UltraTrust Irrevocable Trust Asset Protection

February 2017

Asset Protection, Estate Planning

Estate Street Partners Protect Assets from Lawsuits, Divorce, Medicaid Spend Down

Estate Street Partners offers advanced financial advice to ensure maximum asset protection from lawsuits, divorce and Medicaid spend down   [set_up_personalized_medicaid_trust]   Hello, my name is Rocco Beatrice. I am the Managing Director for Estate Street Partners. We provide financial solutions to your problems of wealth and help protect your assets. We coordinate with your financial goals. We bring to the table the different disciplines, the accountants, the lawyers, the appraisers, the tax guys all for the purpose of protecting your assets and wealth against potential frivolous lawsuits, divorce, the Medicaid spend down, and to minimize your taxes on your income streams, to defer your capital gains taxes, to eliminate the probate process, and to eliminate the Estate tax. And finally, to facilitate tax efficient transfers of your assets and wealth to whomever you’d like to your heirs, children or beneficiaries (in the second generation) and to enable a top, reliable asset protection plan.     Continue to read part 2 of 11 the Ultra Trust® benefits as one of the best irrevocable trust plans for protecting your assets here: What is the Ultra Trust®?   Part 2 – What is the Ultra Trust®? Part 3 – What is a Trust? Part 4 – Asset Protection Plan Part 5 – Asset Protection Eligible Assets Part 6 – Irrevocable Trust Tax Benefits Part 7 – What is Probate? Part 8 – What is Estate Tax? Part 9 – Medicaid Spend Down Rules Part 10 – What is the Ultra Trust®? Part 11 – Irrevocable Trust Benefits Rocco Beatrice, CPA, MST, MBA, Managing Director, Estate Street Partners, LLC. > Mr. Beatrice is an asset protection award winning trust and estate planning expert.   To learn more about irrevocable trusts and senior elder care visit: Medicare: elder care Asset Protection from Medicaid Hide My Assets Medicare Protect Assets Nursing Home Costs Nursing Home Spend-down Program Medicaid Estate Planning < UltraTrust home

Uncategorized

Geston v. Olson. CASE NO. 1:11-CV-044. .857 F.Supp.2d 863 (2012)

GESTON v. OLSON CASE NO. 1:11-CV-044. 857 F.Supp.2d 863 (2012) John and Carolyn GESTON, Plaintiffs, v. Carol K. OLSON, in her official capacity as Executive Director of the North Dakota Department of Human Services, Defendant. United States District Court, D. North Dakota, Southwestern Division. April 24, 2012. Order Denying Motion for Stay Pending Appeal August 1, 2012.   Gregory C. Larson Jeanne M. Steiner, Attorney General’s Office, Bismarck, ND, for Defendant.   ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT   DANIEL L. HOVLAND, District Judge.   This is a Medicaid eligibility case. Before the Court are cross-motions for summary judgment filed on August 22, 2011, and October 3, 2011, respectively. See Docket Nos. 10 and 13. A number of responsive pleadings were filed by both parties thereafter. See Docket No’s. 16, 20, 27, 31, and 34. Oral argument was held in Bismarck, North Dakota, on April 12, 2012.   I. BACKGROUND.   Plaintiff John Geston is a 73-year-old resident of the Missouri Slope Lutheran Care Center (Missouri Slope), a skilled nursing home facility located in Bismarck, North Dakota. He is considered the “institutionalized spouse” for Medicaid purposes. John Geston resided at Edgewood Vista Memory Care facility (Edgewood Vista) prior to moving to Missouri Slope. The cost of his care is $219.25 per day. See Docket No. 21-1. Plaintiff Carolyn Geston is married to John Geston. She lives in her home in Bismarck and is considered the “community spouse” for Medicaid purposes.   The defendant, Carol K. Olson, is the Executive Director of the North Dakota Department of Human Services (DHS). North Dakota has elected to participate in the Medicaid program and has designated DHS to implement the program. N.D.C.C. § 50-24.1-01.1. As Executive Director of DHS, Olson is responsible for the administration of the Medicaid program for the State of North Dakota. The Burleigh County Social Services Board acts under the direction and supervision of theDHS to administer the Medicaid program in Burleigh County, North Dakota.   John Geston entered Missouri Slope on April 19, 2011. His application for Medicaid benefits was filed with the Burleigh County Social Service Board on April 29, 2011. See Docket No. 15-1. An asset assessment was included with the application. See Docket No. 15-6. Eligibility rules limit the amount of assets or resources1 a married couple may possess and still qualify for Medicaid. The asset limit for the “institutionalized spouse” is $3,000. The asset limit for the “community spouse” is $109,560. The asset assessment determined that the Geston’s total countable assets were $699,144.80. as of July 21, 2010, the date John Geston entered Edgewood Vista. See Docket No. 15-6. Subtracting the Geston’s combined asset allowance of $112,560 produced an excess asset calculation of $586,854.80.   Thus, it was necessary to spend down the assets if John Geston was to be eligible for Medicaid benefits. A new car and home were purchased along with prepaid burial services, all of which are considered to be exempt assets. Carolyn Geston also purchased an annuity. See Docket No. 11-1. The single premium annuity was purchased on November 24, 2010, from Employees Life Company (Mutual) for $400,000. The annuity had an effective date of December 6, 2010, and provides Carolyn Geston with monthly income of $2,734.65. The income of the “community spouse” is not taken into consideration in making a Medicaid eligibility determination for the “institutionalized spouse.” The annuity is irrevocable, unassignable, and nontransferable. The annuity has a benefit period of thirteen (13) years, which period is actuarially sound because it is less than Carolyn Geston’s life expectancy which is slightly more than thirteen years. The North Dakota Department of Human Services is named as the primary beneficiary in the first position for at least the total amount of Medicaid benefits paid on behalf of the Gestons.   The record reveals that John Geston applied for Medicaid benefits on April 29, 2011. See Docket No. 21-1. The Medicaid application was denied on June 8, 2011. See Docket No. 11-2. The basis for denial was that the Gestons’ countable assets, which were calculated at $454,691.33, exceeded the $112,560 maximum. The annuity was valued at $383,592.10 which represented the purchase price minus the annuity payments already made. Carolyn Geston’s annuity failed to meet the criteria set forth in N.D.C.C. § 50-24.1-02.8(7)(b) and the annuity was determined to be a countable asset. If the corpus of Carolyn Geston’s annuity was not treated as a countable asset, John Geston would be eligible for Medicaid benefits.   This action was commenced in federal court on May 13, 2011. See Docket No. 1. The action is brought pursuant to 42 U.S.C. § 1983 and the Supremacy Clause. U.S. Const. art. VI. para. 2. The Gestons seek injunctive and declaratory relief declaring N.D.C.C. § 50-24.1-02.8(7) invalid and preempted by federal law because it is more restrictive than federal law and impermissibly allows DHS to consider a community spouse’s income in determining an institutionalized spouse’s Medicaid eligibility. The Court has federal question jurisdiction as the primary issue is whether thefederal Medicaid Act has been violated. See 28 U.S.C. § 1331.   II. STANDARD OF REVIEW.   Summary judgment is appropriate when the evidence, viewed in a light most favorable to the non-moving party, indicates that no genuine issues of material fact exist and that the moving party is entitled to judgment as a matter of law. Davison v. City of Minneapolis, Minn., 490 F.3d 648, 654 (8th Cir.2007); seeFed.R.Civ.P. 56(c). Summary judgment is not appropriate if there are factual disputes that may affect the outcome of the case under the applicable substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). An issue of material fact is genuine if the evidence would allow a reasonable jury to return a verdict for the non-moving party. Id.   The Court must inquire whether the evidence presents a sufficient disagreement to require the submission of the case to a jury or whether the evidence

Lawsuit

HILLMAN v. MARETTA. April 22, 2013

The A/B Trust used to be one of the most popular estate planning products in a lawyer’s arsenal. Here’s how it previously worked: The first spouse dies and that spouse’s assets are placed into a trust using the first spouse’s estate tax exemption. The second spouse dies and their assets go to the children using the second spouse’s estate tax exemption. The assets in the first spouse’s trust then are passed to the children, thereby using both spouses estate tax exemption.   After years of this, the estate tax code was re-written combining the spouse’s exemptions making the A/B trust obsolete for this purpose. Some lawyers continue to use this method of estate planning even though it does some things poorly and others not at all. Although an A/B trust will pass the assets to the beneficiaries as good as other products, it has problems in the areas of privacy, asset protection, and Medicaid planning.   First, an A/B method of estate planning offers absolutely NO asset protection benefits while both spouses are alive and minimal protection after one spouse passes. In fact, if an attorney for a lawsuit checks a person who created an A/B trust for assets, they will see that they still own the assets in their name. While both spouses are alive, depending on how the lawyer drew up the estate plan, either each spouse has their assets in their own name with a will including a testamentary trust (a trust that doesn’t exist until death) or they each have their own revocable trust with half the marital assets.The A/B Trust used to be one of the most popular estate planning products in a lawyer’s arsenal. Here’s how it previously worked: The first spouse dies and that spouse’s assets are placed into a trust using the first spouse’s estate tax exemption. The second spouse dies and their assets go to the children using the second spouse’s estate tax exemption. The assets in the first spouse’s trust then are passed to the children, thereby using both spouses estate tax exemption.   Having assets in one’s own name or assets in a revocable trust doesn’t help for asset protection. In both scenarios, one has access to the assets, which means that one’s creditors can attach these assets as well as courts in the event of a lawsuit. After one spouse passes, the will creates an irrevocable trust or, alternatively, the revocable trust becomes irrevocable. The deceased spouse’s assets are now in an irrevocable trust and protected from creditors and the courts, but chances are that the prime years to get sued or go in debt happened a long time ago. Why not have an irrevocable trust in the first place?The A/B Trust used to be one of the most popular estate planning products in a lawyer’s arsenal. Here’s how it previously worked: The first spouse dies and that spouse’s assets are placed into a trust using the first spouse’s estate tax exemption. The second spouse dies and their assets go to the children using the second spouse’s estate tax exemption. The assets in the first spouse’s trust then are passed to the children, thereby using both spouses estate tax exemption.   An A/B trust also offers little protection from a Medicaid spend-down. Again, like above, while the spouses are alive, they will be subject to a Medicaid spend-down in order to qualify for long-term care benefits. The community spouse can keep a predetermined amount, but the rest will be spent down to a minimal amount ($1,500-2,000, depending on the state). Also, again, once one spouse dies, those assets are protected from the spend-down, but the other half of the assets are subject to the other spouses long-term care bills. An irrevocable trust would protect 100% of all of the assets.The A/B Trust used to be one of the most popular estate planning products in a lawyer’s arsenal. Here’s how it previously worked: The first spouse dies and that spouse’s assets are placed into a trust using the first spouse’s estate tax exemption. The second spouse dies and their assets go to the children using the second spouse’s estate tax exemption. The assets in the first spouse’s trust then are passed to the children, thereby using both spouses estate tax exemption.   An A/B trust doesn’t really do anything well. Instead of protecting half of the assets, a good irrevocable trust can protect all of the assets. The irrevocable trust takes all of the assets out of both spouse’s names so that they don’t own them anymore. If they don’t have title, the assets aren’t counted by Medicaid, aren’t included in the calculation for the estate tax, and cannot be found in a public record as being owned by you, thus they can’t be taken by creditors in the event of a lawsuit. In fact, if an attorney for a prospective lawsuit checks a person who created an irrevocable trust to hold assets, they won’t see any assets in your name and the lawyer probably won’t be interested in taking the case against you on a contingency basis. The lawsuit is stopped before it starts. There is a downside of an irrevocable trust; the persons creating it don’t have ownership of the assets past what they put in the trust documents. So, for the scared, there is the A/B trust and for the protected, the Ultra Trust irrevocable trust.The A/B Trust used to be one of the most popular estate planning products in a lawyer’s arsenal. Here’s how it previously worked: The first spouse dies and that spouse’s assets are placed into a trust using the first spouse’s estate tax exemption. The second spouse dies and their assets go to the children using the second spouse’s estate tax exemption. The assets in the first spouse’s trust then are passed to the children, thereby using both spouses estate tax exemption.

Lawsuit

Federal Trade Commission (FTC) U.S. v. Ameridebt

The Federal Trade Commission (FTC) has sued AmeriDebt, Inc., DebtWorks, Inc., and Andris Pukke for misrepresentations and deceptive omissions under the Federal Trade Commission Act (FTC Act), 15 U.S.C. § 41-58. It has also sued AmeriDebt for violations of the disclosure requirements under the Gramm-Leach-Bliley Act, 15 U.S.C. § 6801(a) et seq. The FTC alleges that Defendants, operating in common as a non-profit credit counseling service, defrauded consumers with debt problems by offering to fashion debt repayment plans for them, then deducting for their own benefit payments the consumers made under the plans without disclosing those deductions to the consumers. The FTC has also sued Pamela Pukke as Relief Defendant to recover such proceeds of these transactions as have been received by her husband, Andris Pukke, and transferred to her.   The FTC has filed a motion pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), requesting that the Court enter a preliminary injunction appointing a receiver, freezing the assets of Andris Pukke and DebtWorks, Inc. (collectively “Defendants”), *561 561requiring an accounting from them, and directing that Andris Pukke repatriate assets he has transferred offshore. 1The Court held oral argument on the motion and took it under advisement. On April 20, 2005 the Court entered an Order granting the Motion. This Opinion sets forth the reasons for the Court’s decision.   II.   The background of this litigation is set forth in FTC. v. AmeriDebt, 343 F.Supp.2d 451 (D.Md.2004). In brief, the FTC alleges that Defendants (except for Pamela Pukke) operated as a common enterprise to deceive consumers into paying for high-cost debt management plans in violation of Section 5 of the FTC Act, 15 U.S.C. § 45(a). After extensive discovery, the FTC filed a Motion for Summary Judgment Against DebtWorks and Andris Pukke, requesting that they be found liable, and that they be permanently enjoined and ordered to make restitution of some $172 million to injured consumers. That motion is currently pending. Meanwhile, the FTC alleges that since 2002, when Defendants became aware of the investigation that led to this lawsuit, Andris Pukke in particular has been actively dissipating Defendants’ assets by making transfers to close friends and relatives, to trusts (both domestic and offshore), and by living a lavish lifestyle. 2 For example, since 2003 Pukke and DebtWorks have transferred over $2.8 million to individuals who never worked for DebtWorks, including Pukke’s father in Latvia, his girlfriend Angela Chittenden, and his wife Pamela, as well as at least $1.6 million to a company controlled by Pukke, Infinity Resources Group. In addition, less than two months after the FTC served AmeriDebt and DebtWorks with Civil Investigative Demands in May and August 2002, Pukke attempted to establish domestic and offshore trusts which the FTC asserts were part of an effort to put his assets out of reach of the FTC and other creditors. 3 Pukke, however, appears to retain substantial control over three primary trusts: The Pukke 2002 Family Irrevocable Trust (located in Delaware with estimated assets *562 562of over $8.8 million), The P Family Trust (established under the laws of the Caribbean island of Nevis with estimated assets of $9 million), and The P II Family Trust (established under the laws of the Cook Islands with estimated assets of $1.3 million). Lastly, the FTC catalogs numerous expenditures Pukke has made out of DebtWorks’ funds to maintain personal residences, yachts and vacations unrelated to DebtWorks’ business. The FTC asserts that if this behavior is allowed to continue, there is a substantial risk that it will not be able to satisfy any final order granting equitable monetary relief that may be entered in this case.   III.   Defendants oppose the Motion for Preliminary Injunction on the grounds that: (a) the Court lacks jurisdiction to grant the requested relief; (b) the FTC has failed to meet its burden of demonstrating a likelihood of success on the merits; (c) the FTC has failed to show that the balance of equities favors the entry of a preliminary injunction; and (d) any order granting the requested relief would violate the Anti-Injunction Act, 28 U.S.C. § 2283, and improperly interfere with the priority of federal tax liens. 4   A. Jurisdiction   Pursuant to Section 13(b) of the FTC Act, “in proper cases the Commission may seek, and after proper proof, the court may issue a permanent injunction.” 15 U.S.C. § 53(b). The authority to grant such relief includes the power to grant any ancillary relief necessary to accomplish complete justice, including ordering equitable relief for consumer redress through the repayment of money, restitution, rescission, or disgorgement of unjust enrichment. FTC v. Febre, 128 F.3d 530, 534 (7th Cir.1997). To insure that any final relief is complete and meaningful, the court may also order any necessary temporary or preliminary relief, such as an asset freeze. FTC v. Gem Merch. Corp., 87 F.3d 466, 469 (11th Cir.1996). Exercise of this broad equitable authority, which is vested in the court’s sound discretion, is particularly appropriate where the public interest is at stake. Porter v. Warner Holding Co., 328 U.S. 395, 398, 66 S.Ct. 1086, 90 L.Ed. 1332 (1946) (citing Hecht Co. v. Bowles, 321 U.S. 321, 329, 64 S.Ct. 587, 88 L.Ed. 754(1944)).   Defendants contend that the Court’s jurisdiction to order the relief requested by the FTC is limited to “proper cases,” which they contend are only those in which the FTC seeks “to halt a straightforward violation of section 5 that require[s] no application of the FTC’s expertise to a novel regulatory issue,” citing FTC v. World Travel Vacation Brokers, Inc., 861 F.2d 1020, 1028 (7th Cir.1988). Defendants argue that since the FTC admitted in a press conference in November 2003 that this case involves “novel and difficult legal issues” rather than those involved in a routine fraud case, jurisdiction does not lie.   The FTC responds that a “proper case” under Section 13(b) is simply one that involves a violation “of any provision of law enforced by the Commission.”Gem Merch.,

Lawsuit

U.S. v. Rogan, 2012 WL 1107836 (N.D.Ill., Slip Copy, March 29, 2012)

The Federal Trade Commission (FTC) has sued AmeriDebt, Inc., DebtWorks, Inc., and Andris Pukke for misrepresentations and deceptive omissions under the Federal Trade Commission Act (FTC Act), 15 U.S.C. §§ 41-58. It has also sued AmeriDebt for violations of the disclosure requirements under the Gramm-Leach-Bliley Act, 15 U.S.C. § 6801(a) et seq. The FTC alleges that Defendants, operating in common as a non-profit credit counseling service, defrauded consumers with debt problems by offering to fashion debt repayment plans for them, then deducting for their own benefit payments the consumers made under the plans without disclosing those deductions to the consumers. The FTC has also sued Pamela Pukke as Relief Defendant to recover such proceeds of these transactions as have been received by her husband, Andris Pukke, and transferred to her.   The FTC has filed a motion pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), requesting that the Court enter a preliminary injunction appointing a receiver, freezing the assets of Andris Pukke and DebtWorks, Inc. (collectively “Defendants”), *561 561requiring an accounting from them, and directing that Andris Pukke repatriate assets he has transferred offshore. 1The Court held oral argument on the motion and took it under advisement. On April 20, 2005 the Court entered an Order granting the Motion. This Opinion sets forth the reasons for the Court’s decision.   II.   The background of this litigation is set forth in FTC. v. AmeriDebt, 343 F.Supp.2d 451 (D.Md.2004). In brief, the FTC alleges that Defendants (except for Pamela Pukke) operated as a common enterprise to deceive consumers into paying for high-cost debt management plans in violation of Section 5 of the FTC Act, 15 U.S.C. § 45(a). After extensive discovery, the FTC filed a Motion for Summary Judgment Against DebtWorks and Andris Pukke, requesting that they be found liable, and that they be permanently enjoined and ordered to make restitution of some $172 million to injured consumers. That motion is currently pending. Meanwhile, the FTC alleges that since 2002, when Defendants became aware of the investigation that led to this lawsuit, Andris Pukke in particular has been actively dissipating Defendants’ assets by making transfers to close friends and relatives, to trusts (both domestic and offshore), and by living a lavish lifestyle. 2 For example, since 2003 Pukke and DebtWorks have transferred over $2.8 million to individuals who never worked for DebtWorks, including Pukke’s father in Latvia, his girlfriend Angela Chittenden, and his wife Pamela, as well as at least $1.6 million to a company controlled by Pukke, Infinity Resources Group. In addition, less than two months after the FTC served AmeriDebt and DebtWorks with Civil Investigative Demands in May and August 2002, Pukke attempted to establish domestic and offshore trusts which the FTC asserts were part of an effort to put his assets out of reach of the FTC and other creditors. 3 Pukke, however, appears to retain substantial control over three primary trusts: The Pukke 2002 Family Irrevocable Trust (located in Delaware with estimated assets *562 562of over $8.8 million), The P Family Trust (established under the laws of the Caribbean island of Nevis with estimated assets of $9 million), and The P II Family Trust (established under the laws of the Cook Islands with estimated assets of $1.3 million). Lastly, the FTC catalogs numerous expenditures Pukke has made out of DebtWorks’ funds to maintain personal residences, yachts and vacations unrelated to DebtWorks’ business. The FTC asserts that if this behavior is allowed to continue, there is a substantial risk that it will not be able to satisfy any final order granting equitable monetary relief that may be entered in this case.     III.   Defendants oppose the Motion for Preliminary Injunction on the grounds that: (a) the Court lacks jurisdiction to grant the requested relief; (b) the FTC has failed to meet its burden of demonstrating a likelihood of success on the merits; (c) the FTC has failed to show that the balance of equities favors the entry of a preliminary injunction; and (d) any order granting the requested relief would violate the Anti-Injunction Act, 28 U.S.C. § 2283, and improperly interfere with the priority of federal tax liens. 4   A. Jurisdiction   Pursuant to Section 13(b) of the FTC Act, “in proper cases the Commission may seek, and after proper proof, the court may issue a permanent injunction.” 15 U.S.C. § 53(b). The authority to grant such relief includes the power to grant any ancillary relief necessary to accomplish complete justice, including ordering equitable relief for consumer redress through the repayment of money, restitution, rescission, or disgorgement of unjust enrichment. FTC v. Febre, 128 F.3d 530, 534 (7th Cir.1997). To insure that any final relief is complete and meaningful, the court may also order any necessary temporary or preliminary relief, such as an asset freeze. FTC v. Gem Merch. Corp., 87 F.3d 466, 469 (11th Cir.1996). Exercise of this broad equitable authority, which is vested in the court’s sound discretion, is particularly appropriate where the public interest is at stake. Porter v. Warner Holding Co., 328 U.S. 395, 398, 66 S.Ct. 1086, 90 L.Ed. 1332 (1946) (citing Hecht Co. v. Bowles, 321 U.S. 321, 329, 64 S.Ct. 587, 88 L.Ed. 754(1944)).   Defendants contend that the Court’s jurisdiction to order the relief requested by the FTC is limited to “proper cases,” which they contend are only those in which the FTC seeks “to halt a straightforward violation of section 5 that require[s] no application of the FTC’s expertise to a novel regulatory issue,” citing FTC v. World Travel Vacation Brokers, Inc., 861 F.2d 1020, 1028 (7th Cir.1988). Defendants argue that since the FTC admitted in a press conference in November 2003 that this case involves “novel and difficult legal issues” rather than those involved in a routine fraud case, jurisdiction does not lie.   The FTC responds that a “proper case” under Section 13(b) is simply one that involves a violation “of any provision of law enforced by the Commission.”Gem

Irrevocable Trust, Offshore

Domestic Irrevocable Trust vs. Offshore Asset Protection Trust

U.S. v. Rogan, 2012 WL 1107836 (N.D.Ill., Slip Copy, March 29, 2012). United States District Court, N.D. Illinois, Eastern Division. The UNITED STATES of America, Plaintiff, v. Peter ROGAN, Defendant. and 410 Montgomery, LLC; Jerry Whitlow, individually and as registered agent of 410 Montgomery, LLC; McCorkle Pedigo & Johnson, LLP; and Darby Bank, Garnishees. No. 02 C 3310. March 29, 2012.   MEMORANDUM OPINION AND ORDER JOHN W. DARRAH, District Judge.     *1 Before the Court is Kelley Drye & Warren LLP’s (“KDW”) Claim and Request for Payment from Escrowed Funds of 410 Montgomery, LLC.   BACKGROUND   On September 29, 2006, the Court entered judgment against Peter Rogan in favor of the United States in the amount of approximately $64.2 million. The judgment was the result of a massive healthcare fraud scheme orchestrated and run by Rogan.FN1 See United States v. Rogan, 459 F.Supp.2d 692 (N.D.Ill.2006); United States v. Rogan, 517 F.3d 449 (7th Cir.2008); see also United States v. Rogan, et. al., 639 F.3d 1106 (7th Cir.2011) ( Rogan ). Rogan has fled the country. To collect the judgment, the United States traced Rogan’s assets and discovered that he invested in 410 Montgomery, LLC (“410 Montgomery”), a firm that built housing in Georgia. Rogan, 639 F.3d at 1106.   FN1. Rogan went through elaborate extremes to conceal his ownership of entities that received the proceeds from his activities. Rogan’s fraud scheme was perpetrated through Edgewater Medical Center (“Edgewater”).   In 1989, an entity that Rogan formed and controlled, Edgewater Operating Company (“EOC”), purchased Edgewater. In 1992, Rogan and his wife, Judith, had set up three trusts in Florida for the benefit of their children (the “Domestic Trusts”). In 1994, EOC was sold to Northside Operating Company (“Northside”), which was created by its parent company, a California-based company called Permian, for the exclusive purpose of purchasing EOC. Rogan and other shareholders of EOC received $31.1 million from the sale of Edgewater. Rogan received approximately $17.4 million, and the remaining shareholders were the Domestic Trusts, which received approximately $4.1 million.   Although Rogan had sold Edgewater to Northside, Rogan retained control of the hospital after the sale through a series of transactions, and he then caused Edgewater to enter into management contracts with two entities that he also controlled, Braddock Management, L.P. (“Braddock”) and Bainbridge Management, Inc. (“Bainbridge”). Rogan’s ownership interest was concealed through an elaborate scheme of inter-locking financial entities owned by Rogan, Rogan’s children, and other entities owned by Rogan. When Rogan operated Edgewater through these entities, the Domestic Trusts received millions of dollars in distributions from the entities.   The United States obtained a writ of garnishment against Rogan’s membership interests in 410 Montgomery. The company sold its holdings, paid its secured creditors, liquidated, and placed the money in escrow. After this Court approved distributions for closing costs, the remaining funds came to about $4 million, which is now being held in court-ordered escrow by the Darby Bank (the “Darby Escrow”). The instant dispute arises out of litigation relating to this writ of garnishment.   As will be further discussed below, on July 15, 2010, the Court entered an Agreed Final Disposition Order, ordering the $4 million in the Darby Escrow, with the exception of $173,289.71, to be turned over to the receiver appointed by Judge Kennelly in Dexia Credit Local v. Rogan, et al., No. 02 C 8288 (N.D.Ill.) ( Dexia ). The remaining $173,289.71 was withheld pending adjudication of claims by Diane Whitlow and the Estate of Jerry Whitlow (“the Whitlows”). The Whitlows claimed that they owned a one-third interest in Taylor Row, LLC (“Taylor Row”) and that 410 Montgomery owes Taylor Row $475,000. Accordingly, the Whitlows argued they were entitled to a total of $173,289.71 from 410 Montgomery and that this amount should be paid to them from the Darby Escrow. On September 21, 2010, the United States opposed the Whitlows’ claim, arguing that the United States had priority over the Whitlows’ claims. This Court entered an order holding that because the United States was a judgment creditor and the Whitlows were unsecured creditors, the United States was entitled to the disputed amount.   This judgment was vacated and remanded by the Court of Appeals on May 12, 2011, in Rogan. The Court of Appeals noted:   First, the writ [of garnishment] covers the property ‘in which the debtor has a substantial nonexempt interest’ which is to say, Rogan’s membership units in 410 Montgomery LLC, not the real estate that 410 Montgomery developed. Investors in corporations and LLCs own tradable shares or units; they do not own the company’s assets. The separation of investment interests from operating assets is a fundamental premise of business law. Equity investors are residual claimants; they get only what is left after debts have been paid. Second, if we were nonetheless to treat 410 Montgomery’s assets as property that Rogan ‘co-owned’ with other investors (including the banks and Taylor Row), then the law of the state in which the property is located determines how far the writ of garnishment reaches. That’s Georgia law-and the parties agree that a writ under Georgia law would not vault equity investor Rogan (and hence would not promote the United States) over creditors’ interests.   *2 * * *   [T]he Whitlows are not claiming any of Rogan’s assets. As we have emphasized, what Rogan owned was a membership interest in 410 Montgomery LLC. The Whitlows don’t want any part of that equity interest; their claim is against the LLC’s own assets, in which creditors have entitlements senior to those of equity investors.   Rogan, 639 F.3d at 1107–1108.   The Court of Appeals noted specific issues to be resolved on remand:   Did 410 Montgomery LLC owe a debt to Taylor Row LLC? If so, how much? If it owed money to Taylor Row LLC, why are the Whitlows the right parties to receive that money?   * * *   Georgia does not appear to permit a suit of this

Lawsuit

Frank R. ZOKAITES, Appellant v. PITTSBURGH IRISH PUBS

ZOKAITES v. PITTSBURGH IRISH PUBS LLC Frank R. ZOKAITES, Appellant v. PITTSBURGH IRISH PUBS, LLC and Colm McWilliams, Appellees. Argued Sept. 24, 2008. — December 11, 2008   BEFORE: KLEIN, POPOVICH and FITZGERALD, JJ.* Jeffrey A. Hulton, Pittsburgh, for appellant.Kurt L. Sundberg, Erie, for appellees.   1 Appellant Frank R. Zokaites appeals the order denying his Motion to Compel Member Interest to Sheriff as Trustee for Sale to Satisfy Judgment (Motion to Compel), which judgment was entered against Appellees Pittsburgh Irish Pubs, LLC and Colm McWilliams.1 We affirm.     2 A review of the record establishes the following undisputed facts; to-wit:   On November 21, 2005 [Appellant] obtained a judgment against [Appellees].[n. 1] On April 2, 2007, [Appellant] filed a writ of execution and unsuccessfully attempted to collect his judgment. Thereafter, on September 4, 2007 [Appellee] Pittsburgh Irish Pubs, LLC filed for bankruptcy under Chapter 11.   In an attempt to collect the outstanding judgment from [Appellee] Colm McWilliams, on September 24, 2007 [Appellant] presented to th[e trial c]ourt a Motion to Compel [․]. The Motion sought to compel [Appellee] Colm McWilliams to transfer his 20.5% outstanding member interests in [Appellee] Pittsburgh Irish Pubs, LLC and Molly Brannigans, LLC to the Allegheny County Sheriff for levy and sale. On September 24, 2007, th[e trial c]ourt granted the Motion to Compel and ordered [Appellee] McWilliams to transfer his member interests in [Appellee] Pittsburgh Irish Pubs, LLC and Molly Brannigans, LLC to the Sheriff.[n. 2]]] The Order noted that no one for [Appellees] appeared to contest the motion.   On October 3, 2007, [Appellee] McWilliams filed a Motion for Reconsideration of th[e trial c]ourt’s September 24, 2007 Order. Subsequently, th[e trial c]ourt granted the Motion for Reconsideration and vacated the order of September 24, 2007. Oral argument on the underlying Motion to Compel was held for October 4, 2007. At argument, bankruptcy attorney for [Appellee] Pittsburgh Irish Pubs informed th[e trial c]ourt of his intention to file a motion for extension of the automatic stay to [Appellee] Colm McWilliams in Bankruptcy Court. Based upon the representation of bankruptcy counsel for [Appellee] Pittsburgh Irish Pubs that the Motion to Extend the Stay would be immediately filed with the Bankruptcy Court, th[e trial c]ourt deferred a decision on the merits regarding the underlying Motion to Compel pending a decision by the Bankruptcy Court regarding the stay.   On November 27, 2007, Jeffrey A. Deller, United States Bankruptcy Judge for the Western District of Pennsylvania, entered an order denying [Appellee] Pittsburgh Irish Pubs’ Motion to Extend the Automatic Stay to [Appellee] McWilliams. Th[e trial c]ourt then scheduled re-argument on the Motion to Compel for February 11, 2008.[n. 3]   After argument on February 11, 2008 and consideration of the briefs filed by the parties, th[e trial c]ourt entered an order denying the motions to compel member interest on February 12, 2008.[n. 4].   _     Trial court opinion, 4/28/08, at 1-4, n. 1-4. Thereafter, on February 13, 2008, the order denying Appellant’s Motion to Compel was entered upon the docket pursuant to Pa.R.A.P. 301(a) (Requisites for an Appealable Order-Entry upon docket below). On March 5, 2008, Appellant filed a notice of appeal, which was followed by a Pa.R.A.P. 1925(b) statement on March 18, 2008, raising the question: “Whether the [trial c]ourt erred in holding that Pennsylvania law does not permit the [trial] court to compel the transfer of the member interest of a member of a limited liability company to the Sheriff for sale to satisfy a judgment against the member of the limited liability company?” Appellant’s brief, at 2.   3 In the process of unraveling the rights and obligations of Appellees against those of their creditors, we are guided by the principles set forth in the Statutory Construction Act of 1972, 1 Pa.C.S.A. §§ 1501-1991. See Hoffa v. Bimes, 954 A.2d 1241, 1244 (Pa.Super.2008); McCance v. McCance, 908 A.2d 905, 908 (Pa.Super.2006). Further, inasmuch as the present case involves Appellee McWilliams’ interest in various limited liability companies, the provisions of Pennsylvania’s Limited Liability Company Law2 will be examined to resolve the matter at hand. See Goldberg v. Winogradow, 2006 WL 3041979, *2, 2006 Conn.Super. Lexis 3067, *5 (filed October 12, 2006) (In assessing plaintiffs’ claim “seeking to satisfy their judgment through an order charging the defendant’s L[imited] L[iability] C[ompany] interests, analysis of the plaintiffs’ claims must be made not only in the context of [Connecticut] General Statutes § 52-356b, but also based on the limitations and guidelines set forth in the act.”). Lastly, in uncovering the intent of the General Assembly in enacting Chapter 89 (Limited Liability Companies), we may look to the Committee Comments to Chapter 89, which are intended to form the legislative history and be citable as such pursuant to 1 Pa.C.S.A. § 1939. See 15 Pa.C.S.A. § 8901 (Committee Comment-1994).   4 15 Pa.C.S.A. § 8924(a) defines “interest” of a member in a limited liability company as the “personal estate of the member and may be transferred or assigned as provided in writing in the operating agreement.” At first glance, it would appear that a member has carte blanche to transfer or assign his “interest” in a limited liability company. But the subsection cautions, “Unless otherwise provided in writing in the operating agreement, if all of the other members of the company other than the member proposing to dispose of his interest do not approve of the proposed transfer or assignment by unanimous vote or written consent, which approval may be unreasonably withheld by any of the other members, the transferee of the interest of the member shall have no right to participate in the management of the business and affairs of the company or to become a member. The transferee shall only be entitled to receive the distributions and the return of contributions to which that member would otherwise be entitled.” 15 Pa.C.S.A. § 8924(a). In the Comment immediately following Section 8924, we are further advised:   Unlike the Prototype Limited Liability Company Act, Chapter

Lawsuit

re Ashley ALBRIGHT, Debtor. US Bankruptcy Court, D. Colorado.

291 B.R. 538 (Bkrtcy.D.Colo. 2003) In re Ashley ALBRIGHT, Debtor. No. 01-11367 ABC. United States Bankruptcy Court, D. Colorado. April 4, 2003   James H. Hahn, Greenwood Village, CO, for debtor. Sally Zeman, Denver, CO, Chapter 13 Trustee. Charles F. McVay, Denver, CO, for trustee.     OPINION AND ORDER ON MOTION TO ALLOW TRUSTEE TO TAKE ANY AND ALL NECESSARY ACTIONS TO LIQUIDATE PROPERTY OWNED BY WESTERN BLUE SKY LLC BRUCE A. CAMPBELL, Bankruptcy Judge.   THIS MATTER is before the Court on the (1) Motion to Allow Trustee to Take Any and All Necessary Actions to Liquidate Property Owned by Western Blue Sky LLC (“Motion to Liquidate”); (2) Motion to Appoint and Compensate Bob Karls as Real Estate Broker to the Trustee; and (3) Debtor’s Response to Trustee’s Motion to Retain Realtor and Liquidate LLC Property. Following a hearing on February 4, 2003, the parties agreed to submit the matter on briefs.   Ashley Albright, the debtor in this Chapter 7 case (“Debtor”), is the sole member and manager of a Colorado limited liability company named Western Blue Sky LLC. [1] The LLC owns certain real property located in Saguache County, Colorado (the “Real Property”). The LLC is not a debtor in bankruptcy.   The Chapter 7 Trustee contends that because the Debtor was the sole member and manager of the LLC at the time she filed bankruptcy, he now controls the LLC and he may cause the LLC to sell the Real Property and distribute the net sales proceeds to his bankruptcy estate. [2] The Debtor maintains that, at best, the Trustee is entitled to a charging order [3] and cannot assume management of the LLC or cause the LLC to sell the Real Property.   Pursuant to the Colorado limited liability company statute, the Debtor’s membership interest constitutes the personal property of the member. Upon the Debtor’s bankruptcy filing, she effectively transferred her membership interest to the estate. See 11 U.S.C. § 541(a). [4] Because there are no other members in the LLC, the entire membership interest passed to the bankruptcy estate, and the Trustee has become a “substituted member.” [5]   Section 7-80-702 of the Limited Liability Company Act requires the unanimous consent of “other members” in order to allow a transferee to participate in the management of the LLC. [6] Because there are no other members in the LLC, no written unanimous approval of the transfer was necessary. Consequently, the Debtor’s bankruptcy filing effectively assigned her entire membership interest in the LLC to the bankruptcy estate, and the Trustee obtained all her rights, including the right to control the management of the LLC. [7]     The Debtor argues that the Trustee acts merely for her creditors and is only entitled to a charging order against distributions made on account of her LLC member interest. [8] However, the charging order, as set forth in Section 703 of the Colorado Limited Liability Company Act, exists to protect other members of an LLC from having involuntarily to share governance responsibilities with someone they did not choose, or from having to accept a creditor of another member as a co-manager. A charging order protects the autonomy of the original members, and their ability to manage their own enterprise. In a single-member entity, there are no non-debtor members to protect. The charging order limitation serves no purpose in a single member limited liability company, because there are no other parties’ interests affected. [9]     The Colorado limited liability company statute provides that the members, including the sole member of a single member limited liability company, have the power to elect and change managers. [10] Because the Trustee became the sole member of Western Blue Sky LLC upon the Debtor’s bankruptcy filing, the Trustee now controls, directly or indirectly, all governance of that entity, including decisions regarding liquidation of the entity’s assets.     Because of the Court’s ruling herein, the Debtor may be entitled to a claim for her contributions made to preserve an asset of this bankruptcy estate based on post-petition mortgage payments on the Real Property. The parties were asked to brief the issue, but the Debtor has not formally asserted such a claim. Therefore, the Court does not rule on the issue at this time. Based on the foregoing, it is hereby:     ORDERED that the Trustee, as sole member, controls the Western Blue Sky LLC and may cause the LLC to sell its property and distribute net proceeds to his estate. Alternatively, the Trustee may elect to distribute the LLC’s property to the bankruptcy estate, and, in turn, liquidate that property himself; and it is FURTHER ORDERED that the Trustee’s Motion to appoint Bob Karls as real estate broker for the Trustee is hereby granted; and it is FURTHER ORDERED that the Debtor may file a claim, subject to objection in the regular course of this case, for her expenditures made to preserve an asset of this estate based on post-petition mortgage or other payments made by the Debtor.   ——— Notes:   [1] The Debtor initiated this case on February 9, 2001, under Chapter 13. It was converted to Chapter 7 by the Debtor on July 19, 2001.   [2] If the Trustee is entitled to control of the LLC, he could, presumably, as an alternative, dissolve the LLC, distribute its property to his bankruptcy estate, and then sell the property himself. The Trustee has not asserted any alter ego theory and has not attempted to pierce the veil of the LLC.   [3] The Debtor further asserts that because the LLC is “non-profit” pursuant to its operating agreement, no distribution of “profit” will ever be made and thus the value of this interest is zero. This argument erroneously assumes that a member of a Colorado limited liability company’s distribution rights are limited only to “profits.” They are not. Colo.Rev.Stat. § 7-80-102(10)(“Membership interest means a member’s share of the profits and losses of a limited liability company and the right

Lawsuit

GOLDIN AUCTIONS, LLC v. BRYANT

Plaintiff Goldin Auctions seeks a declaratory judgment that it has the legal right to sell at auction sports memorabilia of Kobe Bryant which was consigned to it by Pamela Bryant, Kobe Bryant’s mother.     Plaintiff: GOLDIN AUCTIONS, LLC Defendant: KOBE BRYANT Case Number: 1:2013cv02816 Filed: May 2, 2013 Court: New Jersey District Court Office: Camden Office County: Camden Presiding Judge: Renee Marie Bumb Referring Judge: Joel Schneider Nature of Suit: Contract – Other Contract Cause: 28:1332 Diversity-Injunctive & Declaratory Relief Jurisdiction: Diversity Jury Demanded By: None   Docket Report   Date Filed # Document Text May 2, 2013 5 ORDER TO SHOW CAUSE WITH TEMPORARY RESTRAINTS, Enjoining Deft. from interfering with the June, 2013 auction, etc.; Show Cause Hearing set for 5/14/2013 @11:00 AM before Judge Renee Marie Bumb. Show Cause Response due by 5/8/2013. Signed by Judge Renee Marie Bumb on 5/2/13. (js) May 2, 2013 4 INDIVIDUAL RULES AND PROCEDURES JUDGE RENE MARIE BUMB (bdk, ) May 2, 2013 3 Corporate Disclosure Statement by GOLDIN AUCTIONS, LLC. (bdk, ) May 2, 2013 2 SUMMONS ISSUED as to KOBE BRYANT Attached is the official court Summons, please fill out Defendant and Plaintiffs attorney information and serve. Issued By *Brian D. Kemner* (bdk, ) May 2, 2013 1 COMPLAINT against KOBE BRYANT ( Filing and Admin fee $ 400 receipt number CAM002955), filed by GOLDIN AUCTIONS, LLC. (Attachments: # 1 Civil Cover Sheet, # 2 Cover letter, # 3 Order to Show Cause, # 4 Memorandum of Law, # 5 Declaration) (bdk, ).   Access additional case information on PACER   Use the links below to access additional information about this case on the US Court’s PACER system. A subscription to PACER is required.   Access this case on the New Jersey District Court’s Electronic Court Filings (ECF) System  

Insurance

What is Captive Insurance?

A captive insurance company, often referred to as a “captive”, is a risk transfer entity and an alternative to the traditional commercial insurance and reinsurance markets. A captive is a privately held insurance company that is usually a subsidiary of the insured business. It issues policies, collects premiums and pays claims, just like a commercial insurer. The major difference, however, is that it does not offer its services to the public. An 831(b) captive benefits from the preferred tax treatment afforded to small insurance companies by the IRS. 831(b) captives can record up to $1.2 million a year in premiums without any federal income tax implications. Premiums are deducted from a business’ ordinary income and a captive’s profits can be distributed to shareholders at long term capital gain rates.   Captives were once considered too outside the mainstream of risk management practices. However, within the past decade or so, most major corporations have either utilized captives or actively considered the feasibility of captives. Captives are now truly considered a mainstream and cost effective risk management alternative. It is estimated that between 75-85% of S&P 500 companies use captive insurance for risk transfer purposes.   Businesses often find themselves with a need for comprehensive risk management. By establishing a captive insurance company, business owners can craft insurance coverage that addresses their particular needs. The ability to be creative and task specific is a tremendous advantage of captive insurance company ownership. Additionally, using the captive structure companies can create employee retention and executive compensation benefits.   Further, captives can provide significant estate planning benefits. In many scenarios the parties that own the captive also own the business that is insured. In some instances it makes sense for the children of the owners of the business to own the captive. The captive can also be owned by a trust structure, effectively removing the profits and assets of the captive from the estate of the business owner. This can only be accomplished if the captive meets the requirements of the Internal Revenue Code’s section 831(b).   Captives have also demonstrated the ability to provide important asset protection benefits. In particular, if the captive is formed offshore and chooses to make an IRC 953(d) election, thus treating the captive as a domestic corporation, the captive will be able to transfer assets to offshore banks or investment vehicles. There are requirements that disclosures are made about foreign bank accounts. The real advantage comes when dealing with creditors. Creditors would be obligated to pursue their claims in these foreign jurisdictions.   Another advantage is the anonymity that captive ownership provides. Information regarding the ownership of a captive is often protected by the jurisdictions that allow captives. Therefore, ownership information is not readily available to third parties.   Additional protection can be obtained by forming the captive as a Limited Liability Company. Captives can benefit from the LLC structure; this provides an added layer of protection for the owners, who are able to restrict their personal liability.   Our team of advisors has a unique blend of over 100 years of combined experience in the insurance and financial service industries. By combining our extensive experience and knowledge of financial services and insurance we are able to design and implement insurance solutions tailored to fit our client’s insurance needs. We offer comprehensive captive consulting services to wealthy individuals and business owners seeking innovative tax minimization and wealth preservation strategies.

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