More problems for Platinum: It’s now charged with defaulting on $700,000 loan
AMERICAN FORK, Utah—CPI Security Systems, a Charlotte, N.C.-based monitoring company, is suing Platinum Protection, claiming Platinum has defaulted on a $700,000 loan CPI made to the company in January.
CPI contends in a lawsuit, filed March 29 in federal court in Utah against Platinum and its CEO Jared Hallows, that Platinum has not repaid the money as required. Also, CPI claims that Platinum is not able to properly maintain the 350 customer accounts that are collateral for the loan because the company “appears to be in severe financial distress.”
Platinum, a leading summer-sales model company based here, reportedly laid off almost all its employees on Feb. 2. CPI claims in the lawsuit that Platinum’s sales staff is now working for competing companies and that the company’s “financial troubles are interfering with its ability to pay or meet all its obligations” to not only CPI but other creditors.
Such developments put CPI’s collateral accounts “in danger of being lost or significantly reduced in value,” CPI says in the lawsuit.
Hallows did not respond to a request for comment by Security Systems News.
Ken Gill, CEO and founder of CPI, told SSN that his company does not comment on litigation.
Gill previously confirmed to SSN that CPI and Platinum earlier this year were attempting to negotiate an agreement for the two companies to work together, but the deal fell through on Jan. 31. That’s the date the $700,000 loan was memorialized, the lawsuit says.
The CPI lawsuit comes on the heels of another federal lawsuit filed against Platinum in February by its former primary dealer, Monitronics. That Dallas-based monitoring company seeks more than $2 million for what Monitronics says are bad accounts and loss of revenue guarantees. Monitronics in its lawsuit has asked to take possession of the 6,255 accounts it says remain with Platinum in house.
CPI claims in its lawsuit that Hallows and Platinum made false statements to CPI at the time the loan was made, among them that the collateral customer accounts “were free and clear of any competing claims and/or encumbrances.”
Instead, CPI asserts, “some of the customer accounts had already been provided as security to Monitronics … at the time the parties executed the note or had been sold to Monitronics.”
CPI seeks repayment of the $700,000 loan plus interest and costs, such as attorney fees, plus punitive damages, and it wants the collateral accounts secured.
The layoffs at Platinum and the lawsuits have all occurred in the few months following a December announcement by the U.S. Securities and Exchange Commission that it had charged Utah residents Wendell Jacobson and Allen Jacobson with running a $220 million real-estate Ponzi scheme. The Jacobsons provided the primary startup capital for Platinum.
Hallows has told SSN that the Jacobsons no longer have any involvement with Platinum, after the company’s four main founders bought out the Jacobson family’s interest last summer. And Hallows said Platinum only learned of the Jacobsons’ alleged fraud at the time the SEC filed its lawsuit. He complained the SEC action created “an unfair association” between the Jacobsons and Platinum.