TutoringZone Investors sue over $440,000 in loans
Published: Friday, June 14, 2013 at 5:21 p.m.
Last Modified: Friday, June 14, 2013 at 5:21 p.m.
Four investors who loaned TutoringZone co-founder Matthew Hintze $550,000 to buy out his partner in 2011 are now suing to prevent Hintze from wiping out more than $440,000 in debt in bankruptcy court.
The complaint says that Hintze misrepresented his financial situation to secure the loans and later shifted the assets of his company to another investor to keep them from collecting on those assets.
The investors in the complaint are local business people John and Sheila Spence, who say they are owed about $90,000; InterMed Biomedical Services, through its president and CEO Rick Staab, $168,000; and David Whitney, $154,000.
The other investor in the complaint is FLH Holdings, $30,000. FLH is managed by Steven Fieldman, who bought the promissory note on a loan to Hintze from Randy and Sally Scott. Fieldman is also the father of Ethan Fieldman, the partner Hintze bought out and who then started a competing tutoring business with the proceeds of the company’s sale.
The investors filed the complaint on May 31 in U.S. Bankruptcy Court in the Northern District of Florida in Gainesville.
Hintze bought out Ethan Fieldman on June 17, 2011, for $835,000. The plan was to secure additional financing to pay off the investors.
Fieldman started Study Edge the next day, taking nine tutors with him. With Study Edge cutting into TutoringZone’s business, Hintze was unable to secure additional financing to pay off the loans.
By summer 2012, TutoringZone ran out of money. To keep the business going, Hintze shifted the course materials, computers and other assets to Tutoring Zone II LLC, created by investor Chris James, a professor of finance at the University of Florida, who also provided additional funding. The business continues to operate under the TutoringZone name with Hintze as an employee of James.
Hintze and his wife, Larina, filed for Chapter 7 personal bankruptcy protection in November 2012.
In the complaint filed in May, the investors say Matthew Hintze led them to believe that Ethan Fieldman and the former TutoringZone tutors would not compete with his business.
They also say he failed to disclose more than $500,000 in loans he had already taken out and misstated the amount of equity the Hintzes held in their home and rental properties.
Jeff Childers, the Hintzes’ attorney, said that in multiple emails and documents between Matthew Hintze and the investors, there is no mention of a noncompete clause to prevent Fieldman from opening a competing business. He also said he has evidence that shows the investors knew about Hintze’s other debts.
Childers also said the investors had the same opportunity as James to intervene to save the company but they instead decided to “jump like rats off a sinking ship.”
Childers also said the complaint is being driven by Study Edge through Fieldman’s father to drive TutoringZone out of business.
Ethan Fieldman denied that.
John Spence said that is “absolutely untrue.”
“It has nothing to do with the rivalry between those two businesses,” he said. “It has to do with Matt taking the money he took from me.”
Steven Fieldman responded by email to say the allegation “may be just an empty attempt to deflect attention away from the real core issue, i.e., whether Mr. and Mrs. Hintze can just walk away from their lawful debts and leave the creditors with nothing.”
The Hintzes have until June 20 to file a response. Childers said he expects additional depositions and motions in the case, ultimately ending in a trial.
“It could go on for years,” Childers said.