Smart Communications Files for Bankruptcy Protection
Smart Communications Holding, Inc., provides a variety of communications services in prisons and jails nationwide, including phone calls, video calling, tablets and e-messaging. It’s best known for its mail scanning program, MailGuard, which digitizes correspondence sent to prisoners and provides the scans on tablets or kiosks. On November 30, 2024, the firm filed for federal bankruptcy court protection, citing increased competition and litigation.
Founded and run by Jonathan D. Logan, a former felon, the Florida-based company contracts with over 120 lockups in 29 states, generating gross income around $56 million in 2023. It rose to prominence in 2018 with a $13.5 million, three-year contract to provide mail scanning for the Pennsylvania Department of Corrections, as PLN reported. But after competitors, including VendEngine, Inc. and TextBehind, began offering similar mail digitization services to correctional facilities, Smart Communications filed several patent infringement suits—claims rejected in 2022 by federal courts in Tennessee and Pennsylvania, which found that the company’s scanning process did not involve “patent-eligible subject matter,” as PLN also reported. [See: PLN, Sept. 2019, p.60; and June 2023, p.31.]
Apparently unable to effectively compete without those ineligible patents, Smart Communications then filed for bankruptcy. But a contributing factor was infighting between Jon Logan and his estranged mother, Janice Logan, who represents a family trust that owns a 50% interest in the company. According to a court filing by her son on December 3, 2024, Janice Logan “weaponized the Trust’s interest in [Smart Communications] in an attempt to extract grotesque sums of money from the business”; following years of litigation in state court, the only result has been “an obscenely wasteful diversion of time, attention, and resources, while the company has been handcuffed through injunctions and rebuffed by lending partners,” Jon Logan added.
He has also suffered a falling-out with his sister, Alexis. In the family-related litigation, Smart Communications sought “to recover money used … to purchase luxury automobiles and exotic sports cars, cosmetic surgery, and personal items for Alexis,” in addition to her $5,000 monthly allowance. The company further challenged “Janice’s unauthorized possession and use of the $4 million, 20-acre mansion that Smart Communications owns in Sarasota,” along with “cars and other payments.”
The company has been embroiled in other litigation, too—including a contract dispute with Connect Solutions, LLC over provision of tablets at three county jails in Florida. That case included allegations that Smart Communications tablets were not corrections-grade and “were easily dismantled by inmates, parts were used to create weapons, batteries were removed to charge illegal cell phones, and the facilities were unhappy with Smart’s product and poor customer service.” Following a bench trial, the federal court for the Middle District of Florida held on December 13, 2024, that Smart Communications provided defective, non-compliant tablets. The court also found that Jon Logan was not a credible witness. But it said that Connect Solutions failed to prove its counterclaims, so neither party was awarded damages. See: Smart Commc’ns Holding, Inc. v. Correct Sols., LLC, 2024 U.S. Dist. LEXIS 225655 (M.D. Fla.).
In its bankruptcy proceedings, Smart Communications listed approximately $5.4 million in assets, exclusive of licenses and contracts with corrections agencies. Its largest creditor is a Chinese technology firm that provided the electronic tablets used by the company. Smart Communications is seeking to reorganize under Chapter 11 of the bankruptcy code to continue providing its “services” to prisons and jails. See: In re Smart Communications Holding, Inc., USBC (M.D. Fla.), Case No. 8:24-bk-07106.
Additional source: Tampa Bay Business Journal
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Related legal case
In re Smart Communications Holding, Inc.
| Year | 2024 |
|---|---|
| Cite | USBC (M.D. Fla.), Case No. 8:24-bk-07106 |
| Level | Bankruptcy Court |