Terrie Lloyd: Japan Partnership KK Fraud

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We are the founders and former owners of Metropolis magazine. Our investigation, which has taken place over many months, leads us to believe that Terrie Lloyd, his business partner in Hong Kong, David Wells, and the management of Japan Partnership KK, Frank Kasala and Neil Butler, have used Japan Partnership KK to defraud us, the creditors of Metropolis KK, including printers, current staff, Japan’s social insurance system and tax office, through the improper transfer of assets, including Metropolis magazine and japantourist.jp, from Metropolis KK to Japan Partnership KK.

Further, we believe that, despite his public denials, Lloyd continues to operate Metropolis magazine through Japan Partnership KK and is the primary beneficiary and has misrepresented his standing with Japan Partnership KK to investors, staff and partners.

Who Really Owns Metropolis?

In November, 2012, after publication of Metropolis magazine was taken over by Japan Partnership KK, clients and staff were left wondering: who really owns Metropolis?

In September, 2010, Lloyd failed to pay ¥130 million, at that time over $1.7 million for the purchase of Metropolis magazine. We also found out that within two weeks of the sale, at the end of 2007, directly contravening the contract just signed, Lloyd and his wife Kumiko Lloyd cheated us out of property that was our collateral by secretly remortgaging it to Shinsei Bank and using the money for their own purposes. Despite having numerous assets at his disposal, including shares in his other companies and a 50-acre beachfront property, (photos) Lloyd refused to pay and has instead attempted to shift blame onto the Lehman Shock and the earthquake, which happened after he was supposed to pay.

In September, 2012, Lloyd once again refused to honor his obligations by not paying a Settlement Agreement that he signed just three months before for ¥45 million. Two months later, Mary received an email from him, which reads in part:

I should give you some idea of just how bad things are on this end: Metropolis will close down on or around November 12th. There is a pending court case with an irate printer in Osaka that will be decided on that date, and which we are expecting to lose – with the result that the company assets will be seized. I am making preparations for someone else to hire the staff and publish the magazine thereafter, but I won’t be involved.

The “irate printer” is King Printers in Osaka, a foreign-owned company, which is upset that Lloyd has left them with ¥18 million in unpaid printing bills. In fact, Metropolis KK’s 2013 Tax Return shows that Lloyd had run up over ¥90 million in debts:

  • ¥57 million in unpaid printers bills:
    • ¥18 million to King Printers
    • ¥33 million to Synergy printing
    • ¥6 million to EasyPrint
  • ¥22 million outstanding to Minato-ku Shakai Hoken (Minato Ward Social Insurance)
  • ¥3 million in unpaid salaries to Metropolis staff
  • ¥8 million in unpaid salary to Metropolis KK COO, Neil Butler

The wording “I am making preparations for someone else to hire the staff and publish the magazine” immediately catches our attention. Just who has Lloyd lined up to publish the magazine?

Introducing Japan Partnership KK

On December 2, 2012, Lloyd publishes an advertisement in Terrie’s Take:

Japan Partnership, the new publisher of Metropolis magazine, has in-house expertise on mobilizing existing websites, and would be happy to offer a free-of-charge quotations to make your websites usable on mobile devices.For more details, contact sales@metropolis.co.jp

A look at Japan Partnership KK’s company registration showed it to be a recruiting company based near Azabu-Juban run by Richard and Lucy Marshall, an Australian couple. The Marshalls could not be contacted through the japanpartnership.com website – there was neither email nor telephone number on the site. Mary found an email address for Lucy Marshall via LinkedIn and mailed her to ask who to direct legal claims to. She received a response from Frank Kasala:

19 Dec, 2012

Ms. Devlin, I was contacted by Ms. Marshall about your inquiry concerning Japan Partnership KK. I am the new Managing Director for this firm. Please, regarding any claims that you may have with Metropolis KK, be advised that we are contractually indemnified against such claims, and that you should direct all your communications to Metropolis KK or its publisher Mr. Lloyd. We will not address any claims occurring prior to our taking over the Metropolis assets.

Sincerely, F. Kasala Managing Director Japan Partnership KK

Kasala makes it clear that Lloyd is not involved with Japan Partnership KK.

Frank Kasala: Puppet CEO

According to Kasala’s LinkedIn page he appears to have no publishing experience. We have been told that he has never been seen at Metropolis office. As of today, more than six months later, Kasala’s LinkedIn profile still has not been updated with his Japan Partnership CEO position nor has  japanpartnership.com’s website been updated with any company information – the site remains blank.

Later Japan Partnership KK’s company registration is changed to remove the Marshalls. Japan Partnership KK was not an operating company at the time of the sale, but a shell company used specifically as the destination for Metropolis KK assets.

Improper Transfers to Japan Partnership KK

As far back as August 2012, well before Metropolis magazine assets were transferred,  invoices show Metropolis clients were told not to pay into Metropolis KK’s bank account, but into Japan Partnership KK’s bank account. In effect, Japan Partnership KK was receiving money that was earned by Metropolis KK.

Imagine you are owed money by Metropolis KK and you find out that payments for ad contracts signed by Metropolis KK are not going into Metropolis KK’s bank account — where you can have a claim on them — but are going into another, unrelated, company’s account.

After Metropolis magazine assets were transferred to Japan Partnership KK, all Metropolis KK contracts became void. Any advertising contracts should have been re-signed by Japan Partnership KK before collecting any money. Clients were paying Japan Partnership KK for work that they had not agreed to, and the creditors were being denied funds that should come to them.

Lloyd’s Investor Presentation

In December, 2012, despite saying he no longer owns the magazine, Lloyd continues to meet with potential investors. In mid-December we received a PowerPoint presentation called “Investors Guide to Metropolis”  that Lloyd had sent to a potential investor. This document is key to understanding the transfer of Metropolis magazine assets to Japan Partnership KK. In the presentation Lloyd states the magazine’s value:

  • “Valuation – JPY100MM pre-money” (pg 14)

And boasts:

  • “Past debt and related obligations have stayed in Metropolis KK” (pg 13)

In just over a month, Lloyd has turned Metropolis KK, a “bankrupt” company fleeing court judgments, ¥150 million debt to us, and ¥90m in debts to printers, staff and social insurance, into Japan Partnership KK, a company free of debt that he is trying to sell to investors with a valuation of ¥100m.

The Presentation also reveals that David Wells is the major shareholder:

  • “Assets were taken over by major creditor (D Wells), biz transferred to Japan Partnership KK” (pg 13)
  • “Shareholder Representation – Major shareholder – David Wells (HK)” (pg 16)

David Wells: Business Partner & Offshore Fixer

Wells is a British national who lives in Hong Kong. He has worked with Lloyd for years and we were first introduced to him by Lloyd in 2005. Wells presented himself to us as Lloyd’s business partner and we have hundreds of emails that show Lloyd and Wells working together over the past seven years.

Wells is not an entrepreneur. His primary role is to use offshore companies and trusts to shield Lloyd’s assets from the taxman and creditors. Lloyd transfers his assets to Wells so he can then tell the tax authorities and creditors that he has no assets and cannot make successful claims against him. However, Lloyd continues to control the assets through Wells with the expectation of selling them at a later date.

Their collaboration is so deep that in 2007, Wells co-signed as personal guarantor for our sale of Metropolis magazine with Lloyd and his wife, Kumiko. When pressed for payment Wells has said “you’ll never get me”. Now, in 2013, still owing ¥150 million, Wells turns out to be the major shareholder of the magazine!

How The Scam Was Done

Lloyd’s Presentation says that:

  • Assets were taken over by major creditor (D Wells)” (pg 13)
  • Past debt and related obligations have stayed in Metropolis KK (pg 13)

Lloyd says Wells was able to buy Metropolis magazine because he was a “major creditor”. However, on Metropolis KK’s March 2012 Tax Return there is no debt to Wells. How could Lloyd have incurred a debt of ¥100 million — Lloyd’s valuation of the business —  to David Wells in just six months?

Years ago, Lloyd told us that one technique he used to transfer assets offshore was for Wells to create a fake debt, which Lloyd would then “pay off” in kind by transferring assets to Wells. For example:

  • Lloyd and Wells create a fake debt: For example, Metropolis KK owes Wells ¥100m for “consulting services”
  • Metropolis KK assets worth ¥100m get transferred to Wells as payment in kind
  • Wells then transfers the assets to Japan Partnership KK

However, to avoid violating Japan’s bankruptcy and taxation laws, any transfer of assets:

  1. Must not be to avoid creditors Metropolis magazine is being pursued by creditors for ¥90m in debts to printers, social insurance and staff.
  2. Must be arms-length. The seller must sell to a true third party. The seller must not be the beneficiary. Wells is not a true third party. Firstly, he was involved in the 2007 sale of Metropolis with Lloyd. The fact that, after the transfer, Lloyd is actively trying to sell the company to investors proves he is still controlling the asset.
  3. Must be at fair market value To avoid taxes, an asset worth ¥100m cannot be sold for less than the fair market value. Because Lloyd values the assets at ¥100 million we would expect to see a transaction in the Metropolis KK accounts showing that the magazine was sold for ¥100 million – but, as creditors know, Metropolis KK did not receive ¥100 million.

Wells does not have ¥100 million to buy the assets – he’s been complaining to us that he has no money for the past few years. Wells would also not be able to create ¥100 million legitimate debt in the six months since Metropolis KK’s March 2012 Tax Return. It is highly likely that the transfer was at less than fair market value and has avoided proper taxation.

Would You Hire These Men?

Lloyd’s Investor Presentation also notes that Japan Partnership KK’s staff include:

  • Neil Butler as CEO  on page 15 (and also as COO on page 16)
  • Frank Kasala is noted as the CEO on page 16, but not on the “Management” page
  • Lloyd is still working for the company doing business development for japantourist.com

Remember, Metropolis KK has just gone bankrupt due to Lloyd and Butler’s inability to run the business at a profit. Why would any purchaser keep the same people on in management roles? Why is Frank Kasala, CEO, not even listed as a manager? Why would any company that had bought Metropolis assets keep Lloyd on in any role after he had run up so much debt?

Neil Butler: Lloyd’s Lackey

Neil Butler is an Australian national who lives in Japan. He is currently the COO of Japan Partnership KK and the CEO of BIOS (more about that company below). According to Butler’s LinkedIn Profile, he worked in several Australian Meat promotion agencies before working for Lloyd. In Metropolis KK’s 2012 Tax Return Butler was owed ¥8 million. In addition to acting as Lloyd’s puppet, Butler directed the Metropolis sales team to lie about the magazine’s circulation and to spread lies about Mark’s immigration status.

Metropolis Staff = Lloyd’s Victims

The investor presentation says that Metropolis staff have unpaid salaries of ¥3 million (page 14).

  • “JPY3MM, Debt repayment (to sales staff)”

“Debt repayment (to sales staff)” actually means “salary illegally withheld from staff”. We have spoken to Metropolis staff who have been promised their overdue salaries for over a year now and several have told us that they cannot leave the company for fear they will lose the money that has been withheld from them. They have no loyalty to Lloyd, but are only staying on at the company in the vain hope that they will get paid the money they are owed.

According to our sources, even as late as last week, Neil Butler told staff that they will not be paid until after Lloyd brings in a “big deal,” which is what Lloyd has been telling us for the past five years. In fact, Lloyd has been diverting funds which should go to unpaid salaries by making Metropolis magazine pay unnecessary fees for its classified ad system to his software company, Metroworks KK. He hopes to sell Metroworks KK to unsuspecting investors who do not know that Metroworks KK licencing fees from Metropolis magazine are inflated and unnecessary.

Our advice to any investor is to do extensive due diligence and our advice to Metropolis staff is go to the Labor Office, which will force Japan Partnership KK to pay illegally withheld salaries immediately.

Serial Fraud?

It’s interesting to note that Lloyd’s other businesses have similar management structures. BIOS, an IT outsourcing company that Lloyd “owns”, has:

  • No apparent ownership by Lloyd
  • A large share ownership by Wells
  • A puppet CEO, this time Neil Butler, who like Kasala, knows nothing about the business, is not present, and does not even appear on the list of managers
  • A COO (Kenji Sakota) who appears to be operate the day-to-day business  in place of a CEO.

Why do the businesses that Lloyd used to own now have CEOs who know nothing about the businesses? Why do BIOS and Japan Partnership KK have COO’s instead of a CEO as the head of management? Could it be because Lloyd is actually acting as the CEO?

Lloyd can’t have it both ways. He cannot claim, as he does in his Entrepreneur Handbook Seminars, that he is one of Tokyo’s leading entrepreneurs but not actually have ownership in any of his companies.

Metropolis KK: Bankrupt or not?

We recently received two emails from Lloyd saying that Metropolis KK was not actually going bankrupt, but was going “dormant”, which we immediately flagged as strange terminology. It seems that, to avoid a real bankruptcy that would result in him being disallowed to act as a company officer in Japan, Lloyd is keeping Metropolis KK open with all the debts in it. We think he is hoping he will outlast his creditors — who he hopes will give up their claims — leaving him free and clear.

King Printer’s Judgement Against Lloyd

In December 2012 through February 2013, King Printers received a series of court judgments against Metropolis KK for ¥18 million in unpaid printing bills. Due to the diversion of assets to Japan Partnership KK, King Printers has still not been able to collect.

The Final Proof: Lloyd owns Japan Partnership KK

On Mar 29, 2013, I sent an email to Lucy Marshall asking her about her knowledge of the Metropolis KK – Japan Partnership asset transfers. Her husband Richard responded:

Hi Mark,

Lucy and I sold our in-active company to Terrie late last year. We have no involvement in any of the matters you are suggesting.

Thanks, Richard Marshall Director

Despite his repeated public denials that he no longer is involved with Metropolis magazine this email combined with our evidence and his continued willingness to defend and boast about a company he supposedly no longer owns leads to one conclusion:  Lloyd is the owner of Japan Partnership KK and is therefore the real owner of japantourist.jp and of Metropolis magazine.

It is, in fact, Lloyd, aided by Wells, Kasala and Butler, who has been lying to readers and clients about Metropolis magazine’s circulation, withholding staff salaries, misleading investors about his role in the company, and transferring assets that do not belong to him to shell companies to enrich himself at the expense of the many creditors he has left unpaid.

Trail of Deceit

To avoid over ¥90 million in unpaid bills to printers, staff, and Minato-ku social insurance, Terrie Lloyd:

  1. Bought Japan Partnership KK from the Marshalls
  2. Fraudulently transferred Metropolis magazine assets to Japan Partnership KK using a fake debt scheme.
  3. Got David Wells, his business partner, to say he is the major shareholder of Japan Partnership KK
  4. Continues to own the company through his offshore busness partner, Wells
  5. Installed Frank Kasala as a puppet CEO
  6. Continues to try to find investment and do deals for Metropolis magazine and  japantourist.jp even though he publicly denies he is associated with the company
  7. Is misrepresenting his involvement in Japan Partnership KK to investors
  8. Continues direct the day-to-day operations of both Metropolis magazine and japantourist.jp through Neil Butler.
  9. Has withheld ¥3 million in staff salaries
  10. Appears to have a similar corporate structure for his other companies
  11. Claims to be a successful entrepreneur even though he has no ownership in the companies he is known for

We feel sorry for the people who have been scammed by Lloyd especially the staff of Metropolis magazine who have had their salaries withheld and the volunteers who have worked on japantourist.jp, who through no fault of their own have found themselves working to enrich a serial fraudster, while creditors who supplied honest services are left holding the bag.

For exposing his fraud we expect Lloyd and his cronies will try to attack us with his usual lies and misrepresentations. The truth is far more simple: He cheated us, he cheated the creditors of Metropolis KK, he cheated the clients and the readers of Metropolis magazine by inflating the circulation numbers, and has lied to potential investors.

We hope he does not get the chance to lie to and cheat anyone else.

PS: If you have also been cheated by Lloyd or have something to say about his business dealings please feel free to contact me at sparkzilla@gmail.com. All correspondence will be treated in confidence.

9 thoughts on “Terrie Lloyd: Japan Partnership KK Fraud

  1. Pingback: More controversy surrounding Japan Partership KK, Metropolis and Terrie Lloyd. | Hoofin

  2. Pingback: Terrie Lloyd: The print magazine I own has no future | Mark & Mary Devlin

  3. To Mark Devlon,

    Without consent, you have publicly placed my name and my own photograph of me online and without any proof, falsely accused me of wrong doing.
    You are requested to remove these false statements and my photograph immediately.

    Frank Kasala
    CEO
    Japan Partnership Inc.

    • Mr Kasala, please let us know which part of the above is not true and we will remove it. Please direct your attention to the evidence provided.

      Best regards

      Mark Devlin

  4. Pingback: Devlin v. Lloyd Metropolis matter update: lien in property is the issue. | Hoofin

  5. Pingback: How Terrie Lloyd abused our friendship to steal Metropolis | Mark & Mary Devlin

  6. For the CEO of the leading Tokyo English magazine, Mr. Kasala needs to learn how to spell, or maybe it’s just the Alzheimers setting in. How old are you now Frank? 105? Isn’t it about time that you retire? I realize straw man puppet work isn’t real hard but the last time I saw you, you looked like you were about ready to fall over and needed a walker. How much is Terrie paying you? It must be decent money for you to spend the last years of your life getting involved in this kind of dirt.

  7. Mark & Mary

    I’m a long term Tokyo resident and this episode with Lloyd, while interesting reading for me, is not at all surprising. Over the years before any of this happened I have heard many bad things about Lloyd, generally from people who knew him or worked with him. Mostly along the lines of him being a dishonest asshole to people. There are lots of people out there that hate the guy.

    I hope you find a way to either get your money, or another way to make him pay?

    Tom

  8. Dear Mark & Mary,

    It is difficult to express the enormous impact that Metropolis had on my life in Tokyo. Yen figures surely do not account for the true value of the contribution your hard work created for so many.

    You are now doing another great service for people like me by getting the truth out about Mr. Lloyd and his wife. Business can be difficult and good people can find themselves underwater, but the way in which these individuals deprived you of not just your money but of the organization you built from out of nothing is simply vile.

    My experience has been that the entrepreneurial landscape is made of both hard working, straight-dealing types who build genuine success through years of their own hard effort and personal sacrifice while mostly keeping a low profile, and big-talking, showy, ego-driven types who merely project an entrepreneurial facade while attaching themselves to and sucking the blood from out of the former type.

    I was swindled by similar parasites during my time in Tokyo, indeed with the same classic, “Oh, no need to sign that just yet, friend.”

    What you accomplished with Metropolis speaks volumes about the types of entrepreneurs you are. It angers me to see you and the fine company you built being trampled over by such lower life forms.

    Having witnessed the obvious growth you produced with Metropolis, certainly I for one would gladly follow you guys into any venture. No doubt there are lots of people out there who feel the same.

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