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Govt to ‘review’ Okyanos approval

The government is undertaking a “full review” of a proposal to develop a stem cell treatment facility in Grand Bahama in light of revelations that its CEO has declared bankruptcy and is battling the Internal Revenue Service (IRS) over a $3.8m unpaid liability.

Khaalis Rolle, minister of state for investments, told Guardian Business yesterday that court documents relating to Okyanos Heart Institute CEO Matt Feshbach’s current legal and financial woes suggest the Christie administration was correct to hold off on granting final approval of the project. Okyanos Heart Institute intends to offer stem cell therapy to cardiac artery disease patients. The facility had received conditional approval from the former government.

Rolle’s comments come as the Okyanos Heart Institute described Feshbach’s IRS woes as a “personal matter that started many years ago and does not relate to the Okyanos Heart Institute.”

Feshbach himself, in a phone interview with Guardian Business, said that his legal and financial situation “does not affect the viability or solvency of Okyanos in any way”.

“Okyanos is an investor-backed company and is not dependent on any one investor. We’ve raised a significant amount of money to date,” said Feshbach, who described himself as a shareholder in the company.

“I am proud of the fact I was able to pay off a $5.6 million obligation while supporting my family and founding a healthcare company, Okyanos, that can do a lot for patients, The Bahamas and other stakeholders.”

These developments come as Parliament continued debate this week on the Stem Cell Research and Therapy Bill, which would govern the stem cell medical industry in The Bahamas, amidst controversy that primarily focused on the role of fashion tycoon Peter Nygard in the bill’s promotion.

In court documents relating to Feshbach’s court battle with the IRS which were revealed by Guardian Business on Thursday, attorneys for Feshbach and his wife describe the pair as “honest and unfortunate debtors who cannot pay their creditors”.

In a declaration dated November 12, 2011, Matthew Feshbach stated the “massive tax liability from 2001 arises from ‘phantom income’ triggered by changes in the tax code that affected some of the hedge fund positions I was managing”.

“We are not millionaires,” said Feshbach in the declaration to the court. “In fact, the very generous appraisal of our assets recently obtained by the Chapter 7 trustee in our case showed that all of our assets totaled $138,000.”

In support of his claim that he is unable to pay the IRS, Feshbach stated in court filings that he became “seriously ill with chronic pelvic pain syndrome” in 2008, “curtailing his ability to restart and investment business, interview for employment with an investment firm or otherwise engage in meaningful business opportunities.”

Court documents show a hearing took place on Tuesday relating to the motion for a summary judgment on the question of discharging Feshbach’s IRS liabilities. The outcome of that hearing is at present not clear. The matter was previously set down for trial on August 20, 2013.

Feshbach has stated that he has not sought to evade his debts and engaged in “numerous attempts to work with the IRS prior to seeking bankruptcy”. Court documents filed on his behalf state that he paid the IRS $5.62 million in principal taxes due, interest and penalties since 1999.

Speaking with Guardian Business on the matter yesterday, Rolle said: “This is the primary reason the current administration insisted on having legislation to ensure that we don’t make critical mistakes at the outset. I’m very concerned that the previous administration allowed this to go as far as it has gone without insisting on proper due diligence.

“We made the decision not to grant final approval for this until we understood what we were dealing with. Had we gone ahead with the approval in principle we put in place, we would now have major egg on our face.”

He added: “We are reviewing this proposal in light of where we are now – there is a full review taking place.”

Feshbach is a former hedge fund manager with MLF Investments, an investment company he founded. MLF Investments was liquidated in 2008, according to Reuters news agency, after it “suffered a reversal of fortunes”. Prior to founding MLF Investments, Feshbach, the article notes, had been “one of the most famed short-sellers of the 1980s, ”gaining “praise and vilification” for his strategy of betting on stock declines.

He has also been strongly connected to the Church of Scientology and is noted in a 2006 St. Petersburg Times article as a major financial backer of the church’s “Super Powers” program. The program is intended to heighten one’s perceptions – or “perceptics”, in Scientology parlance – via the five senses.

In the article, Feshbach is said to believe he has super powers, which helped him to save a young boy’s life, and is quoted as saying that he is “no longer dependent on [his] physical body to perceive things”.

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