Marc Schwartz testified that he signed a contract to take over as director of corporate restructuring in June and now controls all bank accounts, payroll and hiring decisions. Schwartz testified that Jones withdrew about $62 million from the company over 14 years and said $30 million of those withdrawals went to the IRS.
Schwartz also testified during the hearing, which lasted more than six hours, that Infowars received approximately $9 million in cryptocurrency donations and “they went straight to Mr. Jones.”
Schwartz said during his testimony that Free Speech Systems should be allowed to use the money it has to be able to pay suppliers, saying that otherwise it will have to shut down.
“If we can’t pay critical suppliers, we will be shut down,” Schwartz said. “Society is currently in a situation where there is not much room to manoeuvre.”
U.S. Bankruptcy Judge Christopher Lopez said Wednesday that he would not allow any further withdrawals and that he found some of Schwartz’s testimony “disturbing.”
Court documents filed Friday in Free Speech Systems’ bankruptcy showed the company had between $10 million and $50 million in estimated assets and between $50 million and $100 million in estimated liabilities. An attorney for Free Speech Systems said in court Wednesday that the company has about $1.3 million in cash.
Schwartz stressed the importance of being able to pay vendors who allow the company to stream and sell products online, saying that when Jones is off the air discussing the products he sells, the company sees a 30% drop in sales.
“If we can’t stream, we can’t sell,” Schwartz said.
Schwartz testified that Free Speech Systems’ management structure was not set up the way a successful business should be run.
“There’s Alex and then there’s everyone else,” Schwartz testified.
Schwartz said accounting controls were, as far as he could tell after taking over the company, “non-existent”, that the people responsible for keeping the company’s books did not have degrees in accounting and that no financial report had been produced for at least 18 years. months when he took over.
Lawyers have looked into Jones’ salary under the bankruptcy plan, saying documents showed Jones’ pre-bankruptcy salary was $625,000 a year, and under a restructuring plan, it would amount to approximately $1.3 million. Schwartz said Jones’ salary could be considered reasonable because of his value to the company.
“Who is more valuable? Nobody,” Schwartz said. Lopez authorized a lower salary for Jones, about $20,000 every two weeks.
When asked how much the company spent on legal fees related to the Sandy Hook lawsuits, Schwartz said company records show at least $4.5 million was spent between 2018 and 2021. , but that he did not believe that figure to be accurate.
Schwartz also testified that Jones has used a company-associated American Express card to pay for personal expenses, including cleaning fees, regularly for the past 18 months. The card had a fee of $300,000 per month, but Schwartz said the accounting staff did not indicate what the fee was for.
“We can’t tell you if it’s for electricity, entertainment, or electronic supplies for the production studio,” Schwartz said.
Lopez said he would not authorize payment of the current American Express bill of approximately $172,000.
Schwartz said he didn’t know who Jones was before he was hired and disagreed with many of Jones’ views, but consulted him occasionally on matters regarding the company.
Three small businesses linked to Jones filed for bankruptcy earlier this year, briefly suspending legal action against Jones. But the families suing him removed those companies from their lawsuits so that cases could go forward only against Jones and Free Speech Systems. Soon after, the companies left bankruptcy protection.