years if you 19 In fact if you were going to go into the Army 20 years ago they classified your health like only five 21 categories. 22 you F-4. 23 categories. 24 25 Were you sort of very healthy, healthy or were Everything was very general and very broad As you all are aware everything nowadays has become personalized. You have your clothes that you wear TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 10 1 can be custom made. Everyone has many options on how to set 2 up their computers. What's happening in the world is that 3 many decisions that used to be made by one single individual 4 now it's impossible to get accurate information without 5 accessing vast numbers of databases. 6 will do will be basically organizing mathematical algorithms 7 so that if I want to know what my predisposition is for 8 cancer we can now have my genes specifically sequenced. 9 What Southern Trust Unfortunately, it hit home as of yesterday for me 10 exactly what my company does. 11 diagnosed two days ago with a terminal cancer. 12 the best hospital. 13 old. 14 going through the DNA of his exact tumor. 15 Now he's at I've known him since I was six years His tumor needs to be sequenced. We will spend time Now that was the first step that's available 16 today. 17 only the first step. 18 cancer he has. 19 One of my closest friends was It hasn't been available ever before. But that's Now we know specifically what type of In the past unless you are lucky enough to have 20 the right doctor when you went to diagnose that problem and 21 he can say, well, Jose or Albert I've seen this before and 22 you were out of luck. 23 one sequence, his own DNA and the specific problem he has 24 with his cancer and access worldwide databases of every 25 drug, every single drug across the world that's been tested Now what we'll do is we'll use this TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 11 1 on all different types of cancers that specifically have his 2 DNA sequence involved. 3 treatment are now viable where before as he said last night 4 he would be dead in four weeks. So the chances of a successful 5 So as of medical advance you are able for the 6 first time to have custom made medicine but you can't do 7 that without accessing a vast database of information. 8 if you are the best doctor in New York or California or 9 here, you can only read what you can read. Even You have 24 10 hours a day. 11 you to access every publication that affects your area and 12 you don't have time to read it. 13 The new sequences in biomedicine will allow So my company's algorithms will in fact digest 14 the information as best as they can currently and then spit 15 out its recommendations. 16 solutions for medical problems, which is the next century's 17 work on how to get people healthy. So you'll have computer generated 18 My real business has always been money. People 19 want to know which companies to invest in and you might have 20 been lucky enough -- I was poor but if your parents had any 21 money and they wanted to simply find the stock to buy or how 22 to invest their money, again they had to find a stockbroker 23 or a local banker or someone they could go to and ask their 24 advice. 25 the college they went to or their experience in the And that one person's advice was only as good as TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 12 1 business. 2 Now, just as I -- with my friend or as a simple 3 example years ago if you had asked me what is the name of 4 George Washington's horse? 5 Washington's horse, okay, what would I have to do? 6 to get on the bus and go to the library. 7 the librarian for a book on George Washington. 8 somewhere in the appendix would be a note that said George 9 Washington's horse or otherwise I was in trouble. 10 I lived in Coney Island. George I'd have I'd have to ask Hopefully, I'd have to actually read the book. 11 I would then go back, make a report, come to my 12 school. And as you all know right now we go to Goggle and 13 in a nanosecond Goggle searches 10 billion documents for the 14 names of George Washington's horse. 15 what the horse ate for breakfast on a certain day. And you can find out 16 So my company will then take the concept of 17 building these search algorithms but not searching the 18 information for the name of George Washington's horse but in 19 fact searching the world's databases for what is the best 20 investments. 21 the investments around the world but my computer can do it 22 in a nanosecond. 23 I can't spend 24 hours a day going through all Unbeknownst to most people today again when I 24 first started on Wall Street I was a school teacher. The 25 stock exchange traded a couple of million shares per day and TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 13 1 that was a big -- and if you had a 100 million shares a day 2 it was a calamity. 3 of shares are traded but not by people. 4 Eighty percent of all the trading around the world -- when I 5 say trading, all the statistics you read about how many 6 shares traded today is done by a computer. 7 the computers trade thousands of times per second buying and 8 selling at small increments. 9 Now everyday, every minute those numbers Seventy-Five or In fact some of So the speed at which decisions are made you have 10 speed by computers but you need a search engine, just like 11 Goggle has a search engine for documents, a method to search 12 the financial arena for the best investments in my financial 13 arm of Southern Trust and the best medicine. 14 was me personally -- this again it hits very close to home. 15 I'm leaving for New York after this meeting to go sit with 16 the sequencers to see if I can save my friend. 17 the first time in history that it's probably a chance 18 because most people don't know when they say you have lung 19 cancer, cancer is not really a thing. 20 see we used to -- the past 30 years we know we had a 21 disease. 22 disorder. 23 It's a process. 24 25 So again if it And this is It's not like -- you You had the flu or you had some type of liver Cancer is very different. Cancer is not a thing. It's a process. What do I mean by that? It doesn't mean I have something in my lung that has a little "C" that says cancer. TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 14 1 It means that my lung is doing something. 2 It is cancering. 3 cancering. 4 are cancering. 5 It is a process. My lung is cancering or my prostate is In my friend's case his brain, bones and liver So in the past -- unfortunately anyone diagnosed 6 with a disease for lung cancer you could only treat them 7 with a lung cancer approved drug. 8 center in New York. 9 for breast care you can treat it with things that were only Like I have a breast care So now it turns out that many females 10 used before for prostate. And the only way they got to that 11 is they realized that in certain studies in the Netherlands 12 just by these search engines there had been good results 13 based on the computers being able to search the database, 14 the solutions for specific types of problems. 15 Why the Virgin Islands? Again we have high speed 16 connections in St. Croix. 17 hold my database information. 18 Erika mentioned is I need high level mathematicians to come 19 down and help program the computers. 20 have to be here and monitor the computers. 21 algorithms -- it's amazing but true -- much of the work 22 hopefully to be done later in life. 23 So I have to beg both servers to The high level people that Some people actually And these So that five, ten years away is the computers 24 themselves will help redesign some of the computer programs. 25 Just like in the cars we first built some computers to help TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 15 1 us manufacture cars. 2 design. 3 Now the computers are helping to They in fact design their own little parts. In the new version you can actually printout just 4 like a fax machine started 20 years ago, you could have the 5 computer design the part and make it. 6 parts. 7 database searching mechanism to search things on an 8 individual basis both in the medical field and the financial 9 field. 10 It actually prints So Southern Trust will be basically building up a Again it's an exciting area that the idea is that 11 the diseases that affect the local population -- I do lots 12 of work in Africa. 13 ground for experimentation because it has been so 14 underdeveloped it is not burdened with the current system. 15 What do I mean? 16 To backup Africa is for me a fertile When telephone companies now come to places like 17 Senegal where I was a couple of months ago, they don't put 18 copper in the ground. 19 cables and going to everyone's house. 20 systems going directly to cellular. 21 They don't have to worry about laying They leapfrog the old So though Senegal and Ivory Coast are poor 22 countries, 70 percent of the people have cell phones because 23 they were able to not deal with the local in-breaded 24 telephone companies who had to charge a ridiculous sense of 25 money because they had already laid all this pipe and copper TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 16 1 in the ground. 2 medicine. 3 testing people everyone is not the same, not everyone needs 4 an aspirin and not everyone needs the same aspirin or the 5 same amount of aspirin. 6 personal medical database for lots of people. It's difficult. 7 8 The same thing here, Africa has almost no That's it. subject. But with searching as opposed to The idea would be to build up a And ask as many questions about the I enjoy it. 9 MR. SIMMONDS: 10 the financial part. 11 invest. 12 other people's money. Good afternoon. I get I mean you got a billion dollars to You search for the best investments and you invest 13 The medical part I'm not sure I get as yet. I 14 mean I'm not going to ask you how much something like that 15 would cost because it sounds like it would be really 16 expensive. 17 going to come to you and say, you know what, I have an 18 ailment. 19 But who are you catering too? I mean people are I need you to search and see if there is a cure. MR. EPSTEIN: No, it's the drug 20 companies. To develop a new drug now cost a billion dollars 21 because you sort of start from scratch and it's really like 22 trial and error in your backyard, trying to figure out which 23 piece fits in this screw. 24 first five years testing all the different parts to see if 25 it will work on this drug -- on this disease. So the drug companies spend the The drug TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 17 1 companies would much rather have my computer do the trials 2 and errors. 3 MR. SIMMONDS: 4 anything. 5 tested products. 6 But you are not testing You are basically just searching for already MR. EPSTEIN: The algorithms 7 themselves will be almost like a chemistry lab in the 8 computer. 9 something you had to actually build it to see if it would In the old days when you had to test for 10 work. When the Wright Brothers built their airplane they 11 flew it and it crashed. 12 changed the wing. 13 They flew it and that's when they And now what you do is you design it in the 14 computer. 15 all designed by saying here is the wind, here is the gravity 16 and the product comes out at the end. 17 companies that want to know what's the most likely pathway 18 to hit this type of disease. 19 The computer inside all the new space ships are MR. SIMMONDS: So there is big drug Why would it take five 20 years before local folks could be trained in doing this sort 21 of -- 22 MR. EPSTEIN: It won't take five. It 23 will be growing simultaneously because the mathematics it's 24 like the new programs. 25 program that came out last week, Windows 8, took 600 people For example, the last Windows TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 18 1 six years to do. 2 high level programmers. 3 Now it's not that many people but you need So I would like to have young people -- I'm a 4 teacher by heart -- engaged early on. But the programming 5 initially will take time to get up and running and been 6 testing it until it sort of becomes a model for its 7 performance. 8 MR. SIMMONDS: Thank you. 9 THE CHAIR: Mr. Allen. 10 MR. ALLEN: Good afternoon, Mr. 11 Epstein. 12 I've been listening to you quite intense. You are asking for five years exemption and you 13 need instead of 80/20, you need 50/50. 14 going to take going back to the Legislature to change the 15 statute? 16 MS. KELLERHALS: You know that's We are aware that they 17 did bring in an amendment to go to the Legislature -- that 18 the Legislature actually passed legislation that would 19 reduce the number of employees to five. 20 it was vetoed by the Governor. 21 discussions with the EDC staff it was my understanding that 22 at this time based on the circumstances of each applicant it 23 would be considered. 24 MR. ALLEN: 25 I understand that But based upon my That's the reason why it's in this proposal? TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 19 1 MS. KELLERHALS: It's in the proposal in 2 part because it fits the business model better. 3 them as Mr. Epstein explained there is that ramp up while 4 they are getting the programs together. 5 6 MR. EPSTEIN: MR. ALLEN: You much rather it be MR. EPSTEIN: Sorry. shorter? 9 10 I much rather it be shorter frankly. 7 8 It allows I would like to get it done as fast as possible. 11 MR. ALLEN: Yes, I understand that. 12 But some of the computer models that you discussed it's so 13 way out. 14 on the market that you are trying to tap into? 15 16 Is this your thinking or this is something that is MR. EPSTEIN: I am not a mad man. So it might appear that way. 17 MR. ALLEN: No, I'm just asking if 18 this is your thought brand new or there is something out 19 there that you are trying to bring it here. 20 MR. EPSTEIN: Both. There are 21 products just beginning. They have not yet been fully 22 developed. 23 the wrong word. 24 in the past you got to dig into the ground. 25 concept of database mining is very well established but not Database mining is a very -- product is probably The database mining which mining means as Here the TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 20 1 in these two areas. 2 Normally, for example, as you know when you go in 3 your computer it might target you for a specific type of 4 advertisement because it knows that after you've been 5 searching for French fries. 6 the area who is looking for French fries and said, you know, 7 Randolph seems to like that. 8 9 So we'll send him a message. So the concept itself is very well established, using the medical really the next couple of years. 10 11 So they mine all the people in MR. ALLEN: I have no more THE CHAIR: How do you get around questions. 12 13 all the proprietary medical information, though? 14 does that -- 15 MR. EPSTEIN: I mean how Because you initially 16 start out -- most people they opt in or opt out. Sometimes 17 they, even for the first sequencing, potentially to answer 18 your question, when the human geno project is first begun a 19 question came in if they sequence my geno, my personal geno, 20 is that information tied to Jeffrey Epstein or will it be 21 anonymous? 22 right to say I don't want my name associated with my gene 23 because maybe if I have something that's bad I might have a 24 rocker gene from a woman pre-deposing me to breast cancer I 25 won't get health insurance. And everyone whose genes get sequenced has the TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 21 1 So the decision of having your name associated 2 with the sequence is your decision. 3 then goes into a big pile and says the person who had that 4 sequence was responsive to this drug. 5 attached. 6 However, the sequence So there is no name So there is no privacy issue. If it turns out that most people don't mind 7 having their names I was surprised. 8 look, if I'm doing something good for society and it's 9 helpful you say, yes, I've had a problem and if I can help 10 others my name could be attached. 11 make. 12 13 THE CHAIR: But most people say, That's a decision I would So it's a biomedical Goggle that -- 14 MR. EPSTEIN: Yes. 15 THE CHAIR: -- that tracks genes, 16 preference gene receptivity to different medications in 17 order to make doctors more efficient. 18 MR. EPSTEIN: Yes, and drugs more 20 THE CHAIR: But how do you get paid? 21 MR. EPSTEIN: The drug companies 19 efficient. 22 instead of having -- as I said imagine having your own 23 little chemistry lab in a computer as opposed to having a 24 thousand people. 25 So they pay me for the algorithm. THE CHAIR: So they pay you a TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 22 1 membership fee to access your server or they pay you for an 2 algorithm that you actually sell them instead? 3 MR. EPSTEIN: There will be just like 4 in any other product because there are different algorithms. 5 Some will be outright purchases, probably the simple ones. 6 There will be leases for longer runs and most people will be 7 coming back. 8 search engine in answer to one question. 9 for that one piece of advice, ongoing advice or exclusive Sometime if you want to know -- just like a So you get paid 10 rights like drug companies might want to have for a specific 11 answer. 12 THE CHAIR: And these mathematicians 13 build these algorithms to build themselves or they build 14 algorithms specifically for whatever question is posed 15 because I know you mentioned -- I still want to know why you 16 have a server here, though? 17 MR. EPSTEIN: I'd like to have 18 everything here for security purposes. 19 everybody is hacking servers. 20 unfortunately to make sure you are secure is to have 21 location wise. 22 As you know The only way really Once you put your server -- THE CHAIR: So your server will be 23 more or less your vault rather than a server to power 24 anybody else anywhere else? 25 MR. EPSTEIN: Yes, yes. The systems TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 23 1 everything is interconnected. 2 to have certain types of things is servers that are not 3 connected to the Internet directly. 4 THE CHAIR: But again the only real way How do you anticipate 5 that this business will grow so that it would actually 6 affect employment? 7 MR. EPSTEIN: Because if things go as 8 I planned it will need a significant number of people, 9 hopefully, again, probably between five to ten years or 10 maybe more operate a virtual laboratory. 11 of people. 12 It's accessing the computers and training people to operate 13 the systems. 14 So you need lots You need to watch and help the mathematicians. As you know if you thought about it years ago, 20 15 years ago if we said we are going to have to program a 16 computer, it's impossible. 17 good mathematicians. 18 things that were unthinkable years ago. I can't do it. I'm a pretty But now students coming up can program 19 THE CHAIR: 20 will there be an office space? And the office space or 21 MR. EPSTEIN: Yes, sir. 22 THE CHAIR: It will be in St. 24 MR. EPSTEIN: Yes, sir. 25 THE CHAIR: But the server will be 23 Thomas? TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 24 1 on the level three establishment on St. Croix? 2 MR. EPSTEIN: Don't know yet. 3 THE CHAIR: Because I know I heard 4 you mention St. Croix and the access to the band. 5 are figuring you can tap in a fiber anywhere and get there? 6 7 MR. EPSTEIN: access. Yes. But you You want the So that's really for the trading aspects. 8 It turns out -- and again it's an interesting 9 fact, that computers that trade, the algorithms that's a 10 different part of the business, the computers that trade it 11 makes a tremendous difference if you have fiber and high 12 speed fiber but not high speed fiber. 13 So just as a silly example there was a company in 14 New York that moved its offices three streets closer to the 15 stock exchange and paid millions of dollars to upgrade their 16 space so they can be three streets closer because then they 17 get an edge. 18 19 MR. SIMMONDS: Mr. Chair, if I might follow-up on something that you asked? 20 THE CHAIR: Sure. 21 MR. SIMMONDS: So what then do you see 22 23 24 25 as the economic benefit to the territory? MR. EPSTEIN: Well, obviously, hopefully -MR. SIMMONDS: I mean you are TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 25 1 suggesting that it will be at least five years, maybe even 2 longer before you start ramping up employment. 3 MR. EPSTEIN: I think there will be 4 revenues of a considerable number of millions of dollars at 5 the end of the fifth year. 6 dollar revenue items to the company. 7 of the taxes and in terms of employment. 8 9 But the ramp up these are high MR. SIMMONDS: So obviously in terms I'm sorry, taxes for the five or so individuals that -- 10 MR. EPSTEIN: No, no, the business 12 MR. SIMMONDS: The business taxes? 13 MR. EPSTEIN: Yes, sir. 14 MR. SIMMONDS: But you are getting an MS. KELLERHALS: Right, but the 11 15 taxes. exemption. 16 17 exemptions are only 90 percent on eligible income. 18 19 MR. SIMMONDS: So you are saying that the 10 percent would be substantial for the territory? 20 MR. EPSTEIN: 21 "yes". 22 side. Yes. The answer is And combined with employment it's a little down 23 THE CHAIR: How was this -- 24 MR. SIMMONDS: You are already a 25 resident of the Virgin Islands, right? TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 26 1 MR. EPSTEIN: Yes, sir. I also have 2 homes in New York and Florida. 3 prefer to be down here. 4 It's a more difficult business environment but I prefer to 5 be here. 6 very successful time here. 7 8 Most people prefer -- I This is my favorite place to be. I prefer to have my employees here. THE CHAIR: I've had a How is this different, the financial side than what you were doing before? 9 MR. EPSTEIN: What I was doing before 10 was really financial advice which is almost I don't want to 11 say antiquated but somewhat. 12 what should I buy? 13 years in the business of what you should buy. 14 really use computer search engines to find it. 15 different business. 16 the mathematics and the product of financial algorithms for 17 sale. 18 You would come to me and say And I'll use my judgment based on 30 I didn't It's a very This is not financial advice. THE CHAIR: This is So you have clients that 19 have invested in this and these algorithms produce not 20 information but -- they do produce information but it 21 actually trades based on that information. 22 MR. EPSTEIN: That's correct. 23 THE CHAIR: The computer. 24 MR. EPSTEIN: Yes, the computer can 25 trade. And the client they can either buy its position in TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 27 1 the algorithm or can have advice but I prefer only the 2 algorithm. 3 much more sophisticated. 4 5 I don't want to do financial advice. THE CHAIR: This is When you say they buy a position in the algorithm, you can invest in an algorithm? 6 MR. EPSTEIN: Yes. So if you go on, 7 for example, many trading sites you, yourself, can sign up 8 as a subscription and say I get the Albert Bryan newsletter. 9 When you think about that what was that? That was someone 10 who is willing to pay you a monthly fee for your personal 11 advice. 12 It's a computer. 13 14 15 Here we do the same thing except it's not a person. THE CHAIR: Why isn't this a Tech Park business, though? MS. KELLERHALS: 16 agreement with the Tech Park. 17 that we could go to the EDC. 18 THE CHAIR: We couldn't come to an So there is an understanding Because I was trying to 19 figure out if there was a distinctive difference because it 20 is a little different. 21 but your core business is not really Internet. It is an Internet provided service 22 MR. EPSTEIN: No, it's database. 23 THE CHAIR: It's data. 24 MR. EPSTEIN: Yes, data and it's 25 management. TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 28 1 THE CHAIR: Right, I go it. 2 MR. PENN: In the projections you 3 have two revenue lines, fee income and investment income. 4 It seems that -- is the fee income both the medical and the 5 financial? 6 MR. EPSTEIN: It's a mixture. Again 7 according to what the client wants to do, whether they want 8 to have a single -- you can invest, for example, in the 9 follow-up in only the bond algorithm. So you would then be 10 paying for your piece of a bond algorithm. 11 have more you would be fee for the entire business. 12 MR. PENN: If you wanted to I was just trying to get 13 a feel for how much of the business you estimated because 14 your estimate would have been medical versus financial. 15 MR. EPSTEIN: I think it will move. 16 think it will start off being more financial because the 17 medical is much more sophisticated. 18 sort of doing good thing, hopefully, I think the medical 19 area would be more exciting. 20 MR. PENN: I But in terms of overall And how many people 21 would you say would you need to do what you project for year 22 five? 23 nearly a doubling of your estimates between year one and 24 year five and I'm just trying to figure out -- 25 I'm not going to put numbers on the record but I see MR. EPSTEIN: I wanted to be TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 29 1 conservative. 2 3 If things go well we'll meet a lot of people. MR. PENN: But I mean I guess with the question you had before about the mix 50/50 -- 4 MR. EPSTEIN: Yes. 5 MR. PENN: -- in year five what do 6 you project that to be to generate what you project even 7 though it's conservative? 8 considering? 9 How many bodies are you MR. EPSTEIN: Again I would like as 10 many as possible frankly. But the idea is how well will a 11 product this mechanism take. 12 medical you don't want to sell something before it's ready. 13 And once it's ready then there would be people in the 14 marketing department. 15 things. Especially because it's There will be a bunch of other So it's difficult to put a number on it. 16 MR. PENN: How do you market that? 17 MR. EPSTEIN: Well, for the medical 18 things through the drug companies as well as certain medical 19 NIH, the hospital divisions, the medical countries. 20 is one of the few countries -- and that's another discussion 21 at some point because Iceland is an isolated community and 22 they have 50 years of genetic information. 23 Iceland has a genetic sequence and you can then see what's 24 happening, the children, what was really inherited. 25 breast cancer inherited, not inherited. Iceland So everyone in Is Is schizophrenia by TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 30 1 simply looking at all the data that was accumulated? 2 Places, frankly, like St. Thomas are the perfect 3 place to sequence people because it's so isolated. You are 4 able to get much better data than ever before. 5 ends up -- and that's one of the advantages of being here as 6 opposed to New York. 7 THE CHAIR: And it also But when I think of 8 genetic sequencing -- and I know we are getting way out on a 9 limb. 10 MR. EPSTEIN: No, ask. 11 THE CHAIR: I mean I would think 12 that you would have to have some DNA sampling of these 13 people going back for 50 years and 50 years ago we didn't 14 have that type of technology. 15 people have died. 16 sequencing of somebody who is no longer here? 17 So how do you -- I mean How do you trace that? MR. EPSTEIN: In Iceland they've kept 18 the sequencing. 19 kept blood samples from everyone. 20 thinking. 21 of the blood. 22 23 They started taking blood. So they have That was very forward So they were simply able to get the sequence out THE CHAIR: Got you. That was MR. EPSTEIN: Yes, it's 50 years of confusing. 24 25 How do you do data. It's the only country. It doesn't make them any TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 31 1 healthier at the moment but they have tremendous amounts of 2 data but almost no information. 3 THE CHAIR: Wow! 4 MR. EPSTEIN: Because now they have 5 300,000 people and all their ancestors. 6 with it? 7 Now what do we do It was the same problem when we had the human 8 geno. It was a book of three billion letters and it took 9 ten years to do and three billion dollars to do it, three 10 billion dollars to do it only ten years ago. 11 sequence you can now walk into your doctor and have it done 12 for $65.00. 13 You can sequence your entire geno for $65.00. MS. MADURO: 14 Legal Counsel. 15 to Legal Counsel? 16 That same I have one question for So through the Chair may I ask my question With respect to the fact that the Governor has 17 vetoed the proposed legislation, how will that impact us 18 inasmuch as we are in a public hearing and this board is 19 going to have to later decide moving this application 20 forward without the approved legislation? 21 22 23 MR. SMOCK: You'll have to remind me which legislation are you talking about? MS. MADURO: On the amount of 24 employees that the companies may have. Traditionally we 25 would approve an application with a minimum of 10 and move TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 32 1 forward in the event that the applicant cannot ramp up to 10 2 we would do a modification or a waiver of employees. 3 this instant we are going to start out knowing that we are 4 not going to have 10 employees. 5 MR. SMOCK: 6 the old legislation. 7 THE CHAIR: 8 9 10 11 But in So we'll be dealing with But the law allows for us to waive the employment in any case. MR. SMOCK: If we wish. THE CHAIR: For due cause only because those employees are not needed. 12 MR. SMOCK: If we wish to. 13 MS. MADURO: True. But we 14 traditionally do it by coming back to public hearing. 15 the interest of time and because we now know that the 16 applicant is not intending to ramp up to that I think it 17 should be notated on the record so that we don't have to 18 come back in the event that the applicant is approved to a 19 waiver process or a modification process on it. 20 21 22 23 24 25 MR. SMOCK: So in I believe it's already a part of the application. THE CHAIR: How many more people are doing this? MR. EPSTEIN: it in California. There is a couple doing Steve Jobs had a group that was trying to TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 33 1 help him and it was a little too short. 2 done in time but they were getting there. 3 day of his life they thought they were able to sequence his 4 gene in a way and maybe find a useful drug and he had 5 enough. 6 specifically tailored for your specific problem and he said 7 I can't do this anymore. 8 They tried to convince him to try it and he said I'm done. 9 10 They didn't get it In fact the last They said we think we can try a new one that's THE CHAIR: And then they had a big meeting. Where are you getting your mathematicians from? 11 MR. EPSTEIN: Usually from the United 13 THE CHAIR: That's a big place. 14 MS. HILL: I'm sorry, where? 15 MR. EPSTEIN: United States. 12 States. I had 16 hoped to get some from Europe just like engineers but it 17 turns out that they don't exist anymore and anybody in this 18 level of mathematics anywhere, they don't exist in China 19 because you need a bit of a creative person as opposed to 20 simply a copy cat. 21 are really good you are already here. 22 usually. They don't exist in Europe. And if you So the universities 23 THE CHAIR: So you already have one? 24 MR. EPSTEIN: I've had one. 25 THE CHAIR: And what was his profile TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 34 1 like? 2 MR. EPSTEIN: Harvard. 3 Harvard, MIT. 4 institute of advanced studies at Princeton. 5 6 11 So in your five-year plan you are going to send some Virgin Islanders to Harvard? MR. BRYAN: No, I want to train them THE CHAIR: How do you do that, MR. EPSTEIN: Because it's much -- you here. 9 10 But this is Harvard and he used to be at the THE CHAIR: 7 8 It's usually though? 12 have to start off thinking that, for example, Algebra is not 13 as important as it used to be. 14 And you don't have to -- in the old days you have to 15 actually poke holes in the card to program. 16 younger people can have their little abortage (phon) do 17 things simply by typing in and raise the abortage 18 right-hand. 19 Programming is important. And now the You type it in and it already programs. So advance programming is very different. It's 20 nothing -- I'm sure if you have children how they text, for 21 example, they speak in B2B, see you soon. 22 five minutes ago how am I going to teach -- one of the 23 problems is how do you teach kids to talk because in fact 24 they are starting to talk as they text. 25 understand it. You could ask me So adults don't TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 35 1 THE CHAIR: Is that what it is? 2 MR. EPSTEIN: Yes. 3 THE CHAIR: So are you planning -- 4 and I know you have contributed generously before. 5 you planning to do -- I know we have one applicant that 6 started our Junior Achievement Program and we have some 7 others that did a financial piece that seems to be 8 successful at Charlotte Amalie High. 9 gone viral. 10 So are Junior Achievement has It's all over the Virgin Islands now. Are you going to do any programs to start to 11 build that type of interest and expose young people to that 12 kind of -- 13 MR. EPSTEIN: I'm willing to do any of 14 those things. Again I come from a background where I had no 15 money and it was only by understanding math and science that 16 I was able to live the life I currently lead. 17 love to do it. So I would 18 THE CHAIR: Any other questions? 19 MR. EPSTEIN: I'll be more than happy 20 in some other forum to sit down and say fine. 21 some of the scholarship money that I have given before here 22 in St. Thomas was to try to find children to go to visit 23 Harvard, encourage them. 24 25 In fact in One of the things I did five years ago is I brought a whole bunch of Noble Prize winners here to St. TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 36 1 Thomas for lectures at the university again so kids can see 2 they don't have to be in the music business. 3 fun and exciting. 4 MR. SIMMONDS: Science is as One of our board members 5 is the Provost at UVI. So we certainly will have him get in 6 touch with you and see what kind of programs could be 7 developed in conjunction with UVI to train mathematicians. 8 MR. EPSTEIN: Not only mathematicians, 9 in fact it's a longer discussion. I'm willing to have as 10 many discussions anybody here would like to have on the 11 record, off the record. 12 front of the Chairman has more teaching ability than all the 13 teachers in St. Thomas but people don't understand how to 14 use it yet still, not only here but most places because the 15 teacher unions don't like that idea. But that Apple computer sitting in 16 There is something that I would always encourage 17 adults to do as I would encourage all children is something 18 that some people know about and some might not. 19 the Khan Academy, K-h-a-n, Academy. 20 it you should go on line. 21 learn in high school. 22 simple. 23 it the first time because you can play it over and over 24 again. 25 age to learn the same subject or maybe having the same It's called Now if you haven't seen It teaches every subject you You can watch it when you want. It's You don't feel embarrassed if you don't understand You can blog with other children or people your own TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 37 1 problems you have. 2 mitosis in bio-medicine. 3 I don't understand how miosis works or So I can blog now and say who else? Can someone 4 explain to me how the chromosome split and they get answers. 5 So, yes, it's a tremendous amount of things to be done. 6 THE CHAIR: You know we were having 7 that discussion the other day and that's a serious shift 8 now. 9 to learn on the Internet because all of the information is Because the most important thing is teaching kids how 10 already there. 11 future school I think it's called Florida Virtual School. 12 And they have their whole high school curriculum on line for 13 anybody in the nation to go on and do it. 14 Islands like Iceland we are in the middle of nowhere. 15 They don't need to sit. MR. EPSTEIN: Florida has this But in the Virgin You see that's sort of 16 insensibly the same thinking I grew up with. But the middle 17 of nowhere just like Africa you have an Apple computer 18 sitting on the Internet. 19 middle of nowhere. 20 You are in the middle of everything. 21 understand how to use this thing. 22 the school. So in fact you are not in the You are in the middle of everything. You just have to And it's not taught in 23 And not only are the computers now used to say so 24 you can learn Algebra but it turns out -- and if again let's 25 look ten years down the road if I'm successful it turns out TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 38 1 that with 14 people in the room everyone has a different 2 learning skill and they learn differently. 3 very visual. Once they see a motorcycle part they can put 4 it together. I can't. 5 because they learn verbally. 6 Some people have a combination of the two. 7 Some people are Some people need to hear it verbally Some people learn visually. If you go back 500 years there was not one person 8 that sat in the classroom and said to the people in the 9 field sit in here and let me lecture you and don't move 10 while I do it. 11 everyone learns to do and really learns well is to walk and 12 no one taught them. 13 In fact as I described it the thing that No one taught you to walk. THE CHAIR: So what you are 14 suggesting is in 10 years we may be able to have a -- your 15 same product that would be able to take a genetic code of 16 how somebody is, figure out what is the best way for them to 17 learn and put it on the Internet for them? 18 MR. EPSTEIN: I don't want to say -- 19 that's pushing it but yes. 20 but it's true, yes. 21 people can learn certain things. 22 through space differently. 23 It's the Frankenstein version In fact it will turn out that certain Certain people can move So your skill set if you think about it the 24 questions that people ask are questions they have to find 25 the right person to ask. You want to find the best doctor. TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 39 1 If you got sick and I got sick we go to the best doctor. 2 The best doctor for a 100 percent likelihood is 3 connected on that machine somehow. So how can you find that 4 person in the right place that's connected with that 5 information? It's really exciting. 6 THE CHAIR: That is. 7 MR. EPSTEIN: Yes, but things like the 8 Khan Academy you don't need -- if you want to learn 9 mathematics you don't really need to go to high school. 10 11 THE CHAIR: So why can't we fix the LEAC, man, if we can do all of that? 12 Anymore questions? 13 MR. SMOCK: Mr. Chairman, for the 14 record to follow-up on Commissioner Millin's question and 15 comments, this application did request fewer than 10 16 persons. 17 provide for the record that: But Section 708 of Title 29 Subsection F does 18 19 To be eligible for the granting of 20 benefits you must employ at least 21 10 persons on a full-time basis. 22 And such enterprise and all employees 23 and such enterprise shall be subject 24 to the exceptions contained in Section 25 711 of this subchapter be residents TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 40 1 of the United States Virgin Islands 2 provided however that the applicant may 3 employ fewer than 10 such persons upon 4 demonstrating to the Commission that the 5 employment of this number of persons in 6 his particular enterprise would not be 7 economically feasible or practical. 8 upon a further finding by the Commission 9 that the desirability of the proposed And 10 enterprise outweighs the fact that it is 11 not labor intensive. 12 13 I believe this application also ask for a 14 residency reduction also. 15 code if this commission so finds. 16 But it is permitted under the MS. HILL: And if I may, Mr. 17 Chairman, the amendment to the legislation to reduce the 18 five, we have submitted to Senator Malone the appropriate 19 wording. 20 be dealt with on Monday by the Committee of the Whole to 21 address the EDC requirements. 22 23 24 25 And my understanding is that that amendment is to So we should be okay. THE CHAIR: Fantastic. Maybe we don't have to do anything. Anymore questions? (No Response) TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 41 1 THE CHAIR: Thank you. 2 MS. KELLERHALS: Thank you. 3 4 (Thereupon, Marjorie Robert, Esq., Renee Andre, 5 Esq. and Daniel Coosemans were duly sworn in by Attorney 6 Smock.) 7 . 8 THE CHAIR: Proceed. 9 MS. ROBERTS: Good afternoon. I'm 10 excited to be here this afternoon with you, Commissioners 11 and the EDC staff and observers. 12 behalf of my client, DM Management, Inc. which I will refer 13 to as DIAM. 14 the sole owner of DIAM. 15 colleague, Renee Andre who assisted in preparing the 16 application. 17 And I'm here today on With me today is Mr. Daniel Cossemans who is And I'm also joined by my And at the outside I will just indicate that we 18 actually have two totally different businesses both owned by 19 Mr. Cossemans. 20 21 22 So we are going in sequence. DIAM is applying for EDC benefits as a Category -THE CHAIR: One second. I want to 23 specifically note that because on the agenda it's one item 24 but it's actually two companies. 25 MS. ROBERTS: DIAM is a single company TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 42 1 and then I think Asset Recovery Management is a separate 2 company. 3 4 So I think they are separate on the -MR. SIMMONDS: It's two items on the MS. ROBERT: Right. agenda. 5 And we wanted to 6 start with DIAM but frankly it's the first business which 7 you will hear from Danny that he started. 8 going in sequence of this development of the two businesses. 9 So we are sort of But DIAM is applying for EDC benefits as a 10 Category IIa designated service business providing business 11 and management consulting services, a broad range of 12 services primarily within the wholesale produce industry and 13 its spin off markets to clients outside of the Virgin 14 Islands. 15 Worldwide there is a website that goes into detail about the 16 Coosemans global business. 17 the application. 18 And if any of you check I think it's Coosemans And we've also described it in DIAM will be located on the Island of St. Croix 19 in the town of Christiansted and will make a minimum capital 20 investment of 130,000. 21 getting benefits Mr. Coosemans has identified a building but 22 will not enter into a binding lease until he is approved for 23 benefits. 24 condominium also conditional on benefits. 25 And in anticipation or in hopes of And he also, I think, has a contract pending on a DIAM will employ a minimum of five full-time TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 43 1 employees within one year from the date the certificate is 2 signed and all of those employees will be V.I. residents. 3 So we would ask for a waiver along the lines under Section 4 708 if the statute has not been amended appropriately. 5 in addition DIAM will commit to an additional three 6 employees by its fifth year of operations. 7 seeking a waiver of the minimum employee requirement from 8 ten to five for the first year and from ten to eight over 9 the first five years from the commencement of operations or 10 But So we are from the date the Chairman signs the certificate. 11 DIAM will provide its employees and their 12 dependents with a 100 percent paid health insurance. 13 will provide each employee with up to 30,000 in term life 14 insurance. 15 which it will contribute three percent regardless of whether 16 the employee contributes and then it will match up to two 17 percent of additional contributions. 18 contributed two percent of their salary, then DIAM would 19 contribute five percent. 20 application the vacation, sick leave and holiday policy. It It will provide a 401(k) or a similar plan in So if an employee And we've also indicated in our 21 With regard to charitable contributions DIAM will 22 contribute a minimum of 50,000 annually to charitable causes 23 in the territory commencing in the first full calendar year 24 following the commencement of benefits. 25 DIAM's annual contribution will be directed towards At least 17,000 of TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 44 1 education including public school programs and initiatives. 2 Of the overall contribution 3,000 will go to the Territorial 3 Scholarship Fund and the remaining contribution will be 4 directed to a variety of charitable causes including 5 education, community revitalization, family, religion, 6 women, the arts and animals. 7 statute DIAM will also contribute 2500 annually to the 8 Department of Labor for the creation of management of a 9 database designed to recruit Virgin Islanders living abroad 10 To the extent it's in the who desire to move back to the U.S. Virgin Islands. 11 The other thing that Danny and I had talked about 12 and talked with others about after submission of the 13 application, which I'll elaborate much more and it's really 14 not part of DIAM but would be a willingness to work with 15 local agriculture. 16 companies own a number of farms, for example, in Peru and 17 Central America and they have worked closely with agronomist 18 and other professionals on what types of fruits and 19 vegetables work well in different atmospheres and different 20 soil conditions. 21 Agriculture and see just as a volunteer if there is any way 22 that we can be of assistance in that regard as well. 23 24 25 You'll hear that the global Coosemans And we hope to meet with the Department of Without further ado I'll hand the table over to Danny. MR. COOSEMANS: Thank you for seeing me. TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 45 1 You know it's all a little new and different. But I'm 2 originally from Belgium and I started thinking about produce 3 after I came back from the Army. 4 stationed in Germany. 5 background I was in the diamond business. 6 back from the Army the Bears company starts closing down the 7 small companies and take over the whole diamond industry. 8 So there was very little room for us to grow. 9 So that's where we started in a different direction and I was in the Belgium army And then when I came back on my And when I came 10 started looking to export fruit and vegetables at that time 11 to Germany. 12 So after we started that business and we started 13 shipping a local produce from Belgium to Germany we also 14 started shipping a specialty item that we had in Belgium at 15 that time, Belgium Endive we started shipping it to the U.S. 16 After a couple of years of working the two markets we have 17 to decide which market to take for different reasons, 18 capital reasons and for geographic reasons where we ship to. 19 So then we decided to focus a 100 percent on the 20 U.S. 21 in the early 80's, then we went to New York, Miami and then 22 we spread over the whole United States. 23 in specialty produce, the cactus pear, the bell peppers, 24 Belgium Endive, 25 So we started with a specialty company in Los Angeles We are specializing So it was a growing market in the late 80's and TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 46 1 the 90's. And we started developing then after that because 2 now over time most of the supermarkets and everything in the 3 U.S. they like to see produce growing closer home. 4 also have farms in Florida and in California and also have 5 farms in Peru and Guatemala. So we 6 What I really do on this is I developed a company 7 and have it as a wholesale produce company in the city and I 8 have a partner running that. 9 that's part of how we connected with all these locations. I own part of the company and 10 couldn't be here if I had to run all the produce companies 11 all over the country. 12 ownership from the partner that run it. 13 It's not a franchise. It's an So my business is to keep the way you run it. 14 And we make sure that all the farms are all lined up, that 15 the farms have the lights, food safety that we also do from 16 our office, make sure we have the contracts with the 17 purchases of the water and the safe ways, and make this 18 wholesale place that's small in their city but it's big 19 globally because it's connected to what we do. 20 I So my main headquarters was in Miami until about 21 ten years ago and then I started splitting it between Panama 22 and Miami because -- the main reason why is because I like 23 the tropical and I like the way Panama was and is. 24 moved part of our headquarters over there. 25 a little bit less than half my time over there and half my So we So I spend about TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 47 1 time I'm traveling in our Miami office. 2 are thinking on how we can bring this back all to U.S. soil 3 because now we are the Miami part there. 4 So all the time we And when I find out about the economic 5 development program I said that maybe that's a way that we 6 can do it. 7 Thomas many times on vacation but then I came specific to 8 see what we can do here. 9 fell in love with St. Croix because of the open area, the And so we came to visit -- well, I came to St. And then I went to St. Croix and I 10 places for farming. 11 that's what we tried to do. 12 There is a different environment and MS. ROBERT: And we mentioned 13 management consulting on page 18 of the application. We 14 included a lot more sort of details of the types of things 15 that will be done here such as database management, document 16 compliance for growers and suppliers, quality control, 17 coordinating food safety, documentation, financial 18 statements, database of all sales made so they can track 19 what sells passed where and that will all be centralized 20 here. 21 So all the systems -- and centralized marketing 22 such as company wide marketing plans and media and ongoing 23 customer relations. 24 that we are talking about. 25 So that's sort of the type of thing MR. COOSEMANS: And financing for the TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 48 1 small farms that started off. 2 THE CHAIR: And that will be handled MS. ROBERTS: Yes, here in the Virgin 6 THE CHAIR: Commissioner Maduro. 7 MS. MADURO: I have no questions. 8 THE CHAIR: Mr. Penn. 9 MR. PENN: In your projection you 3 by DIAM? 4 5 Islands. 10 have an item leasehold on your sheet that seems to be your 11 investment, am I correct, your full investment? 12 MS. ROBERTS: In the? 13 MR. PENN: In the projections. 14 MS. ROBERT: Five-year projections? 15 MR. PENN: Yes. 16 MS. ROBERTS: No, the leasehold 17 improvements is part of the capital investment. 18 had 130 as capital investment. 19 think, furniture and -- 20 MR. PENN: I think we And so there is also, I I'm just saying is that 21 when I see it here in the five-year projection I'm thinking 22 it should be shown in the projections. 23 24 25 MS. ROBERTS: That's a good point. We are not trying to double count. MR. PENN: So when I saw it there TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 49 1 and in the other one the same thing. 2 that's one thing that needs to be -- 3 MS. ROBERTS: So I'm just saying And the other thing 4 which I don't think Danny mentioned is he is looking 5 initially at the lease. 6 also looked pretty extensively to build or in effect 7 build -- 8 9 But I think if things go well he MR. COOSEMANS: Rebuild. And not to say that everything goes well, it's part of the program. What 10 happened was we started with trying to buy a building in St. 11 Croix. 12 frame is too short because the building have to be rebuilt 13 and there is no time frame of doing that. 14 building where we were looking to even if we rebuild it was 15 only short-term because we want to expand more over time. We negotiated with one person. 16 So we need a bigger building. And then the time And then also the So we have a 17 couple that we looked to at one particular round that I'm 18 really interested in and want to proceed on it as soon as 19 possible. 20 anyway. 21 contract depending on the approval. But it takes a year to rebuild the whole building So that's why we have a lease of a one and two-year 22 MS. ROBERTS: So we'll adjust that. 23 MR. PENN: And my second question 24 is I'm looking at the salary and wages in year five and it's 25 a little less than double year one. And the PFM income does TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 50 1 not rise on the same basis. 2 increase in salary and wages? 3 employees? 4 What is your rationale for the Is it the number of Is it wages? MR. COOSEMANS: It's the number of 5 employees and raises because I have to alone train. 6 over time I train more people to do more. 7 So more The salary -- the income of the company is all 8 dependent on the economy in the U.S. If the economy is 9 going better and better, then the income rise. If the 10 economy is going to stay or going down then we are going to 11 lose income because that's where it's based on. 12 increase of the expenses it's on labor because we need more 13 people but it take time to get there. 14 MS. ROBERTS: But the I think we showed an 15 increase in employment between the year 2016 and 2017 of 16 three employees. 17 That's where the ramp-up was reflected. MR. PENN: 18 bit more. 19 anticipated raises or whatever. 20 But, anyway, I'm straight. I see the three. It's a So I was just trying to figure out if it was It's nearly a 100,000 more. 21 Thank you, Mr. Chair. 22 THE CHAIR: Mr. Allen. 23 MR. ALLEN: I don't have any THE CHAIR: My question, the only 24 25 questions. TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 51 1 question I have I had the pleasure of meeting Mr. Coosemans 2 before for the record. 3 salaries. 4 for the associates and stuff. 5 But my only question is on the They just seem a little low for the 35 and 40,000 That was my only question. And I know you've already started some of your 6 operation already, right? 7 MR. COOSEMANS: No. 8 THE CHAIR: You haven't started 9 anything yet? 10 MR. COOSEMANS: Here, no, no. 11 THE CHAIR: So the market will 12 dictate what those salaries will be. 13 MR. COOSEMANS: Yes. 14 THE CHAIR: But I had a long 15 conversation yesterday with the Legislature about living 16 wages and you seem to be in order. 17 don't have any questions. So more than that I 18 Mr. Simmonds, do you have any questions? 19 MS. ROBERTS: 20 21 what's the best vegetable? One of my questions was You should tell everybody. MR. COOSEMANS: Well, our main vegetable 22 was Belgium Endive for years and years but now our biggest 23 mover is asparagus out of Peru. 24 Most of it is out of Peru, yes. 25 That's the biggest mover. And it's grown in -- that's a very interesting TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 52 1 way. 2 100 meter sand deep. 3 the Andes that's full of water and then you have the ocean 4 and it drains under, and about 150 meters to 800 meters 5 there is limited water under the desert. 6 It's growing in deserts. It's absolutely deserts, a But there is water because you have So when you have water -- and there is no rain. 7 So there is no fungus. 8 grow basil and asparagus because there is no fungus. 9 10 That's why it's the best place to MR. PENN: You mentioned that you do finance some of your farms? 11 MR. COOSEMANS: Yes. 12 MR. PENN: Would any of that 13 operation be done from St. Croix? 14 MR. COOSEMANS: A hundred percent, yes. 15 MR. PENN: All of it will be done 16 in St. Croix? 17 MR. COOSEMANS: Yes. It's a way that 18 it's different directions how the farms can benefit from 19 that. 20 advances for growing before, then you have the benefit of 21 when shipping the merchandise to get some part of the money 22 already in the shipped merchandise. 23 to our companies, not the farms but the receivers. 24 what we are doing is, how we can manage it is because we 25 make the receiver, our own company liable for the agreement There is a way we can make arrangements that we get And it's only related Because TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 53 1 that is done. 2 So if a farm is out of Mexico and the shipping is 3 out of a container and the relation between the farm and our 4 receiver is so good that there is trust and if they sign off 5 we will release money direct to the farm. 6 different, different ways of -- a hundred different ways of 7 how to help the farm to do it. 8 MR. PENN: 9 10 And there is Looking at it from an accounting standpoint do you record that? Are there any interest charges on -- if it's financed I figure -- 11 MR. COOSEMANS: Yes, there is a fee. 12 MR. PENN: And in your structure 13 you just have fee income. 14 MR. COOSEMANS: Yes, I saw that too 15 because what we saw as the global name of income it's not 16 all, you know, the same. 17 MS. ROBERTS: It was harder to predict 18 the interest income. 19 farms outside of the U.S. it does fall under effectively 20 connected. 21 interest income then it would -- 22 And if the interest income is from We understand that if there is U.S. sourced MR. COOSEMANS: But it's not interest. 23 It's a fee on what it is because the payment terms -- it's 24 not calculated on the payment terms. 25 created on what particular advance we are doing. It's a fee that get TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 54 1 MR. PENN: 2 financing I think of interest. 3 Well, when I hear MR. COOSEMANS: Because farming 4 interest -- financing farms is very difficult. 5 want to deal with it. 6 Banks don't It's very difficult. So for us we have a niche on it because we are 7 the receiver. 8 have to get -- 9 So one thing we have secured but we still MR. PENN: Well, as a director of a 10 bank, our bank I'm always interested to hear how different 11 people do things. 12 THE CHAIR: So it's not the same as 13 advance crop purchasing because it's kind of a gamble too. 14 If I buy your crop -- if you are growing coffee beans and I 15 buy your crop early on in the season and it grows and for 16 some reason there is a coffee shortage in the world, my 17 price is secured, there is a certain -- 18 MR. COOSEMANS: 19 secured on that. 20 financing. 21 No, the price is not This is market price. It's just straight Now we have contract pricing that we grow with 22 the price in advance. Like I said most of the asparagus in 23 Peru are growing under contract pricing and with advances 24 and with also financing on there but that's on a fixed 25 price. But the price is not part of this agreement. That's TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 55 1 why I'm saying there are so many different variables. 2 you make a box like a bank do, then it's very difficult to 3 fit it in a box. 4 If So we made a global that soon we see that -- and 5 also there are risk factors with the farms it's less because 6 we sent our own agronomist to see that people are planting, 7 to see that we are doing the right thing when the harvest is 8 coming. 9 to make sure that all the merchandise is coming. 10 And we make sure that we have people on the ground There is a lot of things going on there. 11 So that's why I'm saying it's not an interest. 12 It's a fee that have to be -- we term it different ways and 13 different -- to different applications. 14 THE CHAIR: I read in your 15 application that St. Croix will now be the headquarters, 16 global headquarters for Coosemans Worldwide. 17 any interest or a majority interest in any other businesses 18 besides Coosemans that will not be part of that? 19 MR. COOSEMANS: Do you have Yes, we are looking to 20 see what else because I'm going to live there. 21 to have to look around to have different things. 22 Yes, we are definitely interested in doing other 23 things. 24 being in there. 25 So I'm going But also we have another company that's part of me It's the same headquarters. THE CHAIR: Right. TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 56 1 MS. HILL: Mr. Chair, if I may 2 through the Chair, a question. Can you clarify for me are 3 you doing logistics management for these farmers? 4 part of what you will be providing? 5 MR. COOSEMANS: 6 management by air and by boat. 7 MS. HILL: 8 service? 9 Is that Yes, we have logistic And do you own that Is that part of your company? MR. COOSEMANS: No, we don't. That we 10 sub out. 11 office manages it. 12 container going a particular season. 13 like contracts like we have with Belgium. 14 the United States we have maybe 300, 400 containers. 15 that contract we manage here. 16 We just do -- our office and somebody in our And it's not the one to one, one What we are doing it's From Belgium to But So if there is a shipper out of Guatemala that 17 ship one container a week, we don't deal with that. 18 to make a direct contract with the shipping line or the 19 airline. 20 MS. HILL: We try So may I follow up to 21 understand. 22 would these 40 or 400 containers converge, for example, 23 coming out of Belgium? 24 25 Your operations in Panama where you -- where MR. COOSEMANS: They go to all our locations in the U.S. TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 57 1 2 MS. HILL: shipping -- these containers are received from the farms? 3 4 5 6 7 So you would be MR. COOSEMANS: Yes, shipped from the MS. HILL: The arrangements for the farms. shipping is made by a separate logistic management company? MR. COOSEMANS: The risk contracts, yes, 8 but it's the same name. We don't have no benefit on that. 9 This is just part of our service. You see the worldwide 10 headquarters we are supplying to our companies so much help 11 we can to make them profitable. 12 little things for them and then charge them for it. 13 It's not that we do our So what we are talking about in the logistic part 14 is like say with Belgium we have a contract that we do. 15 of Peru we have a contract with the shipping line that we 16 every year renew and go over and talk with them. 17 smaller ones we don't -- either the farm or our company the 18 receiving make the deal. 19 MS. HILL: Out But the What I'm trying to 20 understand is in looking at the, what is described as the 21 full range of management and consulting services to clients 22 that include a number of things. 23 coordinate and manage the documents on compliance for 24 growers and suppliers, then you provide a database 25 management -- maintenance service. And one of them is to TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 58 1 MR. COOSEMANS: 2 logistics or food safety now? 3 MS. HILL: We are talking about the Well, I'm trying to 4 understand the logistic side of what I thought I heard where 5 the containers are all -- let's say you are getting all of 6 the asparagus from Peru and they are moving, who manages the 7 movement of those containers? 8 MR. COOSEMANS: We don't touch -- 9 MS. HILL: So you are not involved 10 with any side of the logistic management of shipping those 11 containers out? 12 MR. COOSEMANS: No. 13 MS. HILL: Got you. 14 Thanks for the clarification. 15 with that. Thank you. I was trying to follow along 16 What are you doing in Panama? 17 MR. COOSEMANS: Oh, I liked it there. 18 MS. HILL: I apologize. 19 Let me restate the question. 20 MR. COOSEMANS: My wife is from Panama. 21 MS. HILL: Okay. You see we are 22 interested in Panama for a lot of reasons because of the 23 Canal expansion. 24 noticed that the application talked about warehousing, 25 packing housing and distribution offices as part of the So when I read your application and I TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 59 1 service for Coosemans Worldwide, being a former shipping 2 line person I understand logistics and I understand the 3 shipping. 4 So immediately my thought was when I heard Panama 5 because I don't remember reading that if not I would have 6 asked the question earlier was when I saw that part of what 7 you are involved with. 8 packing houses are all part of logistics management that you 9 would normally find in a logistic distribution company, and Because warehousing, shipping, 10 Panama is growing as one of the largest distribution and 11 logistic management outfits into the United States on behalf 12 of companies like yours. 13 So I was curious about your role in Panama to 14 suggest that there is an opportunity because of the 15 bandwidth capabilities here in the territory now and the 16 need for logistics arrangement that is referenced in your 17 application. 18 It's very specific in your application. So I just want to understand that because there 19 is an opportunity for us to understand what is mentioned in 20 your application when it says that you will handle all 21 logistic management of Coosemans Worldwide including 22 providing for, arranging financial services to growers, I am 23 curious about that. 24 25 MR. COOSEMANS: benefits for our locations. So I'm only looking for So if I -- if we can -- if I TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 60 1 find out that San Francisco bring in a container from Mexico 2 and from the big growers and then I find out that these 3 growers also shipped to our location in Atlanta, I will now 4 say -- say our location in Houston and then I said, okay, 5 now we find out the truck is passing Houston, so then we get 6 involved to get this lined up and organized. 7 works on its own, then we leave it alone. 8 babysitting, then we do it. 9 companies are working together but there is always some 10 And if it If it need Like we have some that some friction because there is some competition. 11 So we have trucks coming from Mexico stopping in 12 Houston and Dallas but we do the distribution by computer. 13 We said seven pallets go there and four pallets go there 14 because if we let them do that, then there is a conflict of 15 interest. 16 for another benefit of them because we have to keep this 17 company in the U.S. running because you need new items. 18 need better transportation because they are focusing on 19 their market. 20 their circle with their customers. 21 But if it works without us, we go out and look They are very isolated. You They are living in And what we have to bring into that is -- and 22 that's why we have every year a big convention, the PMA 23 convention that we bring everybody together and then we see 24 what we can do as a group and how we can expend that. 25 that's our whole role of Coosemans Worldwide is providing So TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 61 1 like I say the service but it's everything. 2 3 MS. HILL: So you are all inclusive which includes at some point logistic arrangements? 4 MR. COOSEMANS: Yes. 5 MS. ROBERTS: If necessary. 6 MR. COOSEMANS: Yes, if necessary. 7 do everything if necessary. 8 9 We MS. ROBERTS: individual stores. But some autonomy to the If it's doing fine they don't need the 10 headquarter to be involved. 11 really going to be created here are to some extent I guess 12 at the expense of Panama? 13 MR. COOSEMANS: Yes. 14 MS. HILL: We have no problems with 15 And I think the jobs that are that at all. 16 MR. COOSEMANS: 17 enormous. 18 Panama anymore like it was before. Panama is growing It's unbelievable what's going on there. It's no 19 THE CHAIR: Miss Benjamin. 20 MS. BENJAMIN: Just one question just 21 for clarification on the record. Mr. Chair, alluded to the 22 fact and you agreed that here would be the headquarters of 23 Coosemans Worldwide. 24 think clarity is needed that DIAM would be actually 25 servicing Coosemans Worldwide, Inc. But in our previous discussions and I TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 62 1 MR. COOSEMANS: Coosemans Worldwide, 2 Inc. it's a company that we use and we use the name as the 3 company. 4 anything else, just the conventions and room arrangements 5 and travel arrangements around the convention area and also 6 carry the office in Panama and Miami are just an 7 administrative office. In reality Coosemans Worldwide on its own don't do 8 So in reality Coosemans Worldwide is the mainstay 9 but the operation company of Coosemans Worldwide is going to 10 be DIAM. 11 12 MS. BENJAMIN: Inc. is a holding company? 13 14 15 So Coosemans Worldwide, MR. COOSEMANS: No, it's not a holding MS. BENJAMIN: You have an existing company. 16 holding company because you mentioned that you have fees 17 coming from your holding company. 18 MR. COOSEMANS: Yes. 19 MS. ROBERTS: I mean the structure we 20 put in place is because there are 20 or so different 21 companies each with different ownerships is that we were 22 going to do a centralized holding company. 23 have set him up with one of the CPA's I work closely with, 24 with some of my other clients to review the situation and do 25 the arms length pricing. And we already But it will probably for ease have TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 63 1 the centralized holding company setup and have it be the 2 technical client but services will be provided to all of the 3 companies. 4 agreements in different countries with different 5 requirements we were going to structure it that way. 6 But instead of doing 20 or 30 different MS. BENJAMIN: So as of today of the 7 application the holding company does not exist. 8 you be granted benefits there is a possible restructuring in 9 terms of -- 10 11 MR. COOSEMANS: It is done. I think MS. ROBERTS: Anyway, it's been MS. BENJAMIN: So through the Chair, it's -- 12 13 But should formed. 14 15 I'm going to request that you provide us additional 16 information regarding that structure. 17 MS. ROBERTS: Sure. 18 MS. BENJAMIN: Thank you. 19 THE CHAIR: Anymore questions? 20 MS. ROBERTS: Did you have anything to 21 add, Renee? 22 MS. ANDRE: No. I just thought that 23 Albert was going to jump on the comments about the annual 24 convention and ask him when it was going to be held on St. 25 Croix. TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 64 1 THE CHAIR: No, I'll leave it alone. 2 MR. COOSEMANS: That's not within our -- 3 we cannot decide that. 4 together with PMA, Produce Market Association. 5 largest organization of produce in the United States and we 6 do that at the same time, same place. 7 We do our convention every year THE CHAIR: It's the Well, you have to let 8 them know, you know, that we are the global headquarters 9 now. 10 MR. PENN: 11 have an agronomist in your company. 12 DIAM? 13 MR. COOSEMANS: You mentioned that you That would not be in No, they are different. 14 You know like in your growing companies like Brook Garden in 15 Miami and Crystal Valley they have their own agronomist on 16 staff. 17 MR. PENN: I just wanted to say 18 that I think that that skill set is something it would be 19 nice that if they come through and assist our development. 20 Agriculture is being touted as an important factor. 21 MR. COOSEMANS: This is absolutely part 22 of the program that we want to do because without having a 23 proper study done, there is nothing you can do. 24 to bring them over and see what the possibilities are and 25 then go from there and then meet with the people in So we like TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 65 1 Agriculture and see where we can go from there. 2 MR. PENN: Thank you, Mr. Chair. 3 THE CHAIR: Thank you. 4 5 6 7 day. Have a nice Oh, yes, the other one. So how are we going to -- you are going to do a whole new presentation again? MS. ROBERTS: Yes, but we weren't 8 going to go through his -- he probably wouldn't go through 9 his bio again. 10 11 12 13 14 15 16 17 18 MS. ANDRE: Yes, just the side about Asset Recovery, about how that started. THE CHAIR: Proceed. Let the record reflect that we will now hear Asset Management. MR. SMOCK: And the parties are still under oath. THE CHAIR: Asset Recovery Management and that the parties are still under oath. MS. ROBERTS: Good afternoon, 19 Commissioners, EDC staff and observers. 20 here this afternoon on behalf of Asset Recovery Management, 21 Inc. which I will refer to as Asset Recovery. 22 is Mr. Daniel Coosemans who is one of the two owners of 23 Asset Recovery and my colleague, Renee Andre, who was 24 instrumental in putting together the application. 25 I'm thrilled to be With me today By way of background -- and Danny will tell you a TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 66 1 bit more -- Danny started Coosemans Worldwide. 2 made some money in the agriculture business -- he's an 3 entrepreneur and was looking for other niches -- he setup a 4 company called Asset Recovery which is going to be 5 relocating here and which I will talk about. 6 it is anticipated will have in effect adjacent space to DIAM 7 if they are both approved for benefits. 8 closely with compliance to ensure that everything can be 9 properly monitored as to which space and which expenditures 10 And when he Asset Recovery But we will work go with which company. 11 And to be honest we thought at one point whether 12 it would be beneficial trying to do them as one company but 13 they really are two different companies with two different 14 business plans and we thought it better to come before you 15 and explain that. 16 the employment rather than trying to put two businesses 17 together that really have evolved separately. And as you will see first year waivers on 18 Asset Recovery is applying for EDC benefits as a 19 Category IIa designated service business providing business 20 and management consulting services within the private and 21 commercial loan industries. 22 will service, acquire, hold and manage non-performing and 23 performing pools of mortgage notes as well as other 24 distressed real estate investments. 25 be located outside of the Virgin Islands. In particular Asset Recovery All of its clients will TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 67 1 Asset Recovery will be located on the Island of 2 St. Croix in Christiansted and will make a minimum capital 3 investment of 130,000 and we will adjust the five-year 4 projection as well to not double count the capital. 5 anticipation of the receipt of benefits Mr. Coosemans has 6 already viewed and tentatively entered into a contract with 7 the building on King Street in Christiansted and he's also 8 pretty much identified a condo not too far away, a 9 four-bedroom condo that he would be acquiring. 10 In Asset Recovery will employ a minimum of eight 11 full-time employees within the first year from the date its 12 certificate is signed and will commit to an additional two 13 employees by its fifth year of operations. 14 will locate one key employee to the Virgin Islands to serve 15 as general manager auditor. 16 contract would be that they come for two years and work to 17 train their successor who would be a Virgin Islander. 18 Asset Recovery And the terms of that person's So other than that all of the employees will be 19 Virgin Islanders at the time of hire. 20 relocating the general manager auditor you'll have a 21 continual of business knowledge during the ramp up period 22 and it will be easier to provide industry based training to 23 the employees. 24 25 But, however, by I should note, too, that Mr. Coosemans will be living here and be involved with both companies. We did TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 68 1 count him as an employee of either company. 2 critical in training as well. 3 But he'll be The general manager auditor will provide 4 extensive training to the assistant manager and company 5 operations and industry knowledge again with the expectation 6 that the assistant manager will be promoted within two 7 years. 8 employment requirement from ten to eight within one year 9 from the commencement of operation to the date the 10 11 As such we are seeking a waiver of the minimum certificate is signed. With regard to benefits, Asset Recovery will 12 provide 100 percent paid health to its employees and their 13 dependents, 30,000 in term life insurance, a three percent 14 contribution plus a two percent match and paid time off and 15 holidays is set out in the application. 16 contribute 50,000 to charitable contributions in the 17 territory with 17,000 going towards education, 3,000 to the 18 Territorial Scholarship Fund and 20,000 to other broad-based 19 charitable causes as listed in the application. 20 as required there will be a $2500.00 annual contribution to 21 the Department of Labor for the creation and maintenance of 22 a database. Asset Recovery will In addition 23 With that I'll hand the table over to Danny. 24 MR. COOSEMANS: 25 In 2004 I think I started investing in buying Thank you. TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 69 1 mortgages and setup a service center to servicing. 2 time that company grew and we have a service center in Miami 3 and in Panama. 4 dates exactly but about two years ago I met Jim Fratangelo. 5 He worked for Bay View. 6 Florida and we were buying mortgages from him. 7 Over About two years ago -- I don't know the It's a large mortgage company in So we got in contact with him and we became 8 partners because I needed somebody to have hands on the 9 ground and have way more experience than I had at that time. 10 So that's how we became partners and setup the system. 11 Now we are maybe servicing about two thousand of 12 our own loans, part are in performing, some are in 13 foreclosure and some are already REOP's. 14 of it is to dissolve the mortgages either by agreement with 15 the borrower to make payments or to get refinanced or if it 16 go in the REOP pool then we rent them out. 17 basically what we are doing. 18 The whole purpose And that's With me moving, with me moving here with produce 19 I have to bring my other baby too. 20 applying for this. 21 Panama. 22 brand new company called Asset Recovery Management. 23 company is going to be set here. 24 auditor, that we are going to send here for two years. 25 So that's why we are And I want to setup a service center in The way we want to do it is we want to start a THE CHAIR: This We have our main guy, our Just for clarification TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 70 1 you said Panama. 2 3 4 MS. HILL: Croix. I'm sure he meant St. Careful now, we want you here. MR. COOSEMANS: So we will bring him 5 here and he's going to setup a full service center. 6 we are doing here is so this is going to be -- this is not 7 going to take much away from Panama or from the U.S. 8 going to be new. 9 it's just an extension of what we are doing. 10 11 So what It's But we have everything in a row because It's just a new company. This company it's going to be full servicing. 12 are going to do servicing for outside companies. 13 going to do servicing for our other companies and we are 14 going to do our own servicing what we buy under ARM. 15 We We are Renee came up with ARM because the name was Asset 16 Recovery Management and she said, oh, ARM. 17 call it ARM. 18 ARM is going to buy mortgages and is going to service its 19 own mortgages and dissolve its own mortgages and service the 20 other companies. 21 So now everybody It's like they have a nickname already. THE CHAIR: So So when you said it 22 doesn't do anything to your U.S. company and your Panamanian 23 company, it's not the same portfolio or you are adding 24 something else to the portfolio? 25 MR. COOSEMANS: No, this is all new. We TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 71 1 are buying new portfolios for this company. 2 3 THE CHAIR: board? 4 5 Questions from the And then the rentals as a part of the Asset Recovery that's a part of ARM? 6 MR. COOSEMANS: No. If ARM gets 7 REOP -- you see when ARM buy a portfolio in that portfolio 8 over the next months some of these mortgages is going to 9 become REOP. When they become REOP -- 10 THE CHAIR: REOP is the acronym for? 11 MS. ANDRE: Real Estate Owned 12 Property. 13 MR. COOSEMANS: So they become REOP now 14 we have to do something with it. 15 for sell to dissolve it or if the market is nothing 16 favorable then we keep it as a rental. 17 THE CHAIR: 18 ARM. 19 management servicing division? We put them on the market But when you say "we", So ARM has a rental division, a sales division and a 20 MR. COOSEMANS: Yes. 21 THE CHAIR: With only five MS. ROBERTS: It's eight. 22 23 24 25 employees? I think it goes up to ten. THE CHAIR: Oh, I'm sorry. That's a TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 72 1 lot. 2 MR. COOSEMANS: The reason it does so 3 because I see ARM going with -- you know, we have 30 4 employees in the company and in Panama they only do 5 servicing and they have 30 employees. 6 growing very fast. 7 because also it takes a long time to get all the licenses in 8 place for ARM. 9 we can put in at least 20 employees. 10 So we see it is But we have to grow from the beginning If we could pickup the licenses in one day, THE CHAIR: And those are state 12 MR. COSSEMANS: State licenses. 13 MS. ANDRE: So each state where the 15 THE CHAIR: Originated. 16 MS. ANDRE: Yes. 17 MR. COSSEMANS: And some states need two 11 14 licenses? loan is -- 18 licenses, performing and non-performing. 19 licensing need bonds. All of these So it's a long -- 20 MS. ANDREA: Process? 21 MR. COOSEMANS: Long process. 22 THE CHAIR: Now, what is your 23 portfolio -- when you say your initial portfolio is going to 24 be servicing, about how many mortgages do you think? 25 MR. COOSEMANS: Here? TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 73 1 THE CHAIR: Yes. 2 MR. COOSEMANS: As many as we can 3 handle, as many as we can handle. 4 will start buying from the U.S. 5 So our guys are ready to come here to setup a team. 6 THE CHAIR: And we start buying, we So we have a team together. But do they buy like in 7 block or do they buy like piecemeal, like you buy like 20 8 mortgages and then you have a mix in there? 9 MR. COOSEMANS: 10 that sell us one by one. 11 and we have already -- with some banks we have an agreement 12 that when we talk about the bank bucks, when we have a loan 13 that don't fit into their bucks, we buy it. 14 here, we buy it at so much percent of value. 15 designed. 16 whatever they want to get rid of it. 17 Sometimes we have banks They want to get rid of this one And if it fit It's already So we take in every month two, three, four, five, The other ones is the bids. Like we just lost a 18 big bid with -- I just get the news five minutes ago from 19 Bank United. 20 too big for us. 21 it was like 180 million or something. 22 big. 23 the other part. 24 25 The reason we lost the bid is because it was So we co-bid it with other people because So it was way too So we bid a part of it and then the other party bid But we don't make it. But, anyway, that's what we are doing. We use Bank of America, Citibank, all of them. TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 74 1 THE CHAIR: So when you service the 2 mortgages, right, so you buy a bunch of mortgages, then what 3 do you do? 4 I mean in terms of what the bank owes or what you owe the 5 bank? 6 You buy them and you get points on them, right, MR. COOSEMANS: 7 60 percent of value. 8 mortgages. 9 10 Right, we buy usable at That's our usable number of first So we buy 60 percent of value and then we start. THE CHAIR: Of the mortgage? MR. COOSEMANS: Of the value. This loan 11 has nothing to do with the mortgage anymore because the 12 mortgage can be more or less. 13 value. 14 15 24 25 The value of the THE CHAIR: Sixty percent of the MR. COOSEMANS: Sixty percent of the value of the property. 22 23 MR. COOSEMANS: value of the property. 20 21 The value of what, property. 18 19 THE CHAIR: though? 16 17 But overall we are buying by THE CHAIR: I'm in the wrong MR. COOSEMANS: It takes sometimes four, business. five years to get a resolution. Without any income you have TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 75 1 to get so much involved in that. 2 mortgage there is maybe already two years if you don't pay 3 the maintenance fee in the building. 4 Say when we get the So say a small apartment in Miami if it's a 5 $1500.00 maintenance fee, $2000.00 maintenance fee, it's 6 $24,000.00 a year that's in maintenance that is due and it 7 takes three or four years to get a resolution. 8 percent sounds a big number but when you come to the end 9 it's just a business like any other business. 10 work hard to make money on it. 11 THE CHAIR: So 60 You have to So in the portfolio you 12 have REOP's and you have mortgages that are actually in 13 progress that are upside down? 14 15 MR. COOSEMANS: Yes, yes. And also we do modifications. 16 THE CHAIR: So what do you manage 17 that with? 18 computer, a software system? 19 I mean that's a lot of -- I mean you have a MR. COOSEMANS: Oh, yes, it's a software 20 system. 21 also what -- because anywhere we are, where I am, the 22 program is in the clouds. 23 It's a software system. THE CHAIR: That's what we do. And So we download from where we are. So in terms of the 24 different do you -- because I mean I would imagine that 25 there is groundwork to be done in specific states where you TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 76 1 have these licenses you have agents. 2 MR. COOSEMANS: Yes, we have agents that 3 do the licenses. 4 we have a person that do nothing else but licenses. 5 don't know yet that we can use that person to get our 6 licenses here as a service or that we are going to get the 7 third company outside to do the licenses to get a comparison 8 with our own because I'm not too happy always what happened 9 in our own. 10 We have Asset Recovery, the one in Miami, And there is companies that provide that service. 11 So maybe for here but I haven't made a decision 12 yet. 13 part of the whole business. 14 15 16 We It's an important -- this may be the most difficult THE CHAIR: So you do your own packaging and reselling too? MR. COOSEMANS: If we need to. If we 17 see that say ARM mortgages and there is mortgages that 18 perform, they perform at three, four percent it really 19 don't -- it's not an interest for us. 20 separate and then we have to sell them on the discount too. 21 So there is maybe a time if we can see that we can place 22 that money in a better location, then maybe we sell to buy 23 better packaging. 24 25 THE CHAIR: So maybe we keep this But you have strategies by geographic area too because there is also an inherent TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 77 1 value in the property when it increases in value. 2 lot of stuff is way undervalued now. 3 MR. COOSEMANS: I mean a But that's where the 4 REOP's is coming in. 5 become -- the property become our property now we decide are 6 we going to dump it in the market today because we are far 7 away, either in Panama or here or in Miami or it can be in 8 New York. 9 market. 10 If we have a foreclosure and the house So you are far away. So you never get top So we are selling maybe five, eight percent under 11 the market for a quick sale. 12 come out to make money on, we say, okay, maybe we rent it or 13 we wait six months. 14 But if our resolution don't So that's what we are talking about. THE CHAIR: So you deal with 15 individual agents, real estate agents or agents in those 16 cities to handle the maintenance and all of that stuff too? 17 MR. COOSEMANS: Yes. We have a main 18 company that we hire in Miami that do property management 19 and they have locations all over, not locations. 20 subcontractors that do everything. They have 21 And also on the main REOP's we don't do like if 22 the light bulb is broken they don't send us a bill for the 23 light bulb. 24 time. 25 put this rentable and then we pay the 16,000, and then it's We pay a monthly fee. They come in the first They say, okay, you are going to pay us $16,000.00 to TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 78 1 like a monthly fee that we pay and they come. 2 don't call us. 3 call me a night here. 4 have to deal with it as part of their maintenance that we 5 buy from them. 6 The renter If the toilet is not flushing they don't They call the company there and they So that gets all managed from here. But it seems like it's a very complex and 7 complicated thing. But because we are doing it to copy it 8 and having our main person it took me about six months that 9 we've been working on this to convince this guy to come here 10 for two years because that's what we need. 11 very difficult. 12 fast enough we can grow this company way bigger than what we 13 have here in a short period of time. 14 15 20 So in your Miami days how many REOP's do you have ballpark? MR. COOSEMANS: I cannot say a 100 percent the number but it's in the hundreds. 18 19 But now I think if the licenses is going THE CHAIR: 16 17 Without him it's THE CHAIR: That's an interesting MR. COOSEMANS: We should, you know, business. 21 within the five years at least we should have the same size 22 as of the Panama office here. 23 24 25 THE CHAIR: And you buy commercial as well as -MR. COOSEMANS: Very little, very TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 79 1 little. I try to stay away from the commercial right now. 2 But if it's part of the packaging we don't -- the term of 3 what you want to sell they come out with the packaging and 4 sometime with the slips on loans in there if you don't want 5 and then you have to deal with it. 6 numbers. But it's all about It's all about numbers. 7 THE CHAIR: 8 I'm always fascinated at how many ways there are 9 to make money. 10 11 12 13 It just blows my mind. MR. COOSEMANS: work. Any other questions? Well, this is ways to To make money we'll see after the fact. MR. PENN: On the projections it will be leasehold improvements? 14 MS. ROBERTS: Yes. 15 MR. COOSEMANS: What was he saying? 16 MS. ROBERTS: The five-year 17 projections list leasehold improvements as an expense 18 and we also list leasehold partially as capital. 19 making sure that's consistent. 20 would be to get a building or build a building and it would 21 have separate offices but it would service both companies. 22 MR. PENN: We are And again the goal in this With what you anticipate 23 doing in St. Croix that place you are looking at does it 24 afford you the ability to grow? 25 MS. ROBERTS: I think the current TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 80 1 location is good for a year or two? 2 MR. COOSEMANS: Yes, for a two-year 3 maximum but then I want to be on our own. 4 rent. 5 6 MS. ROBERTS: I don't like But it will provide an opportunity to get started. 7 MR. COOSEMANS: There is a couple of 8 nice -- what we talked about there is a couple of buildings 9 that I looked at. We just have to get it for the right 10 price because everything have to be rebuilt, totally 11 rebuilt. 12 THE CHAIR: You guys is part of your 13 strategy too actually -- I know there is development. 14 what they did when the economy fell, when the housing market 15 fell is that they bought back all their own units. 16 nothing in their buildings sold below a certain price. 17 18 And So Do you have strategies where you look at communities and stuff and buy just to -- 19 MR. COOSEMANS: I never saw that 20 happening but maybe it happened because don't forget we only 21 buy distress. 22 Ocean Drive. 23 24 25 So we don't have very seldom something in It's more in Liberty City. THE CHAIR: Martin Luther King MR. COOSEMANS: Yes. Boulevard. So it's distress TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 81 1 mortgages and so everything have a problem. That's where 2 you start with. 3 house and they take everything, the bathroom, the bathtubs, 4 the doors and everything. 5 don't want to come in here and change your mind on the 60 6 percent but that's part of the expense. And then there are areas you foreclose on a It's a tough -- like I said I 7 THE CHAIR: Mr. Allen. 8 MR. ALLEN: Have you tried to get 9 licensing for this operation here already? 10 MR. COOSEMANS: 11 no. 12 requirements what we have to do. 13 MR. ALLEN: 14 We have to start where we started. MS. ROBERTS: What type of license is He's talking about AA local license. 17 18 But we know all the required for this? 15 16 For this operation, no, MS. ANDRE: Are you talking about the local license? 19 MR. ALLEN: Licensing. 20 MR. COOSEMANS: We don't need the 21 license here that I know. 22 23 24 25 MS. ROBERTS: We'll need a business MR. COOSEMANS: A business license, yes. license. But we don't buy no mortgages or handle no mortgages here TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 82 1 from the islands. 2 All the mortgages are in the mainland. MS. ROBERTS: We may get business in 3 management consulting and we may end up getting -- I've 4 worked with Licensing to get broker licenses here possibly 5 that are not good for brokerage in the territory. 6 will be getting -- we may have even gotten business and 7 management consulting so far. 8 and business and management consulting. 9 has gotten it, it would be with the proviso that it's So we But we'll probably get broker But if the broker 10 only -- if they are getting fees that could be considered 11 fee sharing and would require a local broker's license. 12 13 THE CHAIR: much. Now I say thank you very Have a great day. 14 MS. ANDRE: Thank you. 15 THE CHAIR: Any privileges of the 16 floor? 17 (No Response) 18 THE CHAIR: Motion to adjourn. 19 MR. PENN: So moved, Mr. Chair. 20 THE CHAIR: The meeting hereby 21 stands adjourned. 22 23 (Hearing Adjourned) 24 --- 25 TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 83 1 2 3 4 5 CERTIFICATE 6 7 8 This is hereby certified to be 9 a true and accurate transcript 10 of the foregoing proceedings. 11 12 13 14 15 16 17 Verdell Porter Shorthand Reporter 18 19 20 21 22 23 24 25 TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428