Marc Schwartz revealed that he signed a contract to take over as Chief Restructuring Officer for the company in June and now controls all bank accounts, payroll and hiring decisions. Schwartz testified that Jones withdrew approximately $62 million dollars from the company over 14 years, and testified that $30 million of those withdrawals were paid to the IRS.
Schwartz also testified during the hearing, which lasted more than six hours, that Infowars received about $9 million in cryptocurrency donations and “they went directly to Mr. Jones.”
Schwartz said during his testimony that Free Speech Systems should be allowed to use the money on hand to be able to pay vendors, saying otherwise it would have to be shut down.
“If we can’t pay the critical vendors, we’ll be shut down,” Schwartz said. “The company is currently in a situation where there is not a lot of breathing room.”
U.S. Bankruptcy Judge Christopher Lopez said Wednesday that he would not allow more withdrawals moving forward and that Schwartz’s testimony “troubled” him.
Court documents filed Friday as part of Free Speech Systems’ bankruptcy showed the company has 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 at Wednesday’s hearing that the company has about $1.3 million in cash on hand.
Schwartz emphasized the importance of being able to pay vendors who allow the company to broadcast and sell products online, saying that when Jones is not on air discussing products he sells, the company sees a 30% drop on sales.
“If we can’t broadcast, we can’t sell,” Schwartz said.
Schwartz pointed out that the management structure of Free Speech Systems was not set up as a successful business should be managed.
“There’s Alex and then there’s everyone else,” Schwartz testified.
Schwartz said that accounting controls, as far as he could tell after taking control of the company, were “non-existent,” that the people responsible for maintaining the company’s books did not have accounting degrees and that any financial reports provided in at least 18. month when he took over.
Lawyers got 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 was about $1.3 million. Schwartz said Jones’ salary could be considered reasonable given his value to the company.
“Who is more valuable? Nobody,” Schwartz said. Lopez authorized paying Jones a lower salary, about $20,000 every other week.
When asked how much the company spent on legal costs related to the Sandy Hook lawsuit, Schwartz said company records show at least $4.5 million was spent between 2018 and 2021, but he doesn’t believe the number is that’s accurate.
Schwartz also testified that Jones used a company-related American Express card to pay for personal expenses, including management fees, regularly over the past 18 months. The card had $300,000 a month in charges, but Schwartz said the accounting team did not label what the charges were for.
“We can’t tell you whether it’s for electricity, entertainment or electronic supplies for the production studio,” Schwartz said.
Lopez said he would not authorize paying the current American Express bill of about $172,000.
Schwartz said he didn’t know who Jones was before he was hired, and that he doesn’t agree with many of Jones’ views but occasionally consults with him on business-related matters.
Three smaller companies associated with Jones declared bankruptcy earlier this year, putting a brief pause on the suits against Jones. But the families he was suing released those companies from their lawsuits so the cases could proceed against Jones and Free Speech Systems alone. Shortly thereafter, the companies emerged from bankruptcy protection.