On October 28, 2004, Bankruptcy Judge Frank R. Monroe made significant rulings that make it likely that taxpayers will be able to recover significant amounts of the approximately $100 million owed by Gary Bradley to the FDIC and IRS. The Court found that Bradley committed bankruptcy fraud and that such findings are sufficient to deny Bradley use of the bankruptcy court to avoid paying his debts. The actual decision as to whether to deny a discharge was left to a later date. The Court also ruled that Phoenix Holdings with its Spillar Ranch and Pfluger Ranch properties in the recharge zone are owned by Bradley, despite all the attempts by Bradley (with the help of numerous associates), to conceal his ownership. These properties, therefore, are property of the bankruptcy estate and can be sold to satisfy creditors.
The Lazarus Trust was found by the Court to be “an incredibly fraudulent scheme engaged in primarily by Bradley, Gressett and, with the Trust’s formation, Beutel, as well, to hide assets Bradley owned, to place them into the Trust when formed, and to preserve them from the clutches of Bradley’s creditors, the FDIC and IRS.” The court referred to this as a “pervasive conspiracy to defraud Bradley’s creditors . . . .” The Court additionally characterized Bradley’s efforts with Bradley Beutel and James Gressett to launder the Spillar and Pfluger properties as a “fraudulent conspiracy.”
The Court noted that some of Bradley’s assets that should otherwise to available to pay debts “have been sold and/or used to fund everything from business expenses of the Trust, to Bradley’s extravagant lifestyle, to investments and loans, and perhaps to acquire additional assets.” The Court found that a homebuilding company named Streetman Homes had been owned by Bradley and should have been property of the bankruptcy estate but that Bradley succeeded in selling it for $5.4 million and disbursing the proceeds in a manner that has successfully evaded the Bankrutpcy Trustee’s efforts to recover them and claim them for taxpayers. Some of this $5.4 million did go to “Calvin Jewelers for the now infamous enagagement ring and earrings” which have since been seized by the Trustee and auctioned for the benefit of taxpayers.
The Court placed significant reliance on depositions of Gary Bradley taken by the FDIC in 2002, apparently before he had sufficiently polished up his story for the bankruptcy trial. These depositions followed after Save Our Springs Alliance sent a letter to Congressman Lloyd Doggett complaining that Gary Bradley owed tens of millions of dollars to FDIC but that FDIC had done nothing to collect the debt. Bradley had even characterized his relationship with the FDIC as a good one. SOS Alliance also set up the www.MakeGaryPay.org website and urged action by FDIC. Hundreds of SOS Alliance members and others emailed the FDIC. The Make Gary Pay website was featured in a national banking trade publication.
Here are quotes from the Court’s ruling:
“What is abundantly clear is that there are tremendous discrepancies between Bradley’s testimony at trial and his testimony in previous depositions.”
“Backdating was a way of life for them, presumably because that was the way they could control the appearance of things. The notary/employee whose job it was to notarize the transactional documents and who was called to testify repeatedly took the 5 th Amendment on the backdating of documents issue . . . .”
“Much has been made both in and out of Court concerning the name of the Trust. It was named the Lazarus Exempt Trust apparently in reference to Lazarus in the Bible who was raised from the dead. It should be pointed out, however, that Lazarus ultimately died.
“[S]ince [Bradley] chose a biblical story for the naming of the Trust, it is only fitting to end this opinion with an admonition from St. Paul to Timothy when he said, ‘But those who desire to be rich fall into temptation and a snare and into many foolish and harmful lusts which drown men in destruction and perdition. For love of money is the root of all kinds of evil for which some have strayed from the faith in their greediness, and have pierced themselves with many sorrows.’ I Timothy 6:9-10. . . .
“Or in the initimable words of the Honorable Edith Jones, United States Circuit Judge of the Fifth Circuit Court of Appeals, . . . ‘phrased colloquially, when a pig becomes a hog it is slaughtered.’”
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