Editor’s note: This story has been updated since its original publication to indicate that Barry Bellue has been booked into the East Baton Rouge Parish Prison and to note his bond amount..
Thinkstream founder Barry Bellue and his former chief financial officer, Morris Alexander, have been arrested on two counts each of theft by fraud and two counts each of criminal conspiracy.
Bellue was booked into the East Baton Rouge Parish Prison this morning; bond was later set at $2,000. Alexander was arrested and released Friday after authorities set a $20,000 bond, prison records show.
The charges stem from a criminal investigation by the Louisiana Attorney General’s Bureau of Investigation—working with the U.S. Department of Labor—into alleged diversion of 401(k) contributions from Thinkstream employees. 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.”
A spokeswoman for the Louisiana Attorney General’s Office declined to comment, noting an ongoing investigation.
Affidavits to support the arrest warrants detail the repeated use of the revenues and the employee retirement contributions from the company that provided software used by hundreds of local and federal law enforcement agencies to pay for unrelated expenses, as well as erroneous financial information provided to secure loans and reassure creditors.
Despite a 2014 federal consent judgment ordering Thinkstream and Bellue to repay approximately $126,631 and terminating Bellue’s fiduciary relationship in the retirement plan, the affidavit alleges, Bellue and Alexander “knowingly participated in an elaborate and continuing scheme which involved the misappropriation of employees’ 401(k) retirement contributions.”
In the affidavit, Special Agent Ernest Green says investigators discovered that rather being submitted to the pension plan, the retirement monies were maintained in the general assets of Thinkstream’s corporate accounts and transferred to an account under the control of Bellue’s private aviation company. BLB Aviation South Carolina received approximately $78,488 between January 2003 and December 2005, according to the affidavit. During that same period, Bellue also received $20,000 in cash advances and authorized electronic transfers in the amount of $320,407 from Thinkstream’s accounts to pay his personal credit cards.
Those payments were reported as business expenses in subsequent financial statements to support loans from Thinkstream’s creditors, according to the affidavit. All told, Bellue diverted more than $1.3 million from Thinkstream’s account to his aviation company—$741,371 of which covered the latter company’s overdrafts. During the two year period, he authorized another $1.5 million from Thinkstream’s accounts to pay personal credit cards, purportedly to cover business expenses. However, investigators discovered that $254,418 of the funds were spent on aviation services and commercial flights; another $168,167 paid for high-end dining.
Bellue also transferred another $235,313 to an account associated with a ranch he owned in Mississippi, again claiming business expenses.
In an interview with investigators in November, Alexander admitted he was aware Thinkstream’s employees’ retirement contributions had been unlawfully diverted, according to the affidavit, but he claimed the company lacked the financial resources to repay the misappropriated funds.
Bellue and Alexander “knowingly engaged in an elaborate criminal conspiracy which operated as a deceit and fraud upon Thinkstream’s employees,” the affidavit concludes. “Bellue and Alexander also deceived DOL officials who attempted to retrieve the misappropriated retirement monies.”
According to investigators, $97,880 in Thinkstream employee 401(k) contributions remains unpaid.
The arrest is the most dramatic tumble in a long fall from grace for Bellue. In the 1980s, he acquired and led his first software firm, Fifth Generation, to extraordinary heights, selling it in 1993 to Fortune 500 company Symantec Corp.—now best-known for its Norton AntiVirus software—in a stock-swap deal valued at $53.8 million.
Bellue landed a job as vice president of operations at Symantec, spending two years in California. In 2006, Bellue told Business Report that after selling their Symantec stock, Fifth Generation investors came out of the deal with about $100 million in liquid assets, not counting the money they made previously with Fifth Generation.
It was that initial professional and financial success that would give Bellue tremendous credibility with investors and potential clients for his next high-tech venture: Thinkstream.
Investors—many of Baton Rouge’s most affluent professionals are among the nearly 500 shareholders—backed Bellue’s vision with more than $40 million. For just as long, prominent Louisiana law enforcement officials were Thinkstream’s best evangelists, singing the praises of the app at pitches and in news releases—and in some cases, investing in the company, too.
But then the Baton Rouge-based tech firm was forced into bankruptcy in May 2015 with more than $22 million in debt, bringing longstanding financial troubles—including missed loan payments, unpaid payroll taxes and a failure to invest employee 401(k) contributions—to light. At one point, his $1.3 million East Lakeshore Drive home was set for auction at a sheriff’s sale. A year and a half later, a bankruptcy judge approved a $1.4 million sale of the company’s assets to Thinkstream Acquisition LLC, or TAL. That company has since rebranded as Kologik.
Bellue’s financial troubles also ensnared First NBC Bank, which court records allege continued lending more money to the company and to Bellue personally—even as both were in default on existing loans and were insolvent—in a likely effort to artificially keep the loans current by paying itself interest as the earlier loans became due.The FDIC declared First NBC a failed bank in 2017.
Read Business Report’s 2015 account detailing Thinkstream’s troubles.
