In re: CASE NO.: 11-20436-BKC-AJC Chapter 7 / TRUSTEE’S EMERGENCY MOTION FOR ENTRY OF AN ORDER DIRECTING TURNOVER OF DEBTOR’S MAIL FROM P.O. BOXES TO THE TRUSTEE NUNC PRO TUNC TO JANUARY 11, 2012 AND FOR SANCTIONS EMERGENCY HEARING REQUESTED The Trustee requests the Court set the hearing on this Motion as soon as the Court’s calendar permits because the Trustee reasonably believes that the Debtor has and may be continuing
to conceal and improperly transfer assets through the use of two P.O. Boxes. Joel L. Tabas, as Chapter 7 Trustee of the
Bernard C. Seidling (the “Trustee”), through counsel and pursuant to 11 U.S.C. §§ 105(a), 541, 542(a), and 28 U.S.C. 1334(d), and Local Rule 9075-1, files this Emergency Motion for Entry of an Order Directing Turnover of Debtor’s Mail to the Trustee Nunc Pro Tunc to January 11, 2012 and for Sanctions, and in support thereof, states as follows: I. Background
The Debtor filed this bankruptcy case pro se, and since the filing has engaged in a campaign to delay and hinder the progress of this case. The Debtor failed to appear for his scheduled § 341 meeting of creditors and produce documents to the Trustee until expressly required to do so by Court order, failed to assist the Trustee in identifying his assets, and has actively concealed same. For example, the Trustee learned that the Debtor owned or
had an interest in several accounts with Edward Jones containing millions of dollars, none of which were scheduled.1
In an effort to obtain information about the Debtor’s business activities and intercept any income that is property of the estate, the Trustee sought to divert the Debtor’s mail from two Post Office Boxes disclosed by the Debtor from which he operated his business activities. The
Debtor has now actively interfered with the Trustee’s administration of estate by contacting his local post office, stating that he did not have knowledge about the bankruptcy, making accusations of fraud, and demanding that his mail be returned to him. Additionally, it appears that the Debtor continues to file law suits in Wisconsin related to pre-petition assets that have not been disclosed to the Trustee. Accordingly, the Trustee seeks an emergency order directing the United States Postal Service to deliver the After engaging counsel, the Debtor filed Amended Schedules revealing over 5,000 times the assets initially scheduled. At his Rule 2004 Examination, the Debtor refused, on the basis of the 5th Amendment, to answer any questions including those related to his involvement with and operation of approximately
215 entities and trusts under which the Debtor purports to do business and under which he files law suits in Wisconsin to collect on debts owed to the Debtor and/or the various entities in which he has an interest.
It appears that none of the entities which the Debtor utilizes in this regard are valid legal entities and the Trustee has been provided with information that the “entities” are really nothing more than “DBA”s (in fact the Debtor has admitted as much in certain papers that he filed in court proceedings where his ability to proceed without counsel had been raised by the respective court and/or the parties).
1 The Trustee commenced an adversary proceeding related to these accounts, which seeks injunctive relief and to compel turnover of estate property and discussed in additional detail below.
Debtor’s mail to the Trustee and directing the Debtor not to interfere with the delivery of mail in any way, and directing the Debtor to take no actions that would in any other way divert any mail related to any of the Debtor’s business activities. A list of the names of the DBAs utilized by the Debtor in furtherance of such activities is set forth on attached Exhibit “A”. II. Relevant Facts
A. The Debtor’s Failure to Cooperate with Trustee
1. This case commenced with the filing of a voluntary Chapter 7 Petition by the Debtor, Bernard C. Seidling (the “Debtor”) on April 19, 2011. Joel L. Tabas is the duly appointed Chapter 7 Trustee.
2. Debtor filed his Schedules and Statement of Financial Affairs on May 3, 2011 [ECF 8], listing personal property on Schedule B totaling only $875.00.
3. On May 19, 2011, the Debtor filed his Motion to Continue Meeting of Creditors and Notice of Change of Address [ECF 11] in which the Debtor changed his address to P.O. Box 13017, Hayward, WI 54843 and requested that his meeting of creditors be postponed until August 2011.
4. The Court continued the Debtor’s meeting of creditors to June 13, 2011 at 9:30 a.m. [ECF 12].
5. The Debtor failed to appear for his rescheduled meeting of creditors on June 13, 2011.
6. On July 22, 2011, the Trustee filed and served his Notice of Taking Rule 2004 Examination of the Debtor Duces Tecum (the “Notice”) [ECF 23] scheduling the examination for August 8, 2011 at 10:00 and requesting the Debtor produce documents to the Trustee on or before August 1, 2011.
7. The Debtor failed to produce any documents to the Trustee.
8. At 9:00 a.m. on Monday, August 8, 2011 (one hour before the scheduled examination) the Debtor sent a letter to undersigned counsel by facsimile stating that the Debtor would not be attending the examination and that he would make himself available for his examination after November 2011 when he is scheduled to be back in Florida because he allegedly had just received the Notice on August 6, 2011.
9. On August 11, 2011, Trustee filed his Motion to Compel Debtor to Appear for Rule 2004 Examination and to Produce Documents in Response to Notice of Taking Rule 2004 Examination Duces Tecum (the “Motion to Compel”) [ECF 26].
10. On September 1, 2011, the Court granted the Motion to Compel [ECF 35] and ordered the Debtor to produce documents to the Trustee by September 19, 2011, to appear for his Rule 2004 Examination on October 3, 2011 and to appear for his 341 meeting on October 3, 2011. On September 16, 2011, the Debtor filed a Motion to Quash/Adjourn 2nd Notice of Rule 2004 Examination Duces Tecum and 341 Hearing (the “Motion to Quash”) [ECF 37 & 39]. At the September 26, 2011 hearing on the Motion to Quash, the Court gave the Debtor one final chance to produce documents, requiring production to the Trustee by 5:00 p.m. on October 17, 2011 after Debtor represented to this Court that he would be able to produce documents by the specified date and time. As such, the Court entered its Order Granting Motion To Quash/Adjourn 2nd Notice of Rule 2004 Examination Duces Tecum and 341 Hearing and Compelling Debtor to Produce Documents to Trustee and Appear for Rule 341 Meeting and Rule 2004 Examination Duces Tecum (the “Order to Produce Documents”) [ECF 40] entered on September 27, 2011.
11. The Debtor failed to produce any documents to the Trustee by 5:00 p.m. on October 17, 2011. Accordingly, on October 18, 2011, Trustee filed his Application for Order to Show Cause Why Debtor Should Not Be Held in Contempt of Court for Failure to Comply
With Order Granting Motion To Quash/Adjourn 2nd Notice of Rule 2004 Examination Duces Tecum and 341 Hearing and Compelling Debtor to Produce Documents to Trustee and Appear for Rule 341 Meeting and Rule 2004 Examination Duces Tecum (the “Contempt Motion”) [ECF 43].
12. On October 19, 2011, the Court entered its Order to Show Cause [ECF 45], requiring Debtor to appear before the Court in person on October 27, 2011 at 11:30 a.m. in connection with the Contempt Motion. On October 24, 2011, Debtor served his Answers to the Order to Show Cause [ECF 52] which completely failed to explain why he did not comply with the Order to Produce Documents and merely attached a 26 page print out of his tax returns transcripts that it appears that he obtained on October 24, 2011 presumably when he finally appeared for his Section 341 meeting of creditors – but which print out did not contain any actual tax returns or supporting documents.
13. On November 3, 2011, the Court entered its Order Granting Application for Order to Show Cause Why Bernard Seidling Should Not Be Held in Contempt of Court for Failure to Comply with Order Granting Debtor’s Motion to Quash/Adjourn 2nd Notice of Rule 2004 Examination Duces Tecum and 341 Hearing and Compelling Debtor to Produce Documents to Trustee and Appear for Rule 341 Meeting and Rule 2004 Examination Duces Tecum [ECF 72], granting the Contempt Motion and giving the Debtor one final opportunity to produce documents and meet with the Trustee to explain the documents prior to
ordering the United States Marshal Service to take the Debtor into custody.
14. The Debtor has produced some documents to the Trustee but has failed to appear at the required meeting and explain to the Trustee the documents produced and why certain documents have not been produced.
15. The Debtor finally appeared at a 2004 Examination in this case, on December 16, 2011.
16. Approximately thirty minutes before appearing for his scheduled Bankruptcy Rule 2004 examination by the Trustee on December 16, 2011, Debtor filed his Amended Schedules and Amended Statement of Financial Affairs [ECF 99]
in which Amended Schedule B lists Debtor as having personal property totaling $4,476,209.42, a substantial increase from the $850.00 worth of assets disclosed on the Debtor’s original petition.
17. At the examination, the Debtor invoked his Fifth Amendment privilege in response to nearly every single question other than the initial inquiry regarding his name.
18. Debtor was asked several questions about the filing of his original and amended bankruptcy schedules, including the omissions contained therein, which he refused to answer based upon his invocation of his Fifth Amendment privilege.
19. For example, the Debtor was asked to admit, and refused to answer on the basis of the invocation of his Fifth Amendment privilege, that:
a. it was a fact that he knew the original and amended schedules were not true, correct, and complete at the time of filing; and
b. it was a fact that the inaccurate, incomplete and false schedules were filed with the intent to hinder, delay, or defraud creditors of the estate.
21. The Debtor was also asked to admit, and refused to answer on the basis of the invocation of his Fifth Amendment privilege, questions relating to the
215 DBAs that appear to be registered and unregistered entities and trusts under which the Debtor conducts business and from which the Debtor collects income.
B. Trustee’s Effort to Obtain Debtor’s Mail
22. Due to the Debtor’s refusal to assist the Trustee in identifying his assets,
investigation of his business interests, and active efforts to conceal his assets, on January 11, 2012, the Trustee initiated a request with the U.S. Postal Service to redirect the Debtor’s mail from P.O. Box 3006, Eau Claire, Wisconsin, 54702 and P.O. Box 13017, Hayward, Wisconsin 54843 (the “Hayward P.O. Box”) (collectively, the “P.O. Boxes”). Notably, the Trustee has not sought to redirect the Debtor’s personal mail from his home mailing address listed in Marathon, Florida.
23. At the Debtor’s Rule 2004 Examination, the Debtor responded as follows to several questions about the operation of the P.O. Boxes:
Q: Is it true that you own and operate a P.O. Box located at P.O. Box 3006 Eau Claire, Wisconsin, zip code 54702?
A: I refuse to answer. I invoke my Fifth Amendment right against self-incrimination.
Q: Isn’t it true that you are the sole owner and operator of that P.O. Box?
A: I refuse to answer. I invoke my Fifth Amendment right against self-incrimination.
Q: Isn’t it true that you own and operate a P.O. Box, P.O. Box 13017 Hayward, Wisconsin, 54843?
A: I refuse to answer. I invoke my Fifth Amendment right against self-incrimination.
Q: Isn’t it true that you listed the Hayward P.O. Box as your personal address in the adversary matter, Tabas vs. Edward Jones, et al., Case No. 11-2762?2
A: I refuse to answer. I invoke my Fifth Amendment right against self-incrimination.
2 In an abundance of caution, the Trustee has served the Debtor with notice in the adversary proceeding at the address provided at the Debtor’s § 341 meeting of creditors.
Deposition of Bernard Seidling, Transcript page 13, lines 3-20.
Q: Isn’t it true that Universal Family LP has a P.O. Box located at P.O. Box 3006 Eau Claire, Wisconsin?
A: I refuse to answer. I invoke my Fifth Amendment right against self-incrimination.
Deposition of Bernard Seidling, Transcript page 24, lines 10-13.
Q: Isn’t it true that Oasis [Family LP] has a P.O. Box located at P.O. Box 3006 Eau Claire, Wisconsin?
A: I refuse to answer. I invoke my Fifth Amendment right against self-incrimination.
Deposition of Bernard Seidling, Transcript page 25, lines 6-9.
Q: Isn’t it true that ZY Enterprises operated out of the Eau Claire P.O. Box 3006?
A: I refuse to answer. I invoke my Fifth Amendment right against self-incrimination.
Deposition of Bernard Seidling, Transcript page 26, lines 7-10.
Q: Isn’t it true that you owned an interest in real property located at 1106 17th Street, Key West, Florida 33040?
A: Fifth Amendment.
Q: Isn’t it true that that interest was transferred to an entity located at P.O. Box 13017, Haywood, Wisconsin, 54683?
A: Fifth Amendment.
Q: Isn’t it true that you are the sole owner of all entities registered to that address?
A: Fifth Amendment.
Deposition of Bernard Seidling, Transcript page 74, lines 19-25; page 75, lines 1-4.
24. The Trustee received some of the Debtor’s mail, and in so doing, was able to determine that the Debtor failed to disclose assets and is continuing to market and sell real estate. For example, the Trustee received an invoice and copy of an advertisement from the Burnett County Sentinel in which the Debtor listed for sale a lot described as “Webster 10A Timber, Free Closing, Drive-way blacktop, Electric across from lake $15.9K” and listed the Debtor’s cell phone number as the contact for such land sale. A copy of the invoice and advertisements are attached hereto as Composite Exhibit B.
25. On or about February 8, 2012, the Trustee was notified by Sandy Houston, a Change of Address Support Staff member of the U.S. Postal Service, that the Debtor had contacted his local post office, demanded return of his mail, advised the post office that he had no knowledge of the Trustee, the Trustee’s counsel at Tabas, Freedman, Soloff, Miller & Brown, P.A., or the pending bankruptcy (despite having appeared at the Trustee’s office for the purposes of his examination and having agreed to the TRO entered in the adversary proceeding against the Debtor and other in respect of the $5 million or so of undisclosed accounts), and filed a complaint with the Postal Service. In response to the Debtor’s efforts, the local post office removed the Trustee’s request to redirect the mail to the Trustee at 14 NE 1st Ave, PH, Miami, FL 33132.
26. Also on February 8, 2012, the Debtor called the Trustee’s counsel under an assumed name and made inquiry as to the identity of the Trustee’s assistant who had prepared the request to the United States Postal Service seeking to divert the mail.
B. Debtor’s Continued Effort to Conceal Assets and Collect Income Related to Estate Property
i. The Adversary Proceeding
27. The Debtor has been dishonest with the Court in his bankruptcy schedules,
and has evidenced
an intent to conceal assets from his creditors so that they can be diverted from this bankruptcy estate. He has also intentionally interfered with the trustee’s efforts to administer this estate
28. Soon after the commencement of this bankruptcy case, the Trustee obtained information related to (at the time) undisclosed personal accounts of the Debtor with Edward Jones and a few other accounts in which the Debtor appears to have a legal or equitable interest. In total, it appears that the Debtor’s interest may be valued at several millions of dollars.
29. Based on the information, the Trustee commenced an adversary proceeding on November 7, 2011 seeking injunctive relief and turnover of estate property contained in several of the Debtor’s personal accounts and in the accounts in the name of the Debtor’s fictitious entities or trusts.3
30.
It appears that several of the Debtor’s family members may be assisting him in his efforts. A review of the Edward Jones account statements indicates that
Neil Seidling, believed to be the Debtor’s son, served as financial advisor for the Debtor and as the financial advisor for several Edward Jones accounts, including accounts purporting to belong to the Debtor’s putative ex-wife,
Christine Seidling, and her mother,
Catherine Vogt.
31. At present, the Court has issued a Temporary Restraining Order [Adv. ECF 5] and Modified Temporary Restraining Order [Adv. ECF 15] which are in full effect through March 15, 2012 [Adv. ECF 53].
ii. Law Suits Commenced by the Debtor to Collect Income Related to Estate Property
32. On February 2, 2012, the Trustee was contacted by counsel for a creditor,
3 The adversary proceeding referred to herein is captioned Tabas v. Edward Jones, et al,
who advised the Trustee that the Debtor is continuing to file law suits on behalf of the DBAs. Specifically, the Trustee learned that on January 4, 2012, the Debtor filed a law suit captioned B & C Partnership v. Griff Griffin, Case No. 12CV14 in the Circuit Court of Chippewa County, Wisconsin. The lawsuit, filed by the Debtor on behalf of B & C Partnership, an undisclosed entity of which the Debtor is purportedly a partner, seeking to collect funds allegedly due on a pre-petition land contract. A copy of the Complaint and the Defendant’s Answer is attached hereto as Composite Exhibit C.
33. From a review of the papers filed in connection with the Complaint, it is clear that the Debtor is conducting business and accepting payments by way of the Hayward P.O. Box. See Exhibit C.
34. It is also clear that the Debtor is aware of the pending bankruptcy. In his Response to the Defendant’s Answer, which the Debtor filed pro se, the Debtor states
“The plaintiff B & C Partnership is not in bankruptcy. The bankruptcy trustee is aware of the pending foreclosure as defendant or his attorney have filed at least two (2) false and fraudulent claims in the bankruptcy court which have been filed in access [sic.] if $56,000. . . . “
“Having knowledge of this foreclosure, the trustee is certainly capable of intervening if it had an interest in this foreclosure.”
A copy of the Debtor’s Response to the Defendant’s Answer is attached hereto as Exhibit D.
35. Debtor’s statement is a tacit admission that he has not scheduled his interest in B & C Partnership nor disclosed the existence of the assets related to the pending law suit as he expressly states that the Trustee is aware of the issue based on the creditor’s action in filing a proof of claim rather than the Debtor’s action in honestly filing and amending his bankruptcy schedules.
This assertion made by the Debtor to a court is also at odds with his complaint to the Postal Service.
36. Without the actions of the creditor, the Trustee would not have known about the foreclosure action which was commenced by the Debtor post-bankruptcy without approval or authorization from the Trustee at a point in time when the cause of action was property of the estate.
37. Based on the foregoing, the Trustee requests that this Court enter an order directing the U. S. Post Office to redirect the Debtor’s mail to the Trustee, and requiring the Debtor to show cause why he should not turnover all mail records and other documents and desist from interfering in the administration of the estate.
III. Argument
A. Redirection of Mail is Necessary and Appropriate
38. It is the duty of the Trustee to “insure and safe guard all estate property and property that comes into the trustee’s hands by virtue of his appointment.” Handbook for Chapter 7 Trustee, U.S. Department of Justice, Page 6-3, Effective March 1, 2001 (with January 1, 2005 technical amendments). To that end, trustees are directed by the U.S. Trustee’s Office, upon their appointment in a corporate Chapter 7 proceeding, to have the mail of a corporate debtor be forwarded to the trustee’s office.
39. In the present case, the Debtor admittedly self-employed, does business as an individual under various assumed and fictitious. He has continually refused to provide information related to his assets, his businesses’ assets and his business activities.
40. The Trustee has only sought turnover of the Debtor’s P.O. Boxes, out of which the Debtor operates various entities or businesses under assumed names. The Trustee has not sought turnover of the Debtor’s personal mail from his residential address, although based upon the Debtor’s actions and efforts at concealment, the Trustee submits that such measures (redirection of all mail of the Debtor) would be appropriate under the circumstances.
41. All the Debtor’s mail related to his business activities and assets is estate property pursuant to 11 U.S.C. § 541 and a review of such information is necessary to the administration of the estate. Indeed, in this case, the mail has assisted the Trustee in identifying assets belonging to the Debtor that were undisclosed, including the Debtor’s interest in an undisclosed partnership, B & C Partnership, and the Debtor’s interest in undisclosed real property as advertised in the Burnett County Sentinel.
42. Relief is required on an emergency basis because, as is demonstrated by the advertisement in the Burnett County Sentinel, the Debtor has undisclosed assets, which may be property of the estate, that he is actively selling without the knowledge or consent of the Trustee4
43. Access to the Debtor’s mail is necessary to aid the Trustee in his duty to secure and safeguard property of the estate. in a clear effort to interfere with the administration of the estate and to possibly defraud creditors.
B. Sanctions Are Appropriate
44. By filing the instant bankruptcy, the Debtor subjected himself to the equitable jurisdiction of this Court.
45. However, as the history of this case clearly indicates, the Debtor does not respect the process, this Court, or the Trustee.
46. The Debtor has time and time again refused to comply with this Court’s rulings, has not cooperated with the Trustee in his attempts to locate and identify assets, and, instead, has actively concealed assets and business interests and continues to file law suits related to those assets and business interests.
4 The deadline for the Trustee to object to the Debtors’ claimed exemptions has been extended through and including March 31, 2012. [ECF 105].
47.
Based on the Debtor’s conduct, the Trustee requests entry of an order stating that any further interference by the Debtor with the Trustee’s duties will result in a finding of contempt in which the Court will consider incarceration.
Local Rule 9075-1(B) Certification
48. Trustee respectfully requests that the Court waive the provisions of Local Rule 9075-1 (B), which requires an affirmative statement that a bona fide effort was made in order to resolve the issues raised in the Motion, as the relief requested herein is urgent in nature and does not lend itself to advance resolution.
WHEREFORE, Joel L. Tabas, Trustee, respectfully requests this Court enter an order:
(i) directing the United States Postal Service to redirect all of the Debtor’s mail (including all mail delivered to his home address and any other address utilized by the Debtor) to be delivered to the Trustee at 14 NE 1st Ave, PH, Miami, FL 33132, nunc pro tunc to January 11, 2012;
(ii) directing the Debtor not to interfere in any way with the turnover of mail, including but not limited to requiring that the Debtor not change any addresses for any mail;
(iii) authorizing the Trustee to review all mail;
(iv) providing for any other relief deemed appropriate under the circumstances.
and made allegations against us in his letter, in regards to his first allegation:
