Judge weighs stripping control of finances

Rudy Giuliani’s creditors tried to persuade a bankruptcy judge to appoint a trustee to take control of the former New York mayor’s finances on Monday.

After more than two hours of arguments, U.S. Bankruptcy Judge Sean Lane made no decision on the creditors’ request, but expressed concerns about several aspects of the case, including financial reporting issues and Giuliani’s struggle to maintain a accountant and active accountant.

“There are reasons to be very concerned here. I’m not going to beat a dead horse,” Lane said shortly before ending the hearing.

Giuliani filed Chapter 11 Bankruptcy in December after a surprise $148 million verdict against him in a defamation case brought by two Georgia election workers he baselessly accused of voter fraud in 2020. bankruptcy, Chapter 11 allowed the former House speaker turned Trump lawyer to remain in control of his assets.

Monday’s hearing marked the culmination of months of rising tensions between Giuliani and his creditors, who have accused Giuliani of obscuring his finances and claiming that his bankruptcy is nothing more than a delaying tactic.

“He is not a doddering 80-year-old man. He is a cunning and manipulative man. Reports from him are false, inconsistent and late. His deadlines are ignored,” Rachel Strickland, an attorney for the election workers, told Lane at Monday’s hearing.

Strickland noted that Giuliani’s accountant is sick while his accountant has resigned.

“These are big red flags that warrant adult supervision,” she said.

Rachel Biblo Block, an attorney representing the committee of unsecured creditors, said Giuliani’s “serious mismanagement” of his financial affairs requires the appointment of an administrator to take control. She also brought up Giuliani’s apparent failure to “control his spending,” pointing to $26,000 in credit card payments and more than 50 Amazon transactions since filing for bankruptcy.

Giuliani’s attorney, Gary Fischoff, acknowledged his client’s past shortcomings, including late reporting and improper credit card spending.

But Fischoff tried to reject the motion, insisting that the situation is improving. Credit cards have been canceled and an accounting professional recently expressed interest in coming on board, he noted.

“I understand that it took some time, but what is important is that the debtor has paid these expenses not with creditors’ money, but with his own money,” Fischoff said.

“How do I know that?” the judge responded, referring to creditors’ concerns about transparency in the finances of Giuliani’s companies.

Fischoff also argued that a full evidentiary hearing was necessary before approving the creditors’ contested motion, saying all the creditors had was a “good presentation.” Fischoff even raised the possibility of Giuliani himself testifying.

“I think maybe the debtor needed to testify,” Fischoff said.

Giuliani participated virtually in Monday’s hearing, while many of the lawyers appeared in person at the White Plains, NY, courthouse. Moments before finishing, Giuliani live-streamed his daily program online.

Even if Giuliani’s desire to maintain control of his finances survives his creditors’ takeover attempt, it may not be his only obstacle to moving forward.

Moments after arguments concluded on the issue, a lawyer for the Justice Department’s bankruptcy enforcement arm expressed concern about how Giuliani has yet to seek approval from his bankruptcy judge to hire attorneys who will actively represent him in his criminal case. in Georgia and in a civil lawsuit Giuliani filed against President Biden. .

“We’re actually close to filing a motion to dismiss or convert the case because all of these things that are going on here are extremely problematic,” said Andrea Schwartz, the attorney.

The cabinet took no position on the creditors’ request for an independent administrator, other than to raise some concerns about the wording of the proposal.

The former New York mayor’s finances have been exposed since his bankruptcy filing, exposing hundreds of thousands of dollars in unpaid taxes and credit card debt, in addition to millions of dollars he could owe in pending litigation.

In addition to the election workers case, Giuliani could have more than US$3.5 million if pending lawsuits against him are resolved, in addition to the “unknown” claims of litigants in several other lawsuits. This includes lawsuits arising from Giuliani’s 2020 voter fraud allegations against voting software companies Dominion Voting Systems and Smartmatic.

President Hunter Biden’s son, another creditor, in recent days agreed to drop his lawsuit against Giuliani after bankruptcy proceedings stalled his progress.

The next hearing on Giuliani’s bankruptcy is scheduled for July 10, when lawyers for the creditors are expected to file a motion to compel discovery that Giuliani has yet to deliver despite expiring deadlines. They also hope to seek sanctions against the former mayor.

“I’m not surprised to hear that,” Lane said.