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There is a personal bankruptcy case in California that has been going
on for almost 20 years and it could possibly be the longest running
personal BK case in history. The case is full of judicial misconduct
and outrageous rulings that have kept the case going for 2 decades.
Here is a short summary of facts on two California Bankruptcy cases
that expose large Trustee and Attorney fee abuse and expenses that
have gone out of control:
In 1984, Thelma V. Spirtos filed for voluntary petition in the US
Bankruptcy Court, Central District of California, after her
ex-husband, Dr. Basil Spirtos, defaulted on their Marital Settlement
Agreement. Basil Spirtos also failed to pay outstanding child support
and marital support and he filed for bankruptcy in 1987. Thelma
Spirtos filed a proof of claim in the Basil Spirtos bankruptcy case in
the amount of $2,130,000.00. The bankruptcy estate of Basil Spirtos
remains pending to this day, even though he died in 1996.
Wayne Elggren of Neilson Elggren was the original Trustee. He has
since left the United States under strange circumstances. His office
states that he is in the Philippines working as a Mormon missionary
and his partner R. Todd Neilson is now the Trustee. Does anyone know
where Wayne Elggren really is and why he left the country?
The Trustee Neilson and the attorneys have been keeping this case open
and charging the estate fees for almost 20 years!
The Trustees and attorneys involved in the Spirtos case are: Trustees
R. Todd Neilson and his partner Wayne Elggren of Neilson Elggren LLP,
and their attorney John Reitman of Gumport, Reitman and Montgomery.
These are the same Trustee and attorneys involved in the Reed Slatkin
bankruptcy case in Santa Barbara California.
The trustee and his attorneys are also milking the Slatkin estate for
as much money as possible. The creditors in that case are rightly
outraged at the amount that is being spent by the Trustee in fees and
expenses. The creditors were cheated once by Slatkin and now by the
estate's Trustee who is taking advantage of them again.
This seems to be common practice among bankruptcy trustees and
attorneys hired to supposedly protect the estate.
Here is a summary of facts outlining the Slatkin BK debacle:
Slatkin filed for bankruptcy on May 1, 2001.
Slatkin was later arrested and in March 2002 he pled guilty to 15
counts of fraud and related crimes. He is currently serving his
sentence. This was covered widely in the media because he was well
known as one of the original investors who started Earthlink and
because of the size of the Ponzi scheme. His victims numbered in the
hundreds.
The bankruptcy was filed in Santa Barbara, before Judge Robin Riblet,
the sole bankruptcy judge in that court. The Santa Barbara Court is a
branch of the Central District of California (LA federal district
court, same court as Spirtos).
R. Todd Neilson was appointed as the Trustee in the bankruptcy case.
The Trustee is represented by the law firm Gumport, Reitman &
Montgomery, and has as special litigation counsel, Richard Wynne of
Kirkland & Ellis, a large national law firm.
R. Todd Neilson, the trustee has agreed to honor approximately $244
million in claims against Slatkin's estate.
The Trustee sued over 140 individuals (net gainers) seeking to have
them ordered to give back the profits they received from Slatkin.
The Trustee filed a declaration with the court stating that he had
collected $31,000,000 for the estate by July 2003.
Of the $31,000,000 that Neilson has collected for the estate,
$19,231.996 has been paid to the trustee, his attorneys and
accountants.
Here are some other facts and figures taken from court documents
concerning the funds spent by Neilson:
Neilson (the Trustee), his attorneys and accountants have been paid a
whopping $19,231,996 in fees and costs to date while collecting
$31,000,000 for the estate to pay off Slatkin creditors. In other
words the Trustee, his accountants and attorneys have been paid
approximately 61.3% of every dollar they have collected. These
administrative fees and expenses are 6 times higher in proportion to
what was charged in the Enron bankruptcy case, which was the largest
bankruptcy case in US history and a much more complex financial fraud
than the Slatkin Ponzi scheme.
A review of the expenses that the Trustee has incurred on behalf of
the estate shows incredible waste and extravagance. For example,
according to documents filed with the court:
The Trustee, Neilson, made a total of $1,231,277.58 in fees through
the end of June 2003 from the Slatkin bankruptcy.
Neilson's accountancy firm, Neilson, Elggren LLP, made a total of
$4,132,652.75 in fees from the Slatkin bankruptcy up through the end
of June 2003. This equates to over $5 million paid to the Trustee and
his accounting firm. Since Neilson is the Trustee and his own
accounting firm is charging for services, isn't this double dipping by
Neilson? Does he not profit from the fees charged by his own firm?
Gumport, Reitman & Montgomery, an attorney firm hired by Neislon have
been paid a total of $4,316,304.50 through June of 2003 and have
charged an additional $317,887.20 in costs to the estate.
Kirkland & Ellis, hired by Neilson as special counsel, collected
$7,009,369 in fees and has charged another $992,771 in costs to the
estate.
Grant W. Newton, accounting consultant and expert witness hired by
Neilson was paid $229,320 in fees.
Hamburg, Karic, Edwards & Martin acted as special litigation counsel
to the Trustee Neilson, has been paid $138,207 in fees.
Crossroads LLC, who act as real estate and business consultants to the
Trustee Neilson have been paid a hefty fee of $485,687 through the end
of June 2003
The Trustee Neilson's special counsel, Kirkland & Ellis, spent
$240,651.43 in outside paralegal assistance and have paid $91,264.60
in computer database research.
Kirkland & Ellis, the Trustee's special counsel, have spent a total of
$343,571.49 in making photocopies. (Even at 10 cents per copy, that
would be 3,435,714.90 photocopies.)
Kirkland & Ellis also paid an outside messenger service a total of
$40,224.22 to date.
It cost Neilson $184,520 just in fees paid to Kirkland and Ellis to
get back only $650,000 in property and cash from Brian Cave (Slatkin's
former attorney).
Why hasn't the Judge in the Slatkin case ordered an audit of the
Trustees' fees and expenses, like Judge Gonzalez did in the WorldCom
bankruptcy? At least in the WorldCom case the auditing committee found
hundreds of thousands of dollars in over billing!
Why does Trustee Neilson keep the Spirtos bankruptcy open for two
decades when it can easily be settled in a manner of hours?
How can Neilson justify a $19 million bill when his team has only
collected $31 million?
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What a bunch of barf!
How can a person going into bankruptcy afford to pay X million dollars to
any attorney even for 1 year? Let alone 20.
How can a person be bankrupt when they are dead?
This all sounds like a fairy tale.
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