The latest setback comes at the hands of King County Superior Court Judge John Erlick who ruled last week that the former MOD Systems CEO was personally liable to another company, Banana Corporation, in the amount of $4.1 million. The charges in King County Superior Court were separate from the criminal charges that led to Phillips’ imprisonment.
“The Court found that Mr. Phillips improperly took $4,121,000 that did not belong to him from Banana Corporation and unjustly enriched himself,” said attorney Chris Mason in a statement to GeekWire. “The amounts were used in part by Mr. Phillips to pay over $700,000 in personal income taxes he owed to the IRS. The Estate of Robert Arnold pursued recovery of the funds as assignee of Banana Corporation, through trial counsel Jeff Smyth. Deceased businessman and philanthropist Robert Arnold was the primary investor in Banana Corporation. Mr. Phillips has repeatedly called the accusations of his misconduct regarding Banana Corporation ‘baseless.’ The large size of this judgment clearly shows otherwise.”
Phillips was sent to prison in July 2011 on fraud and money laundering charges, and he continues to fight the charges. He was released from prison earlier than expected in part because the tech executive successfully reversed a mail fraud charge that he was originally convicted on.
At the time of his prison sentencing, U.S. District Judge John Coughenor said that Phillips’ conduct was “deficient, dishonest, imperfect and wrong,” though he also added that the entrepreneur was “no Bernie Madoff.”
MOD Systems, which is no longer in existence, developed digital media kiosk technology for the electronic distribution of movies and TV shows at airports and other retail locations. It was heavily funded, including backing to the tune of $40 million from the likes of Toshiba and NCR, and led by top technology executives in the Seattle area.