Pacquiao’s money man

Edwin Espejo
A drifter in LA who hung around the Wild Card Gym, Michael Koncz gets to manage the boxing champ's finances. Today tax officials are after Pacquiao.

 GO-FER. Michael Koncz is introduced to Manny Pacquiao by coach Freddie Roach. Screengrab from Manny Pacquiao YouTube channel

Read Part 1: Pacquiao’s wealth and Michael Koncz

GENERAL SANTOS CITY, Philippines – Koncz has been called many names – among them, “Black Pope,” a derisive reference to a powerful figure behind the Vatican throne – somebody behind a conspiracy.

He was once called Manny Pacquiao’s rice “fluff-er.” British journalist Andrew Marshall called him über go-fer. He was a drifter in LA and used to hang around the Wild Card Gym of coach Freddie Roach when he was introduced to Pacquiao. Many were led to believe Koncz was a lawyer, only to be told he was a mere paralegal.

He started to befriend Pacquiao at the time when the then-rising boxing phenom was getting entangled with Murad Muhammad, former boxing promoter of the General Santos kid. 

Invoking the Muhammad Ali Act, Pacquiao sued Murad in 2005 for, among others, failing to remit to the US Internal Revenue Service (IRS) the boxer’s taxes that were due the tax agency. (Enacted in May 2000, the Ali Act offered boxers protection from exploitation and rigged matches, and among others, limited contracts between a promoter and a boxer to one year.)

Their acrimonious separation resulted in Murad paying Pacquiao an undisclosed amount for an out-of-court settlement.

Enter Koncz

After breaking away from Murad, Pacquiao ended up with manager Shelly Finkel. Having been introduced by Roach to Pacquiao, Koncz served as bridge between Arum and Pacquiao.

Koncz kept himself very close to Pacquiao and was even reported to have slept on the floor at the foot of the champ’s bed when Pacquiao’s contract with Finkel expired in 2006. That same year, during Pacquiao’s birthday, Koncz was seen serving beer to the boxer’s guests and friends.

The Canadian later played a role in delivering Pacquiao to Bob Arum’s Top Rank.

Around this time, Jeff de Guzman, a former member of Pacquiao’s “LA Boys,” said Joe Ramos, a trusted aide of Pacquiao and himself a member of the group, could not account for the Filipino boxing icon’s bank deposits amounting to over US$100,000 – a paltry sum by Pacquiao’s living standards today. It was Ramos who handled Pacquiao’s savings in Los Angeles.

De Guzman, a respiratory therapist, said Pacquiao eventually forgave Ramos after the latter cried before him. The episode opened the opportunity for Koncz who eventually ended up “managing” Pacquiao’s accounts in the US. The Canadian used ADK, a shell corporation owned by him, to funnel earnings of Pacquiao in the US.

According to de Guzman, this is how Koncz became Pacquiao’s financial confidant.

FRIENDS. Boxing champ Manny Pacquiao sticks to financial advisor Michael Koncz. Photo by Mohd Fyrol/AFP

Koncz and ADK Inc

A California corporation, ADK Inc is owned by Koncz. In 2011, VisionQwest Accountancy Group (VQ), an accountancy company initially contracted by Pacquiao in 2010 to help straighten out his financial records, raised red flags about ADK. In a July 27, 2011 letter to Pacquiao, his lawyer Franklin Gacal Jr and VQ representative Michael Joseph Cabuhat, VQ president and CEO Michael Lodge raised 4 issues against ADK and its owner Koncz:

  1. ADK’s suspension as a legal California company. If failed to file informational and business tax returns and Koncz continued to operate it even when it had no legal status to continue doing so. “Large sums have been transferred into the ADK bank accounts to cover Manny’s (Pacquiao) expenses…The total amount that has been transferred to ADK is $1,340,678 (over P56 million based on current exchange rates). To this date ADK has not shown a full accounting of the use of these funds transferred.” Lodge pointed out that tax evasion is a criminal offense and anyone convicted is subject to a prison sentence, a fine or both. In addition, Koncz also collected “agent fees” from Top Rank, Pacquiao’s promoter, and placed the fees into his own company. No tax payments were made for any of these fees collected by ADK. Considering Koncz’s “reckless” actions, he should “never touch Manny’s tax or any of Manny’s business concerns,” Lodge wrote.
  2. Koncz’s conflict of interest. As business advisor to Pacquiao, Koncz negotiates contracts with Top Rank and on behalf of Pacquiao’s MP Promotions USA Inc. By himself accepting agent fees without disclosing business relations to Pacquiao, he has “clouded his loyalty” to either Pacquiao or Top Rank and appears to put his own self interest before that of his client, Lodge said.
  3. Koncz’s conflict of interest involving MP Promotions USA Inc. MP Promotions is supposed to sign and build a pool of fighters to enhance the fight promotions business but as of the date the letter was written, no fighters have signed up with it. In business since 2007, it had no fight promotions established except those of Pacquiao’s. Lodge asked when then are “fighter agent fees being paid to Mike Koncz from Top Rank? If there are fighters signed with MP then fees should be paid to MP and not to ADK.”
  4. Koncz’s conflict of interest with ‘LibertadCard.’ Similar to the previous case, Koncz also received fees without full disclosure and written notification. “The conflict is that you never get involved in your employers’ or client’s business unless there is a full written disclosure to Manny and he has signed off on the disclosure,” Lodge wrote.

On Friday, December 27, Koncz declined to comment on the VQ documents leaked to reporters. Back in Manila from the US a day after Christmas, he said the Bureau of Internal Revenue (BIR) and IRS are looking into them and that he was advised by his lawyers not to make any statements.

Lodge, in his letter, said it was best for Pacquiao and MP Promotions to keep an arm’s length relationship with Top Rank. “Once you allow a promoter to gain control of the fighter and his internal business, then there will always be issues because the promoter will never give up his power over the fighter and will use people like Mike Koncz.”

THREESOME. Manny Pacquiao is flanked by Top Rank's Bob Arum to his right, and Michael Koncz to this left. Photo by Edwin Espejo/Rappler

In an earlier letter to Pacquiao and Gacal, Lodge said VQ can no longer trust Koncz as Pacquiao’s advisor.

“Mr Koncz has created a hostile environment with our firm which will affect our client’s business and tax issues. He is working against us and not with us to protect our client. He has also stated to various people that he is going to fire our firm, which is not his decision to make…”

Little did he know that their services would be terminated in September 2011, just months after Lodge raised the alarm.

Animosity

Koncz has been a magnet of controversy and animosity, locals say. He rubs people close to Pacquiao the wrong way.

Former two-time world boxing champion Gerry Peñalosa, a close buddy of Pacquiao when both were still struggling pro boxers, does not hide his disdain for Koncz. He suspects Pacquiao is being taken advantage of.  

There were reports of him reportedly hitting Koncz with bottled water over a dispute that involved Dodie Boy Peñalosa (his nephew) in the undercard of the Pacquiao-Rios fight in Macau.

Koncz reportedly blocked the young Peñalosa from appearing in the undercard of Pacquiao prompting Gerry to call Manny. In the end, an injury reportedly sidelined Dodie Boy Jr, saving Pacquiao the trouble of having to mediate between two of his close friends. 

A different but related incident also happened between Koncz and former Cotabato Governor Manny Piñol, another Pacquiao friend.

Piñol got angry when his ward Diosdado Gabi dumped him and crossed over to Koncz. “I also had my unpleasant moments with Michael Koncz starting from the day he offered to ‘buy’ my boxers to the day he decided to ‘smuggle’ out my boxer flyweight Diosdado Gabi to the US without my knowledge,” Piñol wrote in his July 18, 2011 column in Philboxing.com.

He wouldn’t comment on the recent stories about Koncz. “I do not want to join the fray. I pity Manny. I think it is at this moment when he is wondering who his true friends are. I would like to show to him that he has a friend in me,” the former Cotabato governor belonging to Pacquiao’s group of old and original friends said in a text message.

Gacal, Pacquiao’s lawyer, said Koncz was in charge of the boxer’s books of account ever since, but would not go into details.

Lodge also earlier accused Koncz of spreading lies about VQ when he said it was acting as a double agent of the IRS. “I told Gacal that in no way is our firm a double agent and that we are representing Manny to the best of our ability.”

They would since part ways, with VQ suing Pacquiao for his supposed failure to pay for cash advances he took from the US accounting firm.

Latest reports indicate he has $18.3 million in unpaid taxes in the US, given the Notice of Federal Tax Lien sent to him by the IRS covering years 2006-2010. The IRS notice was dated Nov 22, 2013 and filed with the County of Los Angeles on November 25. (READ: Is Pacquiao covering up his money woes?)

Koncz said the lien represented expenses for 2005-2009, which they had been contesting for the past 3 years.

He also said Pacquiao knows what he is doing and that he and his principal know what are being reported in the press. He further said he already advised his lawyers both in the Philippines and the US to look into published reports that put him in a bad light. 

Local woes

If Pacquiao has tax problems in the US, his tax woes in the Philippines are even more discomforting. (READ: Pacquiao’s bank accounts ordered frozen)

In March 2012, the revenue district office of the BIR in Region 12 sued Pacquiao for failing to obey summons and present documents pertaining to his income from boxing, commercial endorsements and other incomes. Lawyer Rozil Lozares, then Regional District Office 12 director, said Pacquiao owed the government P143 million in taxes for 2009.

Pacquiao vehemently protested and cried harassment. In a press conference later, he asked President Benigno Aquino III to fire Lozares.

Nevertheless Pacquiao’s lawyers went to see Lozares. They brought scanned copies of the documents the BIR was seeking from the boxer-congressman. The BIR however rejected them and demanded the original taxpayer’s duplicates or certified true copies.

Lawyer Francisco “Bong” Gacal, younger brother of longtime Pacquiao lawyer Franklin Jr, said the BIR could have just given the 8-division Filipino champion “a simple accommodation.” (The justice department has since dismissed the BIR complaint.)

The BIR has ordered Pacquiao’s bank deposits frozen because of an alleged P2.2-billion tax liability.

After the BIR made Pacquiao feel the seriousness of his tax problems, the boxing champ employed the services of law firm Romulo Mabanta Buenaventura Sayoc and de los Angeles.

In the meantime, the Court of Tax Appeals has issued a gag order to both Pacquiao and his lawyers and BIR chief Kim Henares, prohibiting them from discussing the issues in public.

Interestingly, Henares and Pacquiao had a closed-door meeting on Friday, December 13. This was followed by a Pacquiao visit to Malacañang on Wednesday, December 18, for a meeting with no less than Aquino himself. Then on December 21, the President, an avid gun enthusiast, and Pacquiao held a fun shot.

So why is Koncz still with Pacquiao? One reporter who has been covering Pacquiao said the boxing champ’s signature T-shirt “Manny Knows” may be the only answer. – Rappler.com

 

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