Phenoms going under (2 Viewers)

[cstu]

How could he have stolen $700k in 2013 and paid the winners that year? There would not be enough money for that.

The IRS does not come into play here at all. Phenoms LLC would not have a tax liability. Those are owed by Mike personally. If Mike did take out money for gambling debts or other personal things he will have a large tax debt which no bankruptcy can wipe out.

You can report any amount you want to the IRS. All he needed was enough money to pay the taxes, which he could easily have taken from future deposits people had made.

 

[BassNBrew]

Seems strange that he would claim entry fees as income in year X knowing he couldn't deduct the prizes until year X+1.

 

[Kool-Aid Larry]

shouldn't this be merged with the trick plays thread?

 

[jon_mx]

Seems strange that he would claim entry fees as income in year X knowing he couldn't deduct the prizes until year X+1.

Must have used a cash method accounting, but would be a very dumb approach here.

 

[Maurile Tremblay]

Seems strange that he would claim entry fees as income in year X knowing he couldn't deduct the prizes until year X+1.

Must have used a cash method accounting, but would be a very dumb approach here.

I don't think he gets to choose when to realize the income from the entry fees. If they're paid in year X, they get counted in year X.

He almost certainly used the accrual method so that he could deduct the prizes in year X as well.

 

[jon_mx]

Seems strange that he would claim entry fees as income in year X knowing he couldn't deduct the prizes until year X+1.

Must have used a cash method accounting, but would be a very dumb approach here.

I don't think he gets to choose when to realize the income from the entry fees. If they're paid in year X, they get counted in year X.

He almost certainly used the accrual method so that he could deduct the prizes in year X as well.

.But he would not of had $700k in income in 2013 if he was just counting his income. Seems more like gross receipts. I am not sure if the information being stated here accurately reflects what is in the filing. But if he really had $700k of profit in 2013, he must have misused/stole the money then and somehow figured out a way to float that for a year. Not sure who would loan him that kind of money.

 

[BassNBrew]

Seems strange that he would claim entry fees as income in year X knowing he couldn't deduct the prizes until year X+1.

Must have used a cash method accounting, but would be a very dumb approach here.

I don't think he gets to choose when to realize the income from the entry fees. If they're paid in year X, they get counted in year X.

He almost certainly used the accrual method so that he could deduct the prizes in year X as well.

.But he would not of had $700k in income in 2013 if he was just counting his income. Seems more like gross receipts. I am not sure if the information being stated here accurately reflects what is in the filing. But if he really had $700k of profit in 2013, he must have misused/stole the money then and somehow figured out a way to float that for a year. Not sure who would loan him that kind of money.

I'm not really understanding if the $700k mentioned is gross receipts or net income.

 

[ROCKET]

Just because he claimed 700K of income in 2013 doesn't mean it was due to the IRS on Jan 1. April 15 is tax day and that's when he would have filed the income. Then he has months for them to start going after him. It was a juggling act and he kept it going as long as he could. I think it's safe to say he stole 100's of thousands of dollars in 2013 from the prize pool. Must have had a hell of a good time.

 

[jon_mx]

Just because he claimed 700K of income in 2013 doesn't mean it was due to the IRS on Jan 1. April 15 is tax day and that's when he would have filed the income. Then he has months for them to start going after him. It was a juggling act and he kept it going as long as he could. I think it's safe to say he stole 100's of thousands of dollars in 2013 from the prize pool. Must have had a hell of a good time.

I am sure some of it was good time, but it seems most was lost gambling. Perhaps there were some software expenses too, but not near $600k.

 

[ROCKET]

Just because he claimed 700K of income in 2013 doesn't mean it was due to the IRS on Jan 1. April 15 is tax day and that's when he would have filed the income. Then he has months for them to start going after him. It was a juggling act and he kept it going as long as he could. I think it's safe to say he stole 100's of thousands of dollars in 2013 from the prize pool. Must have had a hell of a good time.

I am sure some of it was good time, but it seems most was lost gambling. Perhaps there were some software expenses too, but not near $600k.

Is gambling not a good time? Especially with someone else's money.

 

[Maurile Tremblay]

Seems strange that he would claim entry fees as income in year X knowing he couldn't deduct the prizes until year X+1.

Must have used a cash method accounting, but would be a very dumb approach here.

I don't think he gets to choose when to realize the income from the entry fees. If they're paid in year X, they get counted in year X.

He almost certainly used the accrual method so that he could deduct the prizes in year X as well.

.But he would not of had $700k in income in 2013 if he was just counting his income. Seems more like gross receipts. I am not sure if the information being stated here accurately reflects what is in the filing. But if he really had $700k of profit in 2013, he must have misused/stole the money then and somehow figured out a way to float that for a year. Not sure who would loan him that kind of money.

Post #1804.

 

[Maurile Tremblay]

The fact that Phenoms claimed the prize money as revenue is not a good sign in my opinion. It shows that he accounted for it as if was the company's to spend and does not agree with his statement of it being held securely.

The prize money received should not be gross income and with a "prize money expense" on the income statement. It should have been set up as a payable the moment he received it and not even hit the income statement. Only his % of it should have been recorded on the income statement. To be regarded as "revenue" you actually have to have provided a service and the only service he provided was his management related to the leagues.

It's not the prize money that was listed as revenue; it's the entry fees. The prize money is an expense. This is consistent with his statement that the money is being held securely. When you have a million dollars, you hold it securely. Also, regarding the prize money as an expense is consistent with setting it up as a payable the moment he received it. Payables are expenses.

The magic words you're looking for, to indicate that the money never belonged to Phenoms, are something like "held in trust" or "held in escrow." He never used those words, as far as I know.

ETA: Phenoms recording the prize money as gross income is like if a bank recorded all deposits customers made as gross income and then all withdrawals as an expense.

This is exactly what banks do. (Well, it's not the withdrawals that are an expense, but the obligation to make good on withdrawal requests -- because banks use accrual accounting, not cash accounting.)

That's why bank accounts require deposit insurance. Because without insurance, if a bank went bankrupt like Phenoms did, the accounts on deposit would not be satisfied in full.

 

[SacramentoBob]

No secured creditors.

That's good news. Any tax debt? Any large payments in the 90 day window?

$20,000 to PayPal

$1,300 to American Express

$156,413 to Secure Bancard

Shouldn't there be $600K to some web development company here?

 

[ozark]

Mike was just trying to find serenity; hope he used our money (or just mine) if he went to Las Vegas; Because; anyone that has said, "That Money can not buy happpiness, has not had a Vegas Hooker.............!

 

[fridayfrenzy]

The fact that Phenoms claimed the prize money as revenue is not a good sign in my opinion. It shows that he accounted for it as if was the company's to spend and does not agree with his statement of it being held securely.

The prize money received should not be gross income and with a "prize money expense" on the income statement. It should have been set up as a payable the moment he received it and not even hit the income statement. Only his % of it should have been recorded on the income statement. To be regarded as "revenue" you actually have to have provided a service and the only service he provided was his management related to the leagues.

It's not the prize money that was listed as revenue; it's the entry fees. The prize money is an expense. This is consistent with his statement that the money is being held securely. When you have a million dollars, you hold it securely. Also, regarding the prize money as an expense is consistent with setting it up as a payable the moment he received it. Payables are expenses.

The magic words you're looking for, to indicate that the money never belonged to Phenoms, are something like "held in trust" or "held in escrow." He never used those words, as far as I know.

ETA: Phenoms recording the prize money as gross income is like if a bank recorded all deposits customers made as gross income and then all withdrawals as an expense.

This is exactly what banks do. (Well, it's not the withdrawals that are an expense, but the obligation to make good on withdrawal requests -- because banks use accrual accounting, not cash accounting.)

That's why bank accounts require deposit insurance. Because without insurance, if a bank went bankrupt like Phenoms did, the accounts on deposit would not be satisfied in full.

You are correct that he did not say it was "held in trust" and all his statement really says is that he wasn't holding the prize money under his bed. I was speaking on this issue as it relates to revenue recognition (if it were held in trust) because it provides evidence that the entry fees were part of his operating income stream and thus available to use for operating expenses. There was nothing restricting the use of the entry fee money to be used for a brand new company office. If the funds were held in trust which is what I wrongly assumed then Phenoms should not have recognized the revenue the way they did.

Banks do not show client deposits as revenue though like you indicated. Banks show client deposits entirely on their balance sheet (Cash and payable)

 

[CletiusMaximus]

The fact that Phenoms claimed the prize money as revenue is not a good sign in my opinion. It shows that he accounted for it as if was the company's to spend and does not agree with his statement of it being held securely.

The prize money received should not be gross income and with a "prize money expense" on the income statement. It should have been set up as a payable the moment he received it and not even hit the income statement. Only his % of it should have been recorded on the income statement. To be regarded as "revenue" you actually have to have provided a service and the only service he provided was his management related to the leagues.

It's not the prize money that was listed as revenue; it's the entry fees. The prize money is an expense. This is consistent with his statement that the money is being held securely. When you have a million dollars, you hold it securely. Also, regarding the prize money as an expense is consistent with setting it up as a payable the moment he received it. Payables are expenses.

The magic words you're looking for, to indicate that the money never belonged to Phenoms, are something like "held in trust" or "held in escrow." He never used those words, as far as I know.

ETA: Phenoms recording the prize money as gross income is like if a bank recorded all deposits customers made as gross income and then all withdrawals as an expense.

This is exactly what banks do. (Well, it's not the withdrawals that are an expense, but the obligation to make good on withdrawal requests -- because banks use accrual accounting, not cash accounting.)

That's why bank accounts require deposit insurance. Because without insurance, if a bank went bankrupt like Phenoms did, the accounts on deposit would not be satisfied in full.

You are correct that he did not say it was "held in trust" and all his statement really says is that he wasn't holding the prize money under his bed. I was speaking on this issue as it relates to revenue recognition (if it were held in trust) because it provides evidence that the entry fees were part of his operating income stream and thus available to use for operating expenses. There was nothing restricting the use of the entry fee money to be used for a brand new company office. If the funds were held in trust which is what I wrongly assumed then Phenoms should not have recognized the revenue the way they did.

Banks do not show client deposits as revenue though like you indicated. Banks show client deposits entirely on their balance sheet (Cash and payable)

The numbers being discussed are probably taken from the company's bankruptcy schedules, not financial statements. A bankruptcy filing will always show cash in/out, regardless of how the company sets up its financials for accounting purposes.

 

[logic77]

For anyone still considering this just to be an innocent business mistake on Zangrilli's part, consider this:

I joined many fantasy football leagues on Phenoms over the last 5 years. Each year the number of leagues I joined grew a little bit. I was in maybe 13 low stakes leagues this year with a financial commitment of about $900. I didn't do well in most of my leagues this year, so that softens the blow a bit.

At any rate, my favorite type of leagues were the Draft-n-go types. Their premise was simple... draft a deep team (24 or more players to account for injuries during the year) at the beginning of the season and there are no roster moves, trades or lineup submissions as your optimum lineup would automatically be submitted each week. I loved the style. I wasn't terribly great at winning them, but loved them nonetheless. The majority of my leagues were Draft-n-go leagues. There were several other players that I would constantly see joining the same leagues as me, so there was a group of us that seemed to love this format and we couldn't get enough of them because they don't require any maintenance or time after the draft. I played at Phenoms because you can't find this format just anywhere and because his payouts were the highest I'd found.

Well, at $800 in leagues this year I felt like I had over done it and was content not to join any other leagues. But in the final week before the regular season started, Mike sends out a personal invite to myself and some of the other regular Draft-n-go players for a special "Beat the commish" Draft-n-go league for a $100 entry fee. He also offered this league with a full payout so he would't be getting his normal cut as commissioner. How could I resist? If you're interested in looking at the league site, here it is: http://www77.myfantasyleague.com/2014/home/25505#0

Is it possible he didn't know he'd be out of business 3 months later? I suppose it's possible, but it would be incredibly naive to think that he didn't know the end was near which makes the personal invite and the promise of full payout a bit predatory to say the least. I find his invite and his promise of full payout to be malicious in retrospect and I relay this story to you in order to shed additional light on who Mike possibly is to those that are withholding judgement which I myself might normally do.

Am I angry? No, not really. $900 is nothing to scoff at and pissing it away irritates me, but it's not affecting my life so it ended up just being an expensive lesson learned. At the end of the day, I allowed myself to be lulled into a false sense of security by a stranger on the internet. Shame on me. It's not so shocking when you think of it in those terms which I never stopped and did until it was over.

I sympathize with those who may have entered and won a high stakes league through Phenoms and are now looking at the prospects of getting nothing in return. Hopefully no one was at the point where they were expecting and needing their winnings to pay their bills. I'm not expecting to get anything back as the company moves through bankruptcy so anything I do get will be viewed as a complete bonus in my eyes. The real victim here is my desire to play fantasy football going forward which as of right now is next to nil. Maybe that will change come pre-season next year, or maybe it won't and maybe that's a good thing.

Kids, the moral of the story here is don't trust strangers on the internet, especially when money is involved.

 

[lynx4ben]

For anyone still considering this just to be an innocent business mistake on the Zangrilli's part, consider this:

I joined many fantasy football leagues on Phenoms over the last 5 years. Each year the number of leagues I joined grew a little bit. I was in maybe 13 low stakes leagues this year with a financial commitment of about $900. I didn't do well in most of my leagues this year, so that softens the blow a bit.

At any rate, my favorite type of leagues were the Draft-n-go types. Their premise was simple... draft a deep team (24 or more players to account for injuries during the year) at the beginning of the season and there are no roster moves, trades or lineup submissions as your optimum lineup would automatically be submitted each week. I loved the style. I wasn't terribly great at winning them, but loved them nonetheless. The majority of my leagues were Draft-n-go leagues. There were several other players that I would constantly see joining the same leagues as me, so there was a group of us that seemed to love this format and we couldn't get enough of them because they don't require any maintenance or time after the draft. I played at Phenoms because you can't find this format just anywhere and because his payouts were the highest I'd found.

Well, at $800 in leagues this year I felt like I had over done it and was content not to join any other leagues. But in the final week before the regular season started, Mike sends out a personal invite to myself and some of the other regular Draft-n-go players for a special "Beat the commish" Draft-n-go league for a $100 entry fee. He also offered this league with a full payout so he would't be getting his normal cut as commissioner. How could I resist? If you're interested in looking at the league site, here it is: http://www11.myfantasyleague.com/2014/home/25505#0

Is it possible he didn't know he'd be out of business 3 months later? I suppose it's possible, but it would be incredibly naive to think that he didn't know the end was near which makes the personal invite and the promise of full payout a bit predatory to say the least. I find his invite and his promise of full payout to be malicious in retrospect and I relay this story to you in order to shed additional light on who Mike possibly is to those that are withholding judgement which I myself might normally do.

Am I angry? No, not really. $900 is nothing to scoff at and pissing it away irritates me, but it's not affecting my life so it ended up just being an expensive lesson learned. At the end of the day, I allowed myself to be lulled into a false sense of security by a stranger on the internet. Shame on me. It's not so shocking when you think of it in those terms which I never stopped and did until it was over.

I sympathize with those who may have entered and won a high stakes league through Phenoms and are now looking at the prospects of getting nothing in return. Hopefully no one was at the point where they were expecting and needing their winnings to pay their bills. I'm not expecting to get anything back as the company moves through bankruptcy so anything I do get will be viewed as a complete bonus in my eyes. The real victim here is my desire to play fantasy football going forward which as of right now is next to nil. Maybe that will change come pre-season next year, or maybe it won't and maybe that's a good thing.

Kids, the moral of the story here is don't trust strangers on the internet, especially when money is involved.

Excellent insight and a must read.

I've been too busy to follow up for a while. However, I really think someone needs to re-post the number for the consumer affairs that appeared in the original post. All it will take to make sure justice is served is our continuing to follow up. When I called the investigator said he would follow up. But if I haven't followed up myself, what is his initiative. If anyone could find the post and take action that would go a long way.

 

[mattlambertson]

So what's the latest on the legal action here? From the posts during the first few weeks after the news hit, I was under the impression I would be mailed about a class action lawsuit soon, but I haven't received anything. Nor has my IC3 complaint received any response. Just wondering if anyone is ever going to see a single cent. I am owed over $700, I know it's not as much as some people but it was my first year playing for money online and it's a pretty big payout for my income level. Would be happy even getting 5-10% of the winnings. If even that doesn't happen, it will really, really suck. And I will never play FF for money again, which would also suck.

It's also amusing how right were the people who immediately questioned Mike's claim that he would pay 40% of the winnings. I'd love to have 40%. But I haven't received anything from Mike since the last "talk to my lawyer" update.

 

[Dr. Octopus]

So what's the latest on the legal action here? From the posts during the first few weeks after the news hit, I was under the impression I would be mailed about a class action lawsuit soon, but I haven't received anything. Nor has my IC3 complaint received any response. Just wondering if anyone is ever going to see a single cent. I am owed over $700, I know it's not as much as some people but it was my first year playing for money online and it's a pretty big payout for my income level. Would be happy even getting 5-10% of the winnings. If even that doesn't happen, it will really, really suck. And I will never play FF for money again, which would also suck.

It's also amusing how right were the people who immediately questioned Mike's claim that he would pay 40% of the winnings. I'd love to have 40%. But I haven't received anything from Mike since the last "talk to my lawyer" update.

Phenoms filed for bankruptcy. Check and see if your name is listed as an unsecured creditor. Not that it's likely you'll see much if anything, but it's the only way you can get paid at this point.

 

[El If I No]

For anyone still considering this just to be an innocent business mistake on Zangrilli's part, consider this:

I joined many fantasy football leagues on Phenoms over the last 5 years. Each year the number of leagues I joined grew a little bit. I was in maybe 13 low stakes leagues this year with a financial commitment of about $900. I didn't do well in most of my leagues this year, so that softens the blow a bit.

At any rate, my favorite type of leagues were the Draft-n-go types. Their premise was simple... draft a deep team (24 or more players to account for injuries during the year) at the beginning of the season and there are no roster moves, trades or lineup submissions as your optimum lineup would automatically be submitted each week. I loved the style. I wasn't terribly great at winning them, but loved them nonetheless. The majority of my leagues were Draft-n-go leagues. There were several other players that I would constantly see joining the same leagues as me, so there was a group of us that seemed to love this format and we couldn't get enough of them because they don't require any maintenance or time after the draft. I played at Phenoms because you can't find this format just anywhere and because his payouts were the highest I'd found.

Well, at $800 in leagues this year I felt like I had over done it and was content not to join any other leagues. But in the final week before the regular season started, Mike sends out a personal invite to myself and some of the other regular Draft-n-go players for a special "Beat the commish" Draft-n-go league for a $100 entry fee. He also offered this league with a full payout so he would't be getting his normal cut as commissioner. How could I resist? If you're interested in looking at the league site, here it is: http://www11.myfantasyleague.com/2014/home/25505#0

Is it possible he didn't know he'd be out of business 3 months later? I suppose it's possible, but it would be incredibly naive to think that he didn't know the end was near which makes the personal invite and the promise of full payout a bit predatory to say the least. I find his invite and his promise of full payout to be malicious in retrospect and I relay this story to you in order to shed additional light on who Mike possibly is to those that are withholding judgement which I myself might normally do.

Am I angry? No, not really. $900 is nothing to scoff at and pissing it away irritates me, but it's not affecting my life so it ended up just being an expensive lesson learned. At the end of the day, I allowed myself to be lulled into a false sense of security by a stranger on the internet. Shame on me. It's not so shocking when you think of it in those terms which I never stopped and did until it was over.

I sympathize with those who may have entered and won a high stakes league through Phenoms and are now looking at the prospects of getting nothing in return. Hopefully no one was at the point where they were expecting and needing their winnings to pay their bills. I'm not expecting to get anything back as the company moves through bankruptcy so anything I do get will be viewed as a complete bonus in my eyes. The real victim here is my desire to play fantasy football going forward which as of right now is next to nil. Maybe that will change come pre-season next year, or maybe it won't and maybe that's a good thing.

Kids, the moral of the story here is don't trust strangers on the internet, especially when money is involved.

very telling when you look at his team name, and then the picture on his team page...........

Unlucky Bass Turds............ aren't we all

"Follow me" holding a small roll.

that team feels like it was intended to be the salt that was waiting to be rubbed in

 

[mattlambertson]

So what's the latest on the legal action here? From the posts during the first few weeks after the news hit, I was under the impression I would be mailed about a class action lawsuit soon, but I haven't received anything. Nor has my IC3 complaint received any response. Just wondering if anyone is ever going to see a single cent. I am owed over $700, I know it's not as much as some people but it was my first year playing for money online and it's a pretty big payout for my income level. Would be happy even getting 5-10% of the winnings. If even that doesn't happen, it will really, really suck. And I will never play FF for money again, which would also suck.

It's also amusing how right were the people who immediately questioned Mike's claim that he would pay 40% of the winnings. I'd love to have 40%. But I haven't received anything from Mike since the last "talk to my lawyer" update.

Phenoms filed for bankruptcy. Check and see if your name is listed as an unsecured creditor. Not that it's likely you'll see much if anything, but it's the only way you can get paid at this point.

So all that stuff about a lawsuit was just people blowing steam and he is basically getting away with it?

 

[Dr. Octopus]

So what's the latest on the legal action here? From the posts during the first few weeks after the news hit, I was under the impression I would be mailed about a class action lawsuit soon, but I haven't received anything. Nor has my IC3 complaint received any response. Just wondering if anyone is ever going to see a single cent. I am owed over $700, I know it's not as much as some people but it was my first year playing for money online and it's a pretty big payout for my income level. Would be happy even getting 5-10% of the winnings. If even that doesn't happen, it will really, really suck. And I will never play FF for money again, which would also suck.

It's also amusing how right were the people who immediately questioned Mike's claim that he would pay 40% of the winnings. I'd love to have 40%. But I haven't received anything from Mike since the last "talk to my lawyer" update.

Phenoms filed for bankruptcy. Check and see if your name is listed as an unsecured creditor. Not that it's likely you'll see much if anything, but it's the only way you can get paid at this point.

So all that stuff about a lawsuit was just people blowing steam and he is basically getting away with it?

Well the lawsuit would have been stayed once he filed for bankruptcy anyway. I supposed a prosecutor could go after him for a criminal fraud, but that's not very likely.

File you proof of claim and hope for the best.

 

[cstu]

So what's the latest on the legal action here? From the posts during the first few weeks after the news hit, I was under the impression I would be mailed about a class action lawsuit soon, but I haven't received anything. Nor has my IC3 complaint received any response. Just wondering if anyone is ever going to see a single cent. I am owed over $700, I know it's not as much as some people but it was my first year playing for money online and it's a pretty big payout for my income level. Would be happy even getting 5-10% of the winnings. If even that doesn't happen, it will really, really suck. And I will never play FF for money again, which would also suck.

It's also amusing how right were the people who immediately questioned Mike's claim that he would pay 40% of the winnings. I'd love to have 40%. But I haven't received anything from Mike since the last "talk to my lawyer" update.

Phenoms filed for bankruptcy. Check and see if your name is listed as an unsecured creditor. Not that it's likely you'll see much if anything, but it's the only way you can get paid at this point.

So all that stuff about a lawsuit was just people blowing steam and he is basically getting away with it?

Well the lawsuit would have been stayed once he filed for bankruptcy anyway. I supposed a prosecutor could go after him for a criminal fraud, but that's not very likely.

File you proof of claim and hope for the best.

Mike is not going to get charged with a crime and planned this well enough that he's going to walk away with all the money to boot.

 

[Spin]

So what's the latest on the legal action here? From the posts during the first few weeks after the news hit, I was under the impression I would be mailed about a class action lawsuit soon, but I haven't received anything. Nor has my IC3 complaint received any response. Just wondering if anyone is ever going to see a single cent. I am owed over $700, I know it's not as much as some people but it was my first year playing for money online and it's a pretty big payout for my income level. Would be happy even getting 5-10% of the winnings. If even that doesn't happen, it will really, really suck. And I will never play FF for money again, which would also suck.

It's also amusing how right were the people who immediately questioned Mike's claim that he would pay 40% of the winnings. I'd love to have 40%. But I haven't received anything from Mike since the last "talk to my lawyer" update.

Phenoms filed for bankruptcy. Check and see if your name is listed as an unsecured creditor. Not that it's likely you'll see much if anything, but it's the only way you can get paid at this point.

So all that stuff about a lawsuit was just people blowing steam and he is basically getting away with it?

Well the lawsuit would have been stayed once he filed for bankruptcy anyway. I supposed a prosecutor could go after him for a criminal fraud, but that's not very likely.

File you proof of claim and hope for the best.

Mike is not going to get charged with a crime and planned this well enough that he's going to walk away with all the money to boot.

How so? Does not compute, no taxes have to be paid? I have no idea how this works, but it seems like:

Step 1 - Form LLC and collect a bunch of money with promises of future payments

Step 2 - Take out all money for yourself

Step 3 - File for bankruptcy

Step 4 - ????

Step 5 - Profit?

 

[Touchdown There]

For anyone still considering this just to be an innocent business mistake on the Zangrilli's part, consider this:

I joined many fantasy football leagues on Phenoms over the last 5 years. Each year the number of leagues I joined grew a little bit. I was in maybe 13 low stakes leagues this year with a financial commitment of about $900. I didn't do well in most of my leagues this year, so that softens the blow a bit.

At any rate, my favorite type of leagues were the Draft-n-go types. Their premise was simple... draft a deep team (24 or more players to account for injuries during the year) at the beginning of the season and there are no roster moves, trades or lineup submissions as your optimum lineup would automatically be submitted each week. I loved the style. I wasn't terribly great at winning them, but loved them nonetheless. The majority of my leagues were Draft-n-go leagues. There were several other players that I would constantly see joining the same leagues as me, so there was a group of us that seemed to love this format and we couldn't get enough of them because they don't require any maintenance or time after the draft. I played at Phenoms because you can't find this format just anywhere and because his payouts were the highest I'd found.

Well, at $800 in leagues this year I felt like I had over done it and was content not to join any other leagues. But in the final week before the regular season started, Mike sends out a personal invite to myself and some of the other regular Draft-n-go players for a special "Beat the commish" Draft-n-go league for a $100 entry fee. He also offered this league with a full payout so he would't be getting his normal cut as commissioner. How could I resist? If you're interested in looking at the league site, here it is: http://www11.myfantasyleague.com/2014/home/25505#0

Is it possible he didn't know he'd be out of business 3 months later? I suppose it's possible, but it would be incredibly naive to think that he didn't know the end was near which makes the personal invite and the promise of full payout a bit predatory to say the least. I find his invite and his promise of full payout to be malicious in retrospect and I relay this story to you in order to shed additional light on who Mike possibly is to those that are withholding judgement which I myself might normally do.

Am I angry? No, not really. $900 is nothing to scoff at and pissing it away irritates me, but it's not affecting my life so it ended up just being an expensive lesson learned. At the end of the day, I allowed myself to be lulled into a false sense of security by a stranger on the internet. Shame on me. It's not so shocking when you think of it in those terms which I never stopped and did until it was over.

I sympathize with those who may have entered and won a high stakes league through Phenoms and are now looking at the prospects of getting nothing in return. Hopefully no one was at the point where they were expecting and needing their winnings to pay their bills. I'm not expecting to get anything back as the company moves through bankruptcy so anything I do get will be viewed as a complete bonus in my eyes. The real victim here is my desire to play fantasy football going forward which as of right now is next to nil. Maybe that will change come pre-season next year, or maybe it won't and maybe that's a good thing.

Kids, the moral of the story here is don't trust strangers on the internet, especially when money is involved.

Excellent insight and a must read.

I triple stamp that double stamp. Powerful story and that explains his 30%+ growth in buyins this year. No vig "beat the commish" games.

 

[cstu]

Mike is not going to get charged with a crime and planned this well enough that he's going to walk away with all the money to boot.

How so? Does not compute, no taxes have to be paid? I have no idea how this works, but it seems like:

Step 1 - Form LLC and collect a bunch of money with promises of future payments

Step 2 - Take out all money for yourself

Step 3 - File for bankruptcy

Step 4 - ????

Step 5 - Profit?

He claimed profits last year and paid the taxes with the 'escrow' money.

 

[cstu]

I have no idea what any of this means, but if I use Leaguesafe am I just as likely to lose money? We don't play for anything big, but it would just be irritating...not like I win my leagues anymore anyways.

There's always a chance but unlikely since Paul Charchian is the Fantasy Sports Trade Association President and former owner of Fanball.

 

[SacramentoBob]

For anyone still considering this just to be an innocent business mistake on the Zangrilli's part, consider this:

I joined many fantasy football leagues on Phenoms over the last 5 years. Each year the number of leagues I joined grew a little bit. I was in maybe 13 low stakes leagues this year with a financial commitment of about $900. I didn't do well in most of my leagues this year, so that softens the blow a bit.

At any rate, my favorite type of leagues were the Draft-n-go types. Their premise was simple... draft a deep team (24 or more players to account for injuries during the year) at the beginning of the season and there are no roster moves, trades or lineup submissions as your optimum lineup would automatically be submitted each week. I loved the style. I wasn't terribly great at winning them, but loved them nonetheless. The majority of my leagues were Draft-n-go leagues. There were several other players that I would constantly see joining the same leagues as me, so there was a group of us that seemed to love this format and we couldn't get enough of them because they don't require any maintenance or time after the draft. I played at Phenoms because you can't find this format just anywhere and because his payouts were the highest I'd found.

Well, at $800 in leagues this year I felt like I had over done it and was content not to join any other leagues. But in the final week before the regular season started, Mike sends out a personal invite to myself and some of the other regular Draft-n-go players for a special "Beat the commish" Draft-n-go league for a $100 entry fee. He also offered this league with a full payout so he would't be getting his normal cut as commissioner. How could I resist? If you're interested in looking at the league site, here it is: http://www11.myfantasyleague.com/2014/home/25505#0

Is it possible he didn't know he'd be out of business 3 months later? I suppose it's possible, but it would be incredibly naive to think that he didn't know the end was near which makes the personal invite and the promise of full payout a bit predatory to say the least. I find his invite and his promise of full payout to be malicious in retrospect and I relay this story to you in order to shed additional light on who Mike possibly is to those that are withholding judgement which I myself might normally do.

Am I angry? No, not really. $900 is nothing to scoff at and pissing it away irritates me, but it's not affecting my life so it ended up just being an expensive lesson learned. At the end of the day, I allowed myself to be lulled into a false sense of security by a stranger on the internet. Shame on me. It's not so shocking when you think of it in those terms which I never stopped and did until it was over.

I sympathize with those who may have entered and won a high stakes league through Phenoms and are now looking at the prospects of getting nothing in return. Hopefully no one was at the point where they were expecting and needing their winnings to pay their bills. I'm not expecting to get anything back as the company moves through bankruptcy so anything I do get will be viewed as a complete bonus in my eyes. The real victim here is my desire to play fantasy football going forward which as of right now is next to nil. Maybe that will change come pre-season next year, or maybe it won't and maybe that's a good thing.

Kids, the moral of the story here is don't trust strangers on the internet, especially when money is involved.

Excellent insight and a must read.

I triple stamp that double stamp. Powerful story and that explains his 30%+ growth in buyins this year. No vig "beat the commish" games.

Looks like the Commish won.

 

[jon_mx]

So what's the latest on the legal action here? From the posts during the first few weeks after the news hit, I was under the impression I would be mailed about a class action lawsuit soon, but I haven't received anything. Nor has my IC3 complaint received any response. Just wondering if anyone is ever going to see a single cent. I am owed over $700, I know it's not as much as some people but it was my first year playing for money online and it's a pretty big payout for my income level. Would be happy even getting 5-10% of the winnings. If even that doesn't happen, it will really, really suck. And I will never play FF for money again, which would also suck.

It's also amusing how right were the people who immediately questioned Mike's claim that he would pay 40% of the winnings. I'd love to have 40%. But I haven't received anything from Mike since the last "talk to my lawyer" update.

Phenoms filed for bankruptcy. Check and see if your name is listed as an unsecured creditor. Not that it's likely you'll see much if anything, but it's the only way you can get paid at this point.

So all that stuff about a lawsuit was just people blowing steam and he is basically getting away with it?

Well the lawsuit would have been stayed once he filed for bankruptcy anyway. I supposed a prosecutor could go after him for a criminal fraud, but that's not very likely.

File you proof of claim and hope for the best.

Mike is not going to get charged with a crime and planned this well enough that he's going to walk away with all the money to boot.

How so? Does not compute, no taxes have to be paid? I have no idea how this works, but it seems like:

Step 1 - Form LLC and collect a bunch of money with promises of future payments

Step 2 - Take out all money for yourself

Step 3 - File for bankruptcy

Step 4 - ????

Step 5 - Profit?

If Mike had money left it would be worth going after him personally. Odds are he lost/spent it. There is a good chance he will have a large tax liability. If he took additional money out to pay taxes, he is even a bigger chump. That story above really shows he is even a bigger lower-life. The class-action lawsuit crap was from people that had zero idea how the process works. 10 to 20 percent is probably about the most you could hope for out of this mess. The state of Utah is probably the best bet to bring criminal charges. It would probably be good to have an FBGer attend the creditors meeting to see what Mike says and possibly inform the judge/administrator his true Actions. If one thing bankruptcy courts don't tolerate it is perjury.

 

[voiceofunreason]

So what's the latest on the legal action here? From the posts during the first few weeks after the news hit, I was under the impression I would be mailed about a class action lawsuit soon, but I haven't received anything. Nor has my IC3 complaint received any response. Just wondering if anyone is ever going to see a single cent. I am owed over $700, I know it's not as much as some people but it was my first year playing for money online and it's a pretty big payout for my income level. Would be happy even getting 5-10% of the winnings. If even that doesn't happen, it will really, really suck. And I will never play FF for money again, which would also suck.

It's also amusing how right were the people who immediately questioned Mike's claim that he would pay 40% of the winnings. I'd love to have 40%. But I haven't received anything from Mike since the last "talk to my lawyer" update.

Phenoms filed for bankruptcy. Check and see if your name is listed as an unsecured creditor. Not that it's likely you'll see much if anything, but it's the only way you can get paid at this point.

So all that stuff about a lawsuit was just people blowing steam and he is basically getting away with it?

Well the lawsuit would have been stayed once he filed for bankruptcy anyway. I supposed a prosecutor could go after him for a criminal fraud, but that's not very likely.

File you proof of claim and hope for the best.

Mike is not going to get charged with a crime and planned this well enough that he's going to walk away with all the money to boot.

How so? Does not compute, no taxes have to be paid? I have no idea how this works, but it seems like:

Step 1 - Form LLC and collect a bunch of money with promises of future payments

Step 2 - Take out all money for yourself

Step 3 - File for bankruptcy

Step 4 - ????

Step 5 - Profit?

If Mike had money left it would be worth going after him personally. Odds are he lost/spent it. There is a good chance he will have a large tax liability. If he took additional money out to pay taxes, he is even a bigger chump. That story above really shows he is even a bigger lower-life. The class-action lawsuit crap was from people that had zero idea how the process works. 10 to 20 percent is probably about the most you could hope for out of this mess. The state of Utah is probably the best bet to bring criminal charges. It would probably be good to have an FBGer attend the creditors meeting to see what Mike says and possibly inform the judge/administrator his true Actions. If one thing bankruptcy courts don't tolerate it is perjury.

A few hundred thousand and you don't think he has enough to pay his taxes? So naive.

 

[cowboyz1]

So what's the latest on the legal action here? From the posts during the first few weeks after the news hit, I was under the impression I would be mailed about a class action lawsuit soon, but I haven't received anything. Nor has my IC3 complaint received any response. Just wondering if anyone is ever going to see a single cent. I am owed over $700, I know it's not as much as some people but it was my first year playing for money online and it's a pretty big payout for my income level. Would be happy even getting 5-10% of the winnings. If even that doesn't happen, it will really, really suck. And I will never play FF for money again, which would also suck.

It's also amusing how right were the people who immediately questioned Mike's claim that he would pay 40% of the winnings. I'd love to have 40%. But I haven't received anything from Mike since the last "talk to my lawyer" update.

Phenoms filed for bankruptcy. Check and see if your name is listed as an unsecured creditor. Not that it's likely you'll see much if anything, but it's the only way you can get paid at this point.

So all that stuff about a lawsuit was just people blowing steam and he is basically getting away with it?

Well the lawsuit would have been stayed once he filed for bankruptcy anyway. I supposed a prosecutor could go after him for a criminal fraud, but that's not very likely.

File you proof of claim and hope for the best.

Mike is not going to get charged with a crime and planned this well enough that he's going to walk away with all the money to boot.

How so? Does not compute, no taxes have to be paid? I have no idea how this works, but it seems like:

Step 1 - Form LLC and collect a bunch of money with promises of future payments

Step 2 - Take out all money for yourself

Step 3 - File for bankruptcy

Step 4 - ????

Step 5 - Profit?

If Mike had money left it would be worth going after him personally. Odds are he lost/spent it. There is a good chance he will have a large tax liability. If he took additional money out to pay taxes, he is even a bigger chump. That story above really shows he is even a bigger lower-life. The class-action lawsuit crap was from people that had zero idea how the process works. 10 to 20 percent is probably about the most you could hope for out of this mess. The state of Utah is probably the best bet to bring criminal charges. It would probably be good to have an FBGer attend the creditors meeting to see what Mike says and possibly inform the judge/administrator his true Actions. If one thing bankruptcy courts don't tolerate it is perjury.

A few hundred thousand and you don't think he has enough to pay his taxes? So naive.

You wouldn't be stupid enough to claim them as profits. You would just inflate your expenses with bogus stuff and pocket the money. What you see on paper is hardly a financial record of the cash flow or health of his business. The only way to see what really is happening is with the Balance Sheet. After all the goal of any corporation is to show zero or slight profit massaging EBITDA to pocket as much as possible and limit tax liability. Odds are this guy stole hundreds of thousands and now is getting back room legal advise to figure out how to keep it and stay out of litigation.

If you want to steal a bunch of money from FF players, keep what you stole and stay out of jail to boot, Better Call Saul............

 

[cstu]

You wouldn't be stupid enough to claim them as profits. You would just inflate your expenses with bogus stuff and pocket the money. What you see on paper is hardly a financial record of the cash flow or health of his business. The only way to see what really is happening is with the Balance Sheet. After all the goal of any corporation is to show zero or slight profit massaging EBITDA to pocket as much as possible and limit tax liability. Odds are this guy stole hundreds of thousands and now is getting back room legal advise to figure out how to keep it and stay out of litigation.

If you want to steal a bunch of money from FF players, keep what you stole and stay out of jail to boot, Better Call Saul............

What expenses could he have running the website out of his house?

If he did pay taxes, sure he did 'lose' some money, but he also never has to worry about the IRS coming after him.

 

[ROCKET]

So what's the latest on the legal action here? From the posts during the first few weeks after the news hit, I was under the impression I would be mailed about a class action lawsuit soon, but I haven't received anything. Nor has my IC3 complaint received any response. Just wondering if anyone is ever going to see a single cent. I am owed over $700, I know it's not as much as some people but it was my first year playing for money online and it's a pretty big payout for my income level. Would be happy even getting 5-10% of the winnings. If even that doesn't happen, it will really, really suck. And I will never play FF for money again, which would also suck.

It's also amusing how right were the people who immediately questioned Mike's claim that he would pay 40% of the winnings. I'd love to have 40%. But I haven't received anything from Mike since the last "talk to my lawyer" update.

Phenoms filed for bankruptcy. Check and see if your name is listed as an unsecured creditor. Not that it's likely you'll see much if anything, but it's the only way you can get paid at this point.

So all that stuff about a lawsuit was just people blowing steam and he is basically getting away with it?

Well the lawsuit would have been stayed once he filed for bankruptcy anyway. I supposed a prosecutor could go after him for a criminal fraud, but that's not very likely.

File you proof of claim and hope for the best.

Mike is not going to get charged with a crime and planned this well enough that he's going to walk away with all the money to boot.

How so? Does not compute, no taxes have to be paid? I have no idea how this works, but it seems like:

Step 1 - Form LLC and collect a bunch of money with promises of future payments

Step 2 - Take out all money for yourself

Step 3 - File for bankruptcy

Step 4 - ????

Step 5 - Profit?

If Mike had money left it would be worth going after him personally. Odds are he lost/spent it. There is a good chance he will have a large tax liability. If he took additional money out to pay taxes, he is even a bigger chump. That story above really shows he is even a bigger lower-life. The class-action lawsuit crap was from people that had zero idea how the process works. 10 to 20 percent is probably about the most you could hope for out of this mess. The state of Utah is probably the best bet to bring criminal charges. It would probably be good to have an FBGer attend the creditors meeting to see what Mike says and possibly inform the judge/administrator his true Actions. If one thing bankruptcy courts don't tolerate it is perjury.

A few hundred thousand and you don't think he has enough to pay his taxes? So naive.

You wouldn't be stupid enough to claim them as profits. You would just inflate your expenses with bogus stuff and pocket the money. What you see on paper is hardly a financial record of the cash flow or health of his business. The only way to see what really is happening is with the Balance Sheet. After all the goal of any corporation is to show zero or slight profit massaging EBITDA to pocket as much as possible and limit tax liability. Odds are this guy stole hundreds of thousands and now is getting back room legal advise to figure out how to keep it and stay out of litigation.

If you want to steal a bunch of money from FF players, keep what you stole and stay out of jail to boot, Better Call Saul............

That is called tax evasion and could land him in jail. With the amount of money he was claiming I would think he would be smart enough to file his taxes legitimately. He would be prime for an audit after his bankruptcy. Screwing people and screwing the IRS are two different animals.

 

[Maurile Tremblay]

What expenses could he have running the website out of his house?

I hear he had some software-development expenses...

 

[nobiz]

Per the filing, it appears he "stole" not only the $700K but perhaps $200K from credit card companies.

 

[Slider]

Well perhaps he's hidden it safely, will do his 18 months and have Daddy gift it back to him when he gets out. His name is ruined. Unless he changes it and moves to another country this will follow him the remainder of his life. Nice he acquired $$$ but it's not going to end well. Over time people will heal and he will only get worse.

 

[cowboyz1]

Well perhaps he's hidden it safely, will do his 18 months and have Daddy gift it back to him when he gets out. His name is ruined. Unless he changes it and moves to another country this will follow him the remainder of his life. Nice he acquired $$$ but it's not going to end well. Over time people will heal and he will only get worse.

Not true at all. Amercians have very very short memories. Look around you, and you will see people that get money by scrupulous means all the time. Once everything blows over, they go do something else. Hell our general elections process is a perfect example.

 

[jon_mx]

Per the filing, it appears he "stole" not only the $700K but perhaps $200K from credit card companies.

If he took out that large sum of money, the court can look back and determine that payment was fraudlant. Usually the time period is 12 months, but they can look back futher. I am guessing Mike might have waited till it was more than a year hoping the court would not look back further. I think with a $700K income for that year, the court will question if that is reasonable or if that was stealing. Still think it is important for an FBGer to be there to make sure the trustee understands there is a chance Mike took out large sums which were not really his to take. Mike is a long ways from skating on this. Bankruptcy courts to do not look kindly at fraud and they will pursue criminal charges.

 

[cstu]

Per the filing, it appears he "stole" not only the $700K but perhaps $200K from credit card companies.

If he took out that large sum of money, the court can look back and determine that payment was fraudlant. Usually the time period is 12 months, but they can look back futher. I am guessing Mike might have waited till it was more than a year hoping the court would not look back further. I think with a $700K income for that year, the court will question if that is reasonable or if that was stealing. Still think it is important for an FBGer to be there to make sure the trustee understands there is a chance Mike took out large sums which were not really his to take. Mike is a long ways from skating on this. Bankruptcy courts to do not look kindly at fraud and they will pursue criminal charges.

Hope you're right.

 

[The great ones]

If the state of Utah or the FBI a do not press charges, this will set an ominous precedent for places like Leaguesafe. Don't talk to me about reputation when someone is just sitting on something like 40 million bucks.

I will use Leagusafe for baseball but not football; as I would not expect anyone to make a run for it till the end of football season, like Zangrilli did. Guess I must not know the law but if this stuff isn't illegal it should be.

I only lost 200 bucks for the one small league I was in, which I won. But the bigger losses are: 1.trust--can I trust Leaguesafe after something like this? 2. My team-- my team was just starting but I honestly would like to have seen where it was going because I thought it would be very good next year.

Just a horrible precedent. Do we know yet which company the 600$k was paid too? Can anyone follow the money trail?

 

[CalBear]

If the state of Utah or the FBI a do not press charges, this will set an ominous precedent for places like Leaguesafe. Don't talk to me about reputation when someone is just sitting on something like 40 million bucks.

How about $4 trillion? No one involved in causing the financial meltdown, costing trillions of dollars and hundreds of thousands of jobs, has been convicted of anything, and most of them got huge bonuses. And they're probably still holding your life savings.

 

[The great ones]

If the state of Utah or the FBI a do not press charges, this will set an ominous precedent for places like Leaguesafe. Don't talk to me about reputation when someone is just sitting on something like 40 million bucks.

How about $4 trillion? No one involved in causing the financial meltdown, costing trillions of dollars and hundreds of thousands of jobs, has been convicted of anything, and most of them got huge bonuses. And they're probably still holding your life savings.

Right. We could say the same thing about 9-11, the Kennedy assassination , OJ, and a host of other things.

But Zangrilli's isn't exactly LBJ, warren Buffett, or Larry Silverstein is he?

When the Crown commits a crime, it's not a crime. Is Zangrilli's King in Utah? For the sake of the High stakes players, I hope not.

If I owned Leaguesafe, I would be licking my chops.

 

[robcards]

Looks like bankruptcy was filed on the 15th with 8334 creditors listed. I'm sure he's cooked the books pretty well by now though so we'll be lucky to get a penny, but this is certainly better than some of the alternatives.

 

[jon_mx]

Looks like bankruptcy was filed on the 15th with 8334 creditors listed. I'm sure he's cooked the books pretty well by now though so we'll be lucky to get a penny, but this is certainly better than some of the alternatives.

He can't cook the books, at least not without putting himself in serious legal jeopardy. The bankruptcy court will be able to dive into every account and every transaction if they desire. Of course if no FBGer attends and represents the potential fraud of taking out $700,000 last year potentially was, the trustee may not go back that far and pursue it.

 

[Maurile Tremblay]

Of course if no FBGer attends and represents the potential fraud of taking out $700,000 last year potentially was, the trustee may not go back that far and pursue it.

$700,000 isn't the amount that was taken out; it's the amount that went in.

 

[jon_mx]

Of course if no FBGer attends and represents the potential fraud of taking out $700,000 last year potentially was, the trustee may not go back that far and pursue it.

$700,000 isn't the amount that was taken out; it's the amount that went in.

OK, so the $700K figure people are throwing around is just deposits into the business account for last year. But at some point the money had to come out and it should be fairly easy to track where it went to. Depending on where it went, the trustee can sue if he determines one creditor was given preferential treatment. Maybe even if the money did go to a software developer, which few people give any merit too. Things can really get hairy for Mike if he took out the money for personal reasons.

 

[Dr. Octopus]

Of course if no FBGer attends and represents the potential fraud of taking out $700,000 last year potentially was, the trustee may not go back that far and pursue it.

$700,000 isn't the amount that was taken out; it's the amount that went in.

OK, so the $700K figure people are throwing around is just deposits into the business account for last year. But at some point the money had to come out and it should be fairly easy to track where it went to. Depending on where it went, the trustee can sue if he determines one creditor was given preferential treatment. Maybe even if the money did go to a software developer, which few people give any merit too. Things can really get hairy for Mike if he took out the money for personal reasons.

The $727,190 is what he claimed as 2013 income on his statement of financial affairs in his filing.

He listed $1,000,000 in gross receipts (estimated, pre-tax) for 2014.

Preferential treatment only applies to payments made in the last 90 days before filing - which are:

$20,000 to PayPal

$1,300 to American Express

$156,413 to Secure Bancard

 

[Dr. Octopus]

He's claiming to have only $224,500.00 in assets.

$109,000 in Wells Fargo account,

$43,000 in Paypal

$5,000 in a DWolla.com business account

His other assets are $70,000 (value for a New Fantasy League Hosting platform)

$2,500 for Phenoms.com domain name

 

[jon_mx]

Of course if no FBGer attends and represents the potential fraud of taking out $700,000 last year potentially was, the trustee may not go back that far and pursue it.

$700,000 isn't the amount that was taken out; it's the amount that went in.

OK, so the $700K figure people are throwing around is just deposits into the business account for last year. But at some point the money had to come out and it should be fairly easy to track where it went to. Depending on where it went, the trustee can sue if he determines one creditor was given preferential treatment. Maybe even if the money did go to a software developer, which few people give any merit too. Things can really get hairy for Mike if he took out the money for personal reasons.

The $727,190 is what he claimed as 2013 income on his statement of financial affairs in his filing.

He listed $1,000,000 in gross receipts (estimated, pre-tax) for 2014.

Preferential treatment only applies to payments made in the last 90 days before filing - which are:

$20,000 to PayPal

$1,300 to American Express

$156,413 to Secure Bancard

It can be extended if it was done to an insider such as a friend or business partner.