Posts tagged: bankruptcy
A contractor based in Longview, Wash. has submitted the highest bid for a failed polysilicon plant in Pocatello, the AP and the Idaho State Journal report today; click below for their full report. JH Kelly Inc. offered $5.27 million for the defunct Hoku plant at auction; it’s also suing Hoku’s Chinese parent company in federal court, alleging that it’s still owed $25 million for work done at the site. The plant, which never opened, promised high-tech jobs producing materials for solar panels; the city bought the $1.4 million property and leased it almost for free for the plant, and Hoku also got $2.2 million in federal grants plus a promise of job training money from the state.
Meanwhile, the New York Times wrote about the mess today, in a story headlined, “Idaho Town Struggles After Pinning Hopes on a Failed Factory;” you can read it here. Writer Kirk Johnson paints a grim picture of the situation facing Pocatello, Idaho’s 5th-largest city. “Pocatello’s road was tough before Hoku ever came to call,” he writes. “It lost many of its good railroad jobs when Union Pacific consolidated operations in Utah. A potato processing factory in a neighboring town — about 10 percent of the work force commutes there from Pocatello — has said it will close next year. And like Idaho as a whole, it has suffered from a downward spiral in wages.”
Writes Johnson, “From 37th place in per capita income in the mid-1990s, the state is now 49th, kept from the bottom only by Mississippi, according to federal figures. Part-time jobs have been among the fastest-growing employment categories in recent years, with almost one in four jobs statewide offering less than full-time hours — the fifth-highest rate in the nation. Many downtown businesses are vacant and up for lease, and the struggling local shopping mall is scheduled to go up for auction this month.”
Here's a news item from the Associated Press: BOISE, Idaho (AP) — A man who once sought to take control of an Idaho ski resort using millions stolen from retirees should go to prison for 210 months, federal prosecutors wrote this week in their sentencing recommendation. Matthew Hutcheson was convicted in April of 17 counts of wire fraud after prosecutors charged him with raiding pension funds to buy cars, remodel his Eagle home and acquire Tamarack Resort. He's due to be sentenced July 31. Assistant U.S. Attorney Ray Patricco wrote Wednesday in his recommendation that Hutcheson is an unrepentant schemer who would go to any lengths to deceive and take advantage of others to help himself. The sentence is necessary, Patricco added, to promote respect for the law and convince Hutcheson that he, not the government, is responsible for his legal predicament.
Click below for a full report from AP reporter John Miller.
A planned public auction of building materials, furnishings and unfinished construction projects at the failed Tamarack ski and golf resort in central Idaho has been put on hold for at least another two months, the AP reports; materials and furnishings had been scheduled to be auctioned off Monday, from electrical wiring to an elevator car, bathtubs, restaurant equipment and more. Then, the resort's unfinished plaza and a portion of the Lodge at Osprey Meadows were to go on the block on Tuesday. Now, the auctions have been postponed until at least early September; click below for a full report from the Associated Press.
Tax-protesting former state Rep. Phil Hart has filed his response to the U.S. Attorney and U.S. Bankruptcy Trustee's allegations that Hart lied under oath, concealed assets and income and more in his bankruptcy filings, insisting that he's done nothing of the sort and the IRS is just after him for “trumped up” and “exaggerated” tax liabilities. Targeting U.S. Justice Dept. attorney Adam Strait, Hart wrote in a declaration filed with the bankruptcy court, “It is Mr. Strait who is making false statements to the court, not me.” Hart says he thought the trust he put his house in was OK because he hired experts, and the unreported payments Strait identified were things like expense reimbursements and a $200 birthday gift from his mother. You can read my full story here at spokesman.com.
Federal authorities may be laying the groundwork for criminal charges against tax-protesting former Idaho state Rep. Phil Hart. In bankruptcy court documents, federal officials are charging that Hart lied under oath, concealed or destroyed records and attempted to “hinder, delay or defraud his creditors, including the Internal Revenue Service.” The filings by the U.S. Bankruptcy Trustee and the U.S. Department of Justice are aimed at preventing Hart from being relieved of any of his tax debts through his latest bankruptcy case, but the implications could go well beyond that.
By law, federal bankruptcy trustees are required to refer suspected crimes to the U.S. Attorney for prosecution. In 2012, they referred 2,120 cases, with false statements and concealment of assets among the top five crimes charged; the No. 1 most-charged crime was bankruptcy fraud.
“We don’t comment on cases beyond what’s in the public record,” said Shannon May, spokeswoman for the U.S. Trustee Program in Washington, D.C. But she provided copies of the program’s annual report, including the legal requirements and figures about criminal enforcement.
The federal bankruptcy court filings, which have the effect of creating a lawsuit within Hart’s Chapter 7 bankruptcy case, turning it into an “adversary proceeding,” say Hart “retained a secret interest” in his log home in Athol for years after transferring it to a sham trust set up in his daughter’s name. He then denied owning any real estate in his bankruptcy filing, including statements under oath. And that’s just one of the many allegations in the filings. The Justice Department’s filing says Hart claimed to have paid $600 a month in rent to the trust in exchange for living in the home. But he said he “makes the purported rent payments to the Sarah Elizabeth Hart Trust by placing $600 in cash in a desk drawer in his home.” Then, the filing said, he spends the money, including for utility bills on the house. You can read my full story here from Sunday’s Spokesman-Review.
A federal judge has cleared the way for the Internal Revenue Service to foreclose on former state Rep. Phil Hart's Athol, Idaho log home over years of unpaid taxes, the AP reports. U.S. District Judge Edward Lodge ruled last week that Hart, a Republican, was still the true owner of the log home and that his attempt to transfer the property to a trust was ineffective. The judge also said Hart couldn't claim a “head of household” tax exemption because he had no dependents at the time.
Hart, who lost his bid for a fifth term in the Idaho House last year, stopped filing income tax returns in 1996 while he pursued a federal lawsuit challenging the constitutionality of the federal income tax. He lost the lawsuit and the IRS is seeking to collect more than half a million dollars in back taxes, penalties and interest. His home was built partly with logs taken from state school endowment land; Hart never fully satisfied a court judgment over the timber theft. He claimed as a citizen he was entitled to take the logs. Click below for a full report from AP reporter Rebecca Boone.
By the way, the reason that the foreclosure can proceed even though Hart's filed a third bankruptcy case is that a federal bankruptcy judge ruled in late February that Hart's third bankruptcy filing in one year is not entitled to an automatic stay on the foreclosure case, like the last two prompted. “The bankruptcy, when viewed in light of Debtor's previous two filings, appears intended to halt the progress of the federal litigation,” wrote U.S. Bankruptcy Judge Terry Myers, adding that Hart's petitions were “filed without regard to eligibility but with an eye toward delay and potential forum shopping.”
A bankruptcy judge has ordered a tax-protesting former Idaho state representative to submit to intense new scrutiny of his finances, something federal lawyers say is necessary to prevent him from hiding assets from creditors including the U.S. government, the AP reports. Phil Hart now must appear at a hearing May 20 in U.S. Bankruptcy Court in Coeur d'Alene, according to an order from Chief U.S. Bankruptcy Judge Terry Myers.
Hart, a Republican from Athol who lost his bid for re-election in the GOP primary last year, has been ordered by courts to pay the federal and state governments more than $600,000 in delinquent income taxes, interest and penalties. He filed for Chapter 7 bankruptcy protection in January after the U.S. government moved in 2011 to seize his log home in northern Idaho to satisfy debts; it was his third bankruptcy filing, after the first two were questioned as inappropriate and were either withdrawn or dismissed.
With his order, Myers is forcing Hart to submit to what's called a “Rule 2004 Examination,” a provision of bankruptcy law meant to untangle a debtor's murky finances; among other things, Hart must provide statements from every account he's controlled since 2011. Click below for a full report from Associated Press reporter John Miller. Hart told Miller, “My understanding is this is a normal process for a person going through bankruptcy.”
Here's a news item from the Associated Press: BOISE, Idaho (AP) — Government attorneys are asking a judge to rule in their favor in a federal tax case against ex-state Rep. Phil Hart and allow them to immediately foreclose on his northern Idaho log home. In a motion for summary judgment filed in federal court Friday, Assistant U.S. Attorney Kathryn Keneally said there are no disputes over the facts concerning 6 of the 13 years for which the government believes Hart owes back taxes, and so U.S. District Judge Edward Lodge should rule in the government's favor for that portion of the lawsuit. Hart stopped filing federal income tax returns in 1996 while he while he unsuccessfully sued over the constitutionality of the federal income tax. The Internal Revenue Service is seeking to collect more than $500,000 in taxes, penalties and interest. Click below for a full report from AP reporter Rebecca Boone.
A federal bankruptcy judge has dismissed former Idaho state Rep. Phil Hart’s second bankruptcy filing, opening the way for federal authorities to go after his log home in Athol for back federal income taxes, and for the state to launch collection efforts over his state tax debts. “We’re kind of in line behind the feds, and I’m not sure what’s going to be left,” said Bill von Tagen, deputy Idaho attorney general for the Tax Commission.
The federal foreclosure lawsuit already has geared back up; a federal judge issued an order today calling for Hart to submit to a deposition on Jan. 7 as part of the case. The tax-protesting four-term state lawmaker has been fighting court orders to pay more than $600,000 in back state and federal income taxes, penalties and interest; he’s lost repeated attempts to declare the taxes unconstitutional and to claim that legislative privilege should free him from some or all of his tax debts.
You can read my full story here at spokesman.com. In September, Hart sent the state Tax Commission a copy of a 63-page appeal to the U.S. Supreme Court, in which, acting as his own attorney, he argued that the Idaho Supreme Court wrongly dismissed his legislative privilege argument and improperly scheduled a hearing at a time when he couldn’t attend because he was serving in the Legislature. Though that arrived at the state Tax Commission on Sept. 17, shortly before the deadline for such a filing with the high court in Washington, D.C., the U.S. Supreme Court never received the filing, and the deadline passed. In that appeal, Hart wrote that he’s a victim of “political persecution.”
Tax-protesting former Idaho Rep. Phil Hart, R-Athol, is now proposing in bankruptcy court to pay just $106 a month for three years to satisfy more than $626,000 in debts, a total of $3,816 - less than a third of the amount he proposed paying in his earlier, dismissed bankruptcy filing. The debts include more than $564,000 in back federal income taxes, penalties and interest, and more than $62,000 in back state income taxes, penalties, interest and court-ordered attorney fees and costs for the state. Hart appeared before a bankruptcy trustee Friday and refused to answer a barrage of questions.
Federal authorities have filed a foreclosure lawsuit seeking to take Hart's log home in Athol to satisfy his federal tax debts; that case was put on hold when Hart filed for bankruptcy in May, then started back up when his first bankruptcy filing was dismissed in August. Then, in October, Hart filed for bankruptcy again. Last week, a bankruptcy judge refused to postpone the foreclosure, finding that Hart had filed the second bankruptcy in bad faith. You can read a full report here from S-R reporter Scott Maben in Coeur d'Alene.
State lawmaker and tax protester Rep. Phil Hart has filed for bankruptcy — again — prompting a federal tax foreclosure case against him to be put on hold. Click below for a full report from AP reporter Rebecca Boone. Hart's new bankruptcy filing comes almost two months after he voluntarily dropped his previous one, acknowledging it was improperly filed under Chapter 13 of federal bankruptcy laws. His new filing is under the same chapter with largely the same circumstances.
Here's a news item from the Associated Press: BOISE, Idaho (AP) ― The lawyer for a would-be Tamarack Resort buyer who is under indictment wants off the federal fraud case, citing communication problems and a potential conflict of interest. Eagle-based lawyer Dennis Charney filed paperwork Thursday in U.S. District Court in Boise, asking a judge to relieve him of his duties representing Matthew Hutcheson. Hutcheson was charged earlier this year with diverting some $5 million from retirement accounts he oversaw to help finance his failed bid to buy Tamarack, a struggling resort 90 miles north of Boise. Charney says he and Hutcheson disagree over “strategy and presentation.” Moreover, Charney says he could be called as a witness at the criminal trial later this year because of unspecified evidence that may be brought by the government. Hutcheson faces decades in prison, if convicted; click below for a full report from AP reporter John Miller.
The Idaho Supreme Court has ordered tax-protesting Rep. Phil Hart, R-Athol, to pay the state $10,128 in attorney fees and costs for his unsuccessful state income tax appeal to the court, finalizing a decision it first issued in June. At that time, the court dismissed Hart's request to reconsider his appeal; ordered that its earlier April 2012 decision rejecting the appeal be complied with “forthwith;” and ordered Hart to pay the state's attorney fees and costs. That order was issued “subject to the automatic stay in Appellant's bankruptcy proceeding.” Hart had filed for bankruptcy, but has since voluntarily withdrawn that petition; his bankruptcy filing had prompted an automatic stay on other court cases involving his finances, including a federal foreclosure lawsuit seeking to foreclose on his Athol home for more than $500,000 in back federal income taxes, penalties and interest. That stay has now been lifted.
Hart repeatedly appealed an order to pay more than $53,000 in back state income taxes, penalties and interest; he has maintained that both state and federal income taxes are unconstitutional. In his appeal to the Idaho Supreme Court, he argued that his status as a state lawmaker should have entitled him through legislative privilege to more time to file his appeal after a 91-day appeal period had expired, because a legislative session followed the appeal period. The court disagreed, writing, “In this instance, Hart is just a taxpayer, with no greater privilege than his constituents.”
Hart lost his re-election bid in the May GOP primary, so he leaves office at the end of his current House term, his fourth. Bill von Tagen, deputy attorney general for the state Tax Commission, said Hart owes the state both for the attorney fees and the underlying tax liability, and the state will be “seeking to collect it if we can.” He added, “There's a lot of people in line ahead of us, unfortunately.”
Here's a news item from the Associated Press: BOISE, Idaho (AP) ― Lenders led by Credit Suisse Group could quickly ask for a sheriff's sale of Tamarack Resort assets now that an Idaho judge has refused to block their foreclosure case from advancing. The Swiss bank, whose lender group is owed some $300 million, declined to comment on Monday. But a Tamarack Municipal Association lawyer says a sheriff's sale could be concluded in about 60 days. That wouldn't completely unravel Tamarack's tangled finances. Additional creditors with millions in separate claims to resort assets still need the Idaho Supreme Court's permission before a district court judge can process them. Meanwhile, one Tamarack ski lift has been removed and homeowners booked a $300,000 loss last ski season. Tamarack Municipal Association director Tim Flaherty says his group still plans another ski season, starting this December. Click below for a full report from AP reporter John Miller.
Federal authorities are gearing back up their foreclosure lawsuit against tax-protesting Idaho Rep. Phil Hart, now that Hart's voluntarily dismissed his bankruptcy filing - which had placed an automatic stay on the foreclosure case. U.S. District Judge Edward Lodge has lifted the stay in the case that goes after Hart's log home in Athol, but at Hart's request, agreed to a delay until mid-November for the first discovery deadlines in the case, due to the unexpected illness of Hart's Kentucky attorney. U.S. Justice Department lawyers had asked for a deadline a month earlier.
In legal documents filed in federal court in Boise, Hart's lawyers wrote, “Hart has no objection to the lifting of the stay,” as long as the deadlines are pushed back. The lawyer's malady is described variously in the filing as “a sever staph infection” and as a “staff infection.” Hart filed his bankruptcy case in May, just 48 hours before he was scheduled to be deposed in the home-foreclosure case, which seeks to take his house to settle more than $500,000 in back federal income taxes, penalties and interest. You can read my full story here at spokesman.com.
Federal prosecutors are calling for Idaho Rep. Phil Hart's proposed bankruptcy plan to be dismissed, saying it's improper, it wouldn't appropriately satisfy his half-million-dollar federal income tax debt, and it relies on an income source that will disappear at the end of this year: His legislative salary. Hart, a tax protester and fourth-term state lawmaker, was defeated in the May GOP primary, so his legislative salary will end in December.
“Hart's plan is not feasible,” wrote U.S. Department of Justice attorney Adam Strait in legal arguments filed in federal Bankruptcy Court. Hart had proposed paying $200 a month for five years - a total of $12,000 - to get his entire debt of more than $600,000 discharged. Most of that debt is to the IRS; it also includes more than $50,000 in back state income taxes, penalties and interest, and $22,000 in credit card debt. The plan, Strait wrote, “fails to make adequate provision for paying the United States' priority income tax debts.”
Prosecutors also noted Hart's refusal to answer numerous questions about his assets during a bankruptcy proceeding last month, from the home where he lives to the car he drives - neither of which he acknowledges owning. You can read my full story here at spokesman.com.
State Rep. Phil Hart, R-Athol, refused to answer numerous questions about his finances in a meeting Friday with creditors in his bankruptcy case, a move attorneys called unprecedented and likely to imperil his case in court. An attorney with the U.S. Department of Justice and another representing the Idaho State Tax Commission grilled Hart about his business interests, income, assets and debts during a meeting conducted by the trustee in Hart’s Chapter 13 bankruptcy filing; Hart was questioned under oath in the session at the Coeur d'Alene federal courthouse.
Hart, a longtime tax protester who owes the IRS more than $550,000 and the state more than $50,000, said he thought many of the questions – including ones about corporations he helped set up and about the Athol house he lives in – were inappropriate or irrelevant to his bankruptcy filing. He repeatedly responded, “I decline to answer.”
Refusing to answer such questions is highly unusual in such a meeting, said Ford Elsaesser, a Sandpoint lawyer representing the trustee in the case. Elsaesser said he has conducted around 30,000 debtor-creditor meetings. “I’ve never had a debtor decline to answer the routine questions that were asked,” he said. “Refusals to answer are not likely to be looked upon favorably by the bankruptcy court.” You can read our full story here from S-R reporter Scott Maben at spokesman.com.
Outgoing Idaho state Rep. Phil Hart has filed a Chapter 13 bankruptcy plan in federal court that proposes that he pay $200 a month for five years - a total of $12,000 - to get his entire debt of more than $600,000 discharged. The vast majority of that debt is back federal income taxes, penalties and interest owed to the Internal Revenue Service; it also includes more than $50,000 in back state income taxes, penalties and interest owed to the Idaho State Tax Commission, along with $22,000 in credit card debt.
“Debtor will pay to the trustee for a term, not exceeding 60 months, the sum of $200 monthly,” the plan says. No other payments are proposed, though Hart does report that he anticipates income tax refunds over the next five years, and agrees to turn those over as well.
A Spokane bankruptcy attorney with expertise in Chapter 13 cases said it's “unlikely” that such a plan would be approved. “Generally, you don't get to discharge your tax debts,” said David Gardner, an attorney with Winston and Cashatt. Gardner said the plan likely will draw objections from both the bankruptcy trustee and the creditors - including the IRS - when it comes up for a hearing in August. “For that amount of cash, I would expect the IRS to be very involved,” he said. You can read my full story here at spokesman.com.
When the state of Idaho made out its paychecks for tax-protesting state Rep. Phil Hart twice a month for the past seven years, the money didn't go to Hart - it went straight to the IRS. That's what Hart reported in documents filed this week in his bankruptcy case, in which he lists more than $600,000 in debt, most of it to the IRS and the Idaho State Tax Commission. In his supporting documents seeking a Chapter 13 bankruptcy reorganization, Hart reported, “100 percent of Legislative pay garnished since 2005, $16,000 annually.”
Bruce Newcomb, who was Idaho's longest-serving House speaker, said he was troubled by the revelation. “Let's put it this way: I find it very odd,” he said. “A person has a right to protest their taxes. But this has been one of the more extreme endeavors I've ever seen in my life's experience.” Newcomb said he worries about the impact of the case on the institution of the House. “The general public is suspicious of politicians in general, and when something like this comes along, it only serves to confirm what some people think,” he said. You can read my full story here at spokesman.com.
Tax-protesting Idaho state Rep. Phil Hart is asking the Idaho Supreme Court to reconsider its dismissal of his state income tax appeal, saying the court should have given more consideration to his legislative privilege argument. Hart appealed an order to pay more than $53,000 in back state income taxes, penalties and interest, but filed his appeal months after the 91-day appeal period had expired. He argued that because an Idaho legislative session fell just after the appeal period, his status as a lawmaker should entitle him to more time to file.
The Idaho Supreme Court strongly disagreed, writing in its unanimous decision in April, “In this instance, Hart is just a taxpayer, with no greater privilege than his constituents.” Hart's bid for reconsideration argues that the framers of Idaho's Constitution “were intimately aware that their full attention, without any distraction of any nature, was required in order for them, and future legislators, to accomplish their work on behalf of the people.” You can read my full story here at spokesman.com.