Ahead of a scheduled arraignment, attorneys for Thinkstream founder Barry Bellue are casting allegations that he used corporate funds for his own benefit as an “unfortunate misunderstanding.”
Bellue, whose company was forced into bankruptcy in May 2015, was the subject of an investigation by the Louisiana Attorney General’s Office and the U.S. Department of Labor into alleged diversion of 401(k) contributions from Thinkstream employees.
Investigators allege a portion of those funds was allegedly used for Bellue’s personal benefit, including covering overdrafts incurred by an aviation company owned by him and his son, Lee Bellue, and “numerous meals at high-end restaurants.” His arraignment is scheduled for Sept. 17 in an East Baton Rouge Parish courtroom.
In an unsigned “position summary” emailed to Daily Report late Tuesday, attorneys James Manasseh and John DiGiulio argue the Thinkstream funds in question—which Bellue used to pay his personal credit card, aviation company and property in Mississippi—were “legitimate business expenses.” The email follows an Aug. 30 Daily Report story questioning why Bellue will be arraigned on a significantly lesser charge than the counts he faced when he was arrested six month ago.
The three-page summary of Bellue’s defense provided by DiGiulio argues the allegations that Bellue diverted Thinkstream employee retirement contributions stem from a decision in 2004 to reclassify engineers as contractors. Bellue later reinstated the employees as full-time in 2005 and allegedly repaid lost contributions with bonus payments, the statement contends.
Manasseh and DiGiulio declined to provide financial records to support the emailed position. DiGiulio says the attorneys have documentation, but choose to present it to authorities “rather than litigate in the press.” DiGiulio did not respond to questions about the author of the position statement.
However, Bellue is now being arraigned on one count of unauthorized use of a movable, having a value of less than $500, according to the Louisiana Attorney General’s Office, which is prosecuting the case. The office declined comment when asked why Bellue is being arraigned on a lesser charge or what act the lesser charge is tied to.
His attorneys claim the case dates back to 2003 when Thinkstream was having cash flow problems and Bellue reclassified some employees as contract labor in early 2004. Thinkstream reinstated them as full-time in 2005 and Bellue allegedly made up for “any loss or inconvenience by awarding significant bonuses” totaling $320,245.73.
The document emailed to Daily Report also alleges Bellue tried to reinstate the 401(k) contributions, but learned it is impossible to make retroactive contributions to the plans after an annual anniversary date expired.
In 2008, the U.S. Department of Labor penalized Thinkstream when an audit found payment discrepancies due to the contract labor arrangement amounting to $89,020. The penalty brought the total amount due to $126,631.58 to be paid in $8,000-per-month installments, according to the statement. The company’s failure to make payments led to the claim that employee 401(k) contributions were being diverted to Bellue’s benefit, the statement concludes.
The attorneys’ summary also addresses allegations that Bellue used company funds for his personal credit card, private aviation company and property in Mississippi. The summary alleges Bellue’s credit card “provided a line of credit that the company used” for business expenses, that the aviation company was a “cost-efficient tool” to service multistate Thinkstream customers, and that the Mississippi property was used by “hundreds of business associates” for recreational purposes—even as property payments were not treated as business expenses on Thinkstream’s books.
The summary also claims that over a 17-year period, Bellue advanced personal funds to sustain Thinkstream in the form of an interest-free, short-term loan, but maintains loan payments were never made to Bellue at the expense of the company or its employees. When Thinkstream was forced into bankruptcy in 2015, it owed Bellue nearly $1.4 million on the loan, according to the statement provided Bellue’s attorneys.
“In order to better frame the full picture of the situation it is worth noting that Mr. Bellue would ultimately invest a total sum of $15.7 millions (sic) of his personal wealth and family’s estate in Thinkstream over the 17 years that he managed the company,” the unsigned statement reads.
“It seems improbable that Mr. Bellue would bother with use of the funds from the employee retirement plan while during the same period in question he was regularly putting hundreds of thousands of dollars in the company to sustain it.”
Absent from the statement, however, is any reference to the hundreds of creditors and shareholders who invested millions into Thinkstream during that period as well, according to records filed in Thinkstream’s federal bankruptcy case, or multiple loans from the now-defunct First NBC Bank of New Orleans.