Trustee tells of Coleman deceptions

Evidence reported `of plans to conceal assets'

`Suspicious transactions'

Co-founder of firm invokes the Fifth a dozen times

June 04, 1999|By Sean Somerville | Sean Somerville,SUN STAFF

The trustee assigned to liquidate Monica Coleman's holdings in her Chapter 7 bankruptcy case said she has "uncovered evidence of plans to conceal assets" from creditors and "numerous suspicious transactions, many involving large amounts of cash," according to documents filed yesterday in U.S. Bankruptcy Court.

Coleman, the co-founder of Coleman Craten LLC, the bankrupt downtown investment firm, invoked her Fifth Amendment protection against self-incrimination a dozen times under questioning by lawyers for Lori Simpson, the trustee handling the two bankruptcy cases.

In response to inquiries about the location of documents, loans from investors, the transfer of assets and the destruction of documents, Coleman said in a deposition: "I respectfully decline to answer the question on the grounds that the answer may tend to incriminate me."

Cornelius Carmody, Coleman's bankruptcy attorney, declined to discuss the deposition or the Simpson allegations.

"Those are allegations made by someone else." Asked whether the allegations are true, he said, "I have no knowledge of them."

According to a memorandum filed by Martin Fletcher, Simpson's attorney, the trustee's allegations and Coleman's deposition were part of a response to Coleman's motion for the dismissal of her personal Chapter 7 case.

Carmody said yesterday that he had not filed such a motion. "It wasn't filed," he said. "I have not moved to dismiss" the case.

But Fletcher said Carmody had served both Simpson and the U.S. trustee with the motion and a notice of its filing. Fletcher said he was proceeding with the assumption that it had been filed.

Coleman and her firm face more than 10 lawsuits seeking more than $4 million, including four filed by investors who say she defrauded them.

Coleman sought to liquidate her personal possessions under Chapter 7 on May 7. She estimated creditors to number between 16 and 49. She listed assets and debts ranging from $1 million to $10 million.

The company, which promised financial services in a lavishly renovated city-owned building, on May 11 sought to reorganize itself under Chapter 11 of the U.S. Bankruptcy Code.

Coleman Craten placed its assets at less than $50,000 and its claims at $5,968,000.

Two days later, U.S. Bankruptcy Judge Stephen E. Derby ordered liquidation of Coleman Craten under Chapter 7, saying he saw no prospects for reorganization.

In the memorandum filed in Coleman's personal case, Simpson said she "has located and is indexing about 50,000 pages of documents relevant to the financial affairs of Ms. Coleman and Coleman Craten."

Simpson did not specify her findings. She had said in earlier court proceedings that she had found an unidentified account register with entries totaling $500,000 and a deposit slip from early May for $400,000 in Coleman's Pasadena home.

Before Coleman's deposition with lawyers for Simpson, Carmody insisted that Coleman be questioned only in her personal bankruptcy case.

"Miss Coleman is facing possible criminal prosecution," Carmody said, according to a transcript.

After Simpson's lawyers agreed to Carmody's demand, Coleman repeatedly invoked the Fifth Amendment privilege. The questions included:

"Did you transfer any of your personal assets in the 30 days before the bankruptcy case was filed, your personal bankruptcy case?"

"Have you made any effort to transfer or sell any of your personal assets since May 1?"

"Have you destroyed any documents or evidence of your assets or liabilities within the last 30 days?"

To all of them, her response was the same:

"I respectfully decline to answer the question on the grounds that the answer may tend to incriminate me."

In her memorandum, Simpson said dismissing the case would be unfair to creditors.

She also said Coleman's assertion of her Fifth Amendment privilege on questions about hidden assets and destroyed evidence makes dismissal "fundamentally improper."

Pub Date: 6/04/99

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