Given the untimely death of Russell Armstrong and the media blitz surrounding a situation that has made Taylor Armstrong one of the most recognizable names in the world, we have been trying to reach Bob Lorsch, CEO of MMRGlobal, Inc. (OTCBB:MMRF), for days. We finally spoke with him late last Friday to discuss the MyMedicalRecords.com (“MMR”) lawsuit against Taylor Armstrong, Russell Armstrong and NuWay Digital Systems. Mr. Lorsch was hesitant to speak with us, especially given the fact that he has declined to comment on the situation to the national media even though MMR and their attorneys had been approached by many high-profile news organizations since Russell’s suicide roughly a week ago.
Understandably, Lorsch was also hesitant about expressing any personal feelings towards the Armstrong’s circumstances other than offering that his heart goes out to family. So while I had him in the phone, I quickly segued into a conversation about MMRGlobal, the publicly traded company he runs, its shareholders and the MyMedicalRecords.com lawsuit at hand.
When asked directly, Lorsch was clear that the lawsuit “is not going away.” He stated, “I have an obligation to everyone who currently owns shares of the company with the trading symbol ‘MMRF’ on it.” He continued, “This is not reality television. I cannot ignore Taylor and Russell’s 2007 settlement agreement when representations in that agreement could represent millions of dollars to our shareholders. Every day I learn more about what the Armstrong’s told investors about privately-held MyMedicalRecords.com and the consulting and fundraising services they provided to others. How many mailing lists did they exploit through Taylors special events invitation service to meet potential investors? Where are the millions of dollars that flowed through their bank accounts and pockets? We have no reason to believe that Russell was broke or that Taylor is a victim of Russell without the ability to pay damages to MMR. Documents show Taylor’s involvement in the handling of money paid to Russell for the benefit of MMR from investors. ”
Lorsch continued, “During Russell’s bankruptcy it appears that Taylor was a frequent check signer and may have received money intended for MMR. That is why Taylor and Russell were both required to sign the MMR settlement agreement.”
The press all over newspaper, web and television are painting the picture that Russell and Taylor Armstrong are without assets and completely broke. Commenting on the divorce that Russell and Taylor were currently in the midst of, Russell’s lawyer, Ronald Richards, publicly stated that it was basically going to be a “no asset divorce” and told TMZ, "I feel bad because his credit cards weren't working ... He had tremendous financial problems." This has recently raised questions by the investment community about whether the lawsuit is a waste of time and money for MMRGlobal because no payout should ever be expected.
When questioned about this further, Bob first and foremost reiterated prior comments to us that “[this] is a very narrowly-focused case for specified liquidated damages. Either the Armstrong’s breached the settlement contract or they didn’t. We believe the evidence shows that they did.” Then Bob added, “Also, Russell Armstrong raised millions of dollars from many people through consulting and other forms of commission agreements. He took equity in nearly everything he raised money for. He kept some of the equity and sold some off to others. Taylor and Russell spoke publicly about these transactions such as the restaurant with Eva Longaria called “Beso”. They openly discussed a ten million dollar film deal on national television.”
Still on point, Lorsch added, “Before the MMR board removed Russell from MMR, he boasted to me about how he would keep his money in an offshore trust which is why MMR insisted his Trustee for the Armstrong Trust, Manuel Glaze, be a signature on the settlement agreement to help avoid possible fraudulent transfers in the event of a breach.”
Questioning whether or not the Armstrongs had/have cash or other assets leads to a spider web of financial doings as they seem to have shuffled money countless directions via several businesses for whatever reasons. We held a conversation this weekend with several people close to the source, including Tom Crosswhite, an investor and successful businessman who was at one time friends with Russell and Taylor Armstrong. Moreover, Crosswhite was another person who invested in then-private MyMedicalRecords.com via the Armstrongs and never received his shares until Bob Lorsch uncovered the whole Armstrong/MyMedicalRecords.com business fiasco and made things straight with Crosswhite and many others by rescinding Russell’s shares for the benefit of Crosswhite and the others. Crosswhite confirmed this fact and told us that he still holds many shares today because of his belief that Bob Lorsch will make the company a success.
Crosswhite explained that he had known the Armstrongs for several years and that, while not on a regular basis, they had done many things together encompassing both business and personal interests. Tom told us that on several occasions, Russell and Michael Nobel (of the Nobel Foundation, Nobel Peace Prize and some Armstrong-lead companies) had stayed and been entertained at Crosswhite’s Park City, Utah house. He also informed us that he had introduced Russell to more than 25 companies seeking venture capitalist activities, for which Russell was paid healthy commissions on the fund raising.
One of the companies, Genea Energy Partners, was tagged in September 2009 by Forbes Magazine as #13 on their list of “America's 20 Most Promising Young Companies.” Crosswhite is very knowledgeable of the $10 million in capital that was raised for Genea as he was supposed to receive roughly $450,000 in commissions from Russell for making the introduction to Genea and getting him the business...money Armstrong never gave him.
“I cannot comment on whether the Armstrongs are broke at this time, but I do know that Russell had received very large amounts of money through a wide variety of channels throughout the last two/two-and-a-half years in my association with him,” stated Crosswhite. “I know that a family in Texas was paying him to raise capital for several upstart businesses. Russell told me that they had given him $200 to $300 million for a fund in what Russell called ‘Vegas’ money to develop and provide capital for a conglomerate of developing firms and were paying Russell $250,000 a month in salary for his services plus one to two percent from any deal that he was responsible for creating.” Crosswhite also understands that Russell then also took equity in the companies he raised money for.
Lorsch believes that Ingrid Wang, the wife of the founder of the Wang Computer Company, recently gave Armstrong’s “Fund” four million dollars.
The Armstrong’s apparently moved quickly putting that fund to work with $10 million going towards five future films for Oscar Winning Director Kathryn Bigelow (“The Hurt Locker”), which they alluded to in an early episode of Beverly Hills Housewives, and possibly millions in other film production deals for which they were supposedly paid 8 to 10 percent commissions for raising the money and given equity in each film as well, according to Crosswhite. “It seemed that the Armstrong’s had many business operations that were generating significant amounts of income recently,” stated Crosswhite.
With direct regard to circumstances that could potentially arise surrounding the MMR/Armstrong’s lawsuit, Crosswhite spoke of other individuals he knows that had invested money through the Armstrongs that never seemed to hit the target destination, including MyMedicalRecords.com. This lends impetus to the idea of the lawsuit could grow significantly generating many more millions of dollars in claims for today’s MMRF shareholders.
In our conversation with Crosswhite, he mentioned that Russell had become a member or the highly-exclusive Tiger 21 group approximately two years ago. Crosswhite also mentioned that he had passed the stringent criteria and application process and was invited to become a member of the learning group as well. He explained that in order to even be considered as a member, individuals must be able to prove a net worth of a minimum of $30 to $40 million and that regular reviews are conducted to ensure that members are maintaining a high net worth. Advance-paid annual membership dues are $30,000. Russell Armstrong joined Tiger 21 in 2009 despite his ongoing bankruptcy – during which he claimed only $50,000 in assets and millions in debt – which was eventually discharged from debtors in June of 2008 and not terminated until June of 2010, possibly at the same time he was in the process of shooting Beverly Hills Housewives.
By itself, joining this club during a time when he was telling the government that he was broke should make people scratch their head as to “How could Russell Armstrong show that sort of net worth to this elite group of high net worth individuals?” It would also seem a bit naive to think that Taylor knew nothing about any of this or any assets, but that is just author speculation.
This sort of information begs the question, “Are the Armstrong’s truly broke?” Answering that question with a question (several, actually), Lorsch provided this response, “We already know that a lot of money flowed through Russell and Taylor without including reports of Taylor Armstrong penning a multi-million dollar deal (some report the contract to be worth $6.5 million) to become a spokesperson for DAVI Skin Care in March of 2011. Where are those assets? What about the published BeautyTicket.com deal naming Taylor Armstrong as Chief Creative Director in January 2011 where she is supposed to have received 30% of the company? Where is that asset? What about her consulting business which they discussed on the show and where are those contracts and fees? And what about sponsor gifts, personal appearance fees and reimbursements as a result of being on the show as well as any payments from being on “The Real Housewives of Beverly Hills”? Then there are all the deals that Russell closed and took equity in. Where are all of those assets?” With Bob’s questions it certainly would not be inappropriate to wonder “Is Taylor going to deny that these deals ever existed?”
Heading into this my third article on this subject, it was intended to “put this story to rest” and provide definitive answers to the lawsuit and what it means to MMRF shareholders. Investigation has revealed that there are more layers to the onion to be peeled which could have the possibility of many more breaches of contract to be potentially unveiled with each one carrying a $250,000 price tag. Some may think that Lorsch’s pursuit is not warranted, but the facts at this point seem to disagree with those pundits. Lorsch commented, “It’s still business as usual for MMR in every sense as we work towards building our core business. We are finally addressing this publicly because we simply want our shareholders to understand our position. The one good thing that Russell did for me was introduce me to the most exciting investment opportunity of our time, e-health and, in particular, Personal Health Records.”
That’s when Lorsch asked me, “If you were an investor in a company that had claims for millions of dollars, would you want the CEO to believe the claims of Russell’s divorce lawyer or - to use your words - peel away the onion for you as a shareholder?” If the odds are in favor of the company coming out on top and justice being served at the same time, the answer to that seems pretty obvious.
As to the true value of the Armstrongs, it appears to be muddied by gossip rhetoric at this moment as it makes for a better headline to print the anomaly of a “Beverly Hills Housewife” not having a penny and losing her estranged husband. The Armstrongs, including Taylor who held herself out as a member of the “Ford” family (confirmed by Crosswhite and others we’ve interviewed) while a sidekick of Russell, show a track record of deceit that should not slip the mind. Time will tell which Armstrong investors will continue to stand up and be recognized as there seems to be more of them out there.
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