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Genesee Multimedia Group (GMG) was an American holding company that focused on direct-to-consumer music and video sales, media distribution, and ownership and management of intellectual property rights. The company was headquartered in Stamford, Connecticut.
Following an accounting scandal, in which senior management had overstated sales, assets and revenues, Genesee filed for Chapter 11 bankruptcy protection in 2010 and gradually sold off its remaining holdings in 2011-12. It remained itself to SCT Liquidation Trust, ceased day-to-day business, and liquidated its remaining assets before finally being dissolved on May 27, 2014.
History[]
Genesee Music Group was founded in 1987 in Stamford, Connecticut by former MCA Records A&R personnel Phillip Preiss and Anne Lowin. The company licensed and sold back catalogue titles from other labels, primarily MCA, primarily through direct-response advertising.
In 1991, Genesee acquired Nashville, Tennessee-based Music City Marketing, a seller of discount-priced music compilations, for $3 million. That same year, Genesee launched its GMG Video division, which, in addition to music-related home videos, also delved into special interest titles, including reissues of TV series and movies, through deals with companies such as RHI Entertainment, DiC Entertainment, Turner Entertainment Co. and Golden Harvest.
Co-founder Preiss left the company in 1997.
In 2000, reflecting its wider shift beyond the music business, and ahead of its initial public offering (IPO), the company renamed itself to Genesee Multimedia Group. That same year, it acquired Allen, Texas-based Windebank Home Video; with Windebank being merged with GMG Video and its Playalong and Playalong Preschool brands being retained for mainstream children's content and pre-school titles, respectively.
In mid-October 2005, Genesee acquired Charlotte, North Carolina-based anime licensor and distributor Creator Arts for $86 million in cash and 1.8 million shares of Genesee stock.
Accounting scandal and bankruptcy[]
In the wake of the Great Recession, Genesee Multimedia Group was dogged by rumors of financial impropriety. In May 2009, an investigation by The Wall Street Journal uncovered evidence that senior management, led by co-founder and president Anne Lowin, CEO Oliver C. Stanley and CFO Alex Yearsley, had been fraudulently inflating its assets and earnings, as well as hiding losses. The company was also discovered to have been engaging in embezzlement: the company had moved $13.6 million from Genesee to World Indoor Football, which Lowin and Stanley had founded, and around $16 million to a shell company in Switzerland.
After the scandal broke out, Stanley and Lowin subsequently departed the company, and over the next month, several other members of the company's senior management team resigned. Stanley and Lowin, who subsequently went on the run, were charged en absentia with embezzlement and securities fraud in November 2009, and had warrants issued for their arrest.
On February 1, 2010, Genesee filed for Chapter 11 bankruptcy protection. The company was subsequently delisted from the Nasdaq Stock Market. From 2011-12, Genesee's assets were sold off in bankruptcy court: Creator Arts was sold to its management; its home video assets and television library were sold to Steven J. Windebank, the founder of Windebank Home Video, and reorganized as Great Idea Entertainment Group; its direct-response and marketing division was sold and reorganized as GMG Music; and its music catalog was sold to Concord.
In July 2012, Oliver C. Stanley and Anne Lowin were caught and arrested at Saipan International Airport, and sent back to the United States mainland to face trial. Tried in the United States District Court for the District of Connecticut, Stanley pleaded guilty and received a sentence of 10 years in prison, with an additional two years of probation, while Lowin pleaded not guilty, also receiving a 10 year sentence. Yearsley, who testified against Stanley and Lowin, received a suspended 33 month sentence.
In 2013, SCT Liquidation Trust (the former Genesee entity), the company's auditors Ernst and Young, the company's creditors, and former members of Genesee senior management paid $59.3 million, $25.9 million, $19 million and $6.5 million, respectively to settle investor's lawsuits.
Former divisions and subsidiaries[]
Direct marketing[]
- GMG Direct Sales
Music[]
- Genesee Music
Video[]
- Creator Arts
- GMG Video
- Playalong Video
- Playalong Preschool