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  1. #1
    Join Date
    Mar 2018
    Posts
    6

    Default Fraud by a Bankruptcy Trustee

    My question involves court procedures for the state of: Louisiana.

    I have a complex case involving a biased judge and a crooked chap.7 bankruptcy trustee. In an attempt to defraud the owner of a promissory note and mortgage (against whom the court is biased), trustee reopened a 8 year old bankruptcy case and authorized a 3rd party to seek a declaratory judgment in favor of his debtor in a summary proceeding held in a case in which neither the debtor nor the true owner are parties.

    The true owner filed an ordinary suit in the only court having jurisdiction over both the debtor and himself. The biased judge ignored the existing suit, held the summary proceeding, and rendered judgment in favor of the debtor. True owner's atty untimely filed improper pleadings with the court of appeal and his appeal was dismissed on technical grounds. Trustee motioned for turnover in bankruptcy court and true owner was ordered to surrender his note. We have since discovered that in their rush to defraud the true owner and avoid the ordinary suit in the unbiased court, neither the trustee nor the 3rd party motioned the bankruptcy court for relief of the automatic stay which went into effect when the trustee reopened the bankruptcy.

    We believe this makes the biased court's judgment void ab initio. We intend to file a motion to set aside and declare an absolute nullity the judgment awarding the defrauded owner's property to the debtor. We're trying to figure out how to prevent the 3rd party and trustee from doing the same thing all over again in the biased court. We considered filing a notice of lis pendens, but until we're granted relief of stay, that suit is barred too.... We don't want to file for relief of stay until after we have the judgment declared void - because until then, the debtor owns the note. But then it will be a race to the courthouse... Filing a motion to recuse won't help either as the biased judge is the chief justice who the remaining judges refuse to embarass.

    Additionally, we're planning to file the nullity action in the biased court. Though, we're wondering if there isn t a way to petition the federal district court to annul the judgment... ?

  2. #2
    Join Date
    Oct 2014
    Posts
    7,414

    Default Re: Civil Procedure Matters

    Was the “biased judge” a federal bankruptcy judge? If not, what kind of court was it? And was the “unbiased court” a state court? If so, what kind of court was it? Those are just the start of questions I would have about this. Failure to get relief from the automatic stay does not necessarily render the decision of the unbiased judge void. The true owner had an attorney who evidently screwed up the chance to appeal the ruling of the trial court, and that may work against the true owner here. It may be that in the end the true owner will need to sue his lawyer for malpractice.

  3. #3
    Join Date
    Mar 2018
    Posts
    6

    Default Re: Civil Procedure Matters

    The biased judge is state judicial district chief justice. He rendered the order awarding the true owner's property to the crooked trustee's debtor. The 3rd party holds an inferior lein on the property securing the note awarded to the debtor. The trustee, the 3rd party and the debtor intended to split the proceeds. To do this, the trustee would hold the note until it prescribed and the 3rd party would foreclose on the inferior lein (thus also defrauding creditors in the bankruptcy).

    The bankruptcy judge is aware something odd is occurring but what he has in front of him is a trustee with a judgment awarding the debtor property... So the bankruptcy judge did nothing wrong in ordering the turnover.

    The suit for declaratory judgment against the debtor was filed in an unbiased state court in a different district. But, that suit was never heard because the trustee threatened the true owner with violations of stay and the biased court issued the "declaratory" order awarding the property to the debtor before the true owner could file for relief of stay. (It all happened inside of two weeks.)

    A malpractice suit against the attorney who screwed up the appeal has been filed, but there may be a prescription issue.

    Additionally, a RICO action was brought in federal court. However, that suit was dismissed without prejudice when the trustee raised the Barton Doctrine because P had not obtained leave from the bankruptcy court to sue the trustee and jurisdiction could not be retroactively validated. It is interesting to note that the only element of the RICO claim that the federal court judge believed was missing was continuity. True owner abandoned the RICO claim and refiled suit in the bankruptcy court as an adversarial proceeding - in LA P is entitled to treble damages anyway. So, RICO is unnecessary.

  4. #4
    Join Date
    Sep 2010
    Posts
    471

    Default Re: Civil Procedure Matters

    A little late to the party but, my guess. . .

    8 years ago Debtor A filed bk. Trustee A was assigned to the case. At the time of filing or within the 4 years prior to the filing Debtor A was the owner of the note and mortgage. Debtor A failed to disclose either that he was the owner of the note and mortgage or had transferred his interest in the note and mortgage prior to filing.

    Lienholder B at some point acquired the note and mortgage from Debtor A. Lienholder B filed a suit in state court to foreclose on property.

    Trustee A discovered the suit and determined that the promissory note and mortgage, at one time, belonged to Debtor A. Trustee A reopened Debtor A’s bankruptcy and then intervened in the state court foreclosure suit asserting that he was the proper Plaintiff and holder of the note.

    Am I close? If not the only way for any of us to make heads or tails of what you are trying to say is to read the pleadings filed by the Trustee. While the state court pleadings are probably not accessible, anything filed in bankruptcy court (or Federal District Court) is through the PACER system but we would have to know the case number of the bk or district court case. Not sure you want to give that information to us.

    Des.

  5. #5
    Join Date
    Mar 2018
    Posts
    6

    Default Re: Civil Procedure Matters

    Ok...
    2007
    - True Owner A and her grandson purchased note.
    - Debtor B was retained as bookkeeper because True Owner A (70yo, grandson 12) is incapable of same.
    2008
    - Future Leinholder C sues owner D of property securing note.
    2009
    - Leinholder C receives judgment against Property Owner D.
    - In an unrelated action, Debtor B files bankruptcy. Trustee E is appointed.
    2010
    - Debtor B's bankruptcy is closed.
    2013
    - Feb. - Leinholder C deposes True owner A (unrepresented) in collection action against Property Owner D and discovers True Owner A is incompetent.
    - Apr - Seeking to avail itself of True Owner A's incompetence and a crooked state court Judge F. Leinholder C files motion in Biased Court F to have mortgage cancelled.
    - June - True Owner A assigns note to a LLC - Debtor B sole member. Debtor B simultaneously executes counterletter expressing no equitable interest in note and identifying grandson as True Owner. Intent was to place Debtor B in the position of handling these business matters for granny and eventually transfer LLC to grandson after he reached majority and graduated.
    - Aug. - Debtor B perjures himself in Biased Court F swearing the note belongs to him. Immediately thereafter, True Owner A pursuant to counterletter demands Debtor B assign note to LLC in which grandson (who has just turned 18) is sole member. Debtor B complies and files post hearing Memo explaining he lied.
    - Leinholder C contacts Trustee E. Trustee E enters into deal with Leinholder C to split proceeds of note if Leinholder C can get judgment from Biased Judge F awarding note to Debtor B. Trustee E reopens Debtor B's bankruptcy.
    - Leinholder C threatens Debtor B with perjury charges in Biased Court F if he doesn't reassert ownership in note. Leinholder C hauls Debtor B into Biased Court F where he is mirandized in open court. Trustee E steps in with automatic stay preventing action against Debtor B.
    - Trustee E offers Debtor B $10k and a portion of the proceeds of the note if he successfully reasserts ownership in the note and tells Debtor B that he will tell Bankruptcy Court G that his failure to include note in his schedule of assets was a mere oversight. Leinholder C also agrees to protect Debtor B from perjury charges in biased court F if he repeats his perjured testimony.
    - Dec. - Upon discovering this "deal," True Owner A sues Debtor B for declaratory judgment in in Unbiased Court H.
    - In an attempt to circumvent the ordinary suit in Unbiased Court H, Leinholder C races to file a motion to fix value of note (which is really a disguised petition for declaratory judgment). Because it was so rushed, no relief of stay was requested from Bankruptcy Court G.
    - Jan. 2014 - Biased Court F ignores all law and evidence (including public mortgage records) and awards Debtor B the note.
    - Trustee E motions Bankruptcy Court G for Turnover based on Biased Court F's judgment and True Owner A is forced to surrender property.
    - True Owner A gets attorney who misses filing dates and True Owner A's appeal is dismissed.
    - True Owner A intends to file motion to declare Biased Court F's judgment void ab initio because no relied of stay was granted by Bankruptcy Court G.

    Believe it or not, there is more to this story. But, these are the facts relevant to the Motion to declare the Biased Court F's judgment void.

    I can find no precedent which allows a 3rd party to rule in bankruptcy debtor merely with a trustee's "permission." But, even if Biased Court F's judgment is declared void, how do I prevent biased court from merely setting another hearing....?? I suppose it will be a race to Bankruptcy court G to get relief of stay...

    Btw, Des, the best way to get a full picture is to read the adversarial proceeding filed against the trustee et al... I can give you the docket number if you're interested. The Complaint lays it all out with exhibits proving everything and it should be available on PACER if you have access.

  6. #6
    Join Date
    Sep 2010
    Posts
    471

    Default Re: Civil Procedure Matters

    Quote Quoting squalie30
    View Post
    the best way to get a full picture is to read the adversarial proceeding filed against the trustee et al... I can give you the docket number if you're interested. The Complaint lays it all out with exhibits proving everything and it should be available on PACER if you have access.
    You are correct. The matter is way too convoluted. I have no problem looking at the pleadings off of PACER but, you giving that information means you are giving up your anonymity. I would need the case number and the name of the court where the complaint was filed. Up to you. . .

    Des.

    Are you the grandson?

    Reading through your dissertation is very difficult. Your anger is clear and clouds your writing. Assuming I got the gist of this correct, the bottom line is that B asserted an interest in the note. B failed to list the note as an asset in the bk. When C contacted the Trustee, the Trustee rightfully reopened the bk to administer the undisclosed asset.

    It is now up to the courts to decide who is the proper holder of the note. Understand, B has absolutely no rights to an asset he failed to disclose in his bk therefore, the question of ownership is between the Trustee and C (and/or some other person but not B). Of course, the Trustee can settle the controversy with a Rule 9019 compromise settlement filed in the bk court.

    As to A, if A was legally competent back in 2007 and had the authority to transfer, A lost any interest in the note when A did the transfer. I should think that to unwind a transfer from 2007 one would have to prove that, at the time of the transfer, A was legally incompetent. Good luck with that 11 years after the fact.

    Without seeing the pleadings the above is my best guess.

    Des.

  7. #7
    Join Date
    Mar 2018
    Posts
    6

    Default Re: Civil Procedure Matters

    Hey Des, I don't mind giving you the docket # and the bankruptcy court info in a PM. But, it probably wouldn't be wise to do so openly. I'm new here, but is there a way to pm?

    I'll admit to a certain level of frustration. But, I'm not sure where anger clouded the timeline... I'll take your word for it.

    You have the gist... After Grandma assigned the note to Debtor's LLC in 2013, he offered perjured testimony suggesting he bought the note in 2007 and Grandma had no interest. After discovering what Debtor had done, Grandma made Debtor B assign the note back to Grandson's LLC. Trustee E reopened the Debtor B's bankruptcy to "investigate" Debtor's ownership administer the property if it was declared his. Biased Court F was more than willing to ignore public records and every authentic doc and award property to Debtor B. Trustee E knows True Owner owns the note.... but, they want to split the proceeds.

    I should add, the transfer to the true owner was in 2007. The transfer to the Debtor wasn't until 2013 - after Leinholder tried to take advantage of aging g-ma. The note was only recorded in the name of Debtor B's LLC for a month or so. A second transfer back to the true owner was made pursuant to the counterletter after the Debtor perjured himself. The note is currently recorded in the name of the grandson's LLC. As I said, the story is even a bit more complicated than this.... I am actually property owner D.

    If you know how to pm me, I'll give you the docket # and court...

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