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Bankruptcy Court Refuses To Reopen Case At State's Request

Posted By admin || 29-Mar-2011

Stock Fraud - Bankruptcy Court Refuses To Reopen Case At State's RequestThe bankruptcy case and eventual imprisonment of penny stock trader Robert E. Brennan is one which spans more than 15 years. The bankruptcy debtor was put in prison for nine years after hiding assets from the bankruptcy estate. And while the bankruptcy trustee scoured the globe trying to find the assets which belonged to the estate, one illegally hidden asset remained untouchable.

In 1994, with regulators bearing down, Brennan set up the Cardinal Trust in Gibraltar, helping him shield $7 million to $8 million in New York municipal bonds from potential creditors, according to court documents.

A bankruptcy trustee scoured the globe to seize Brennan's assets, but the Cardinal Trust proved to be troublesome. The trustee decided in 2005 to cede the rights to the asset to the state.

In trying to recover the asset, state investigators found that the trust was moved to Mauritius and then to Nevis, where it was administered by Michael Paton, a resident of the Bahamas, according to court documents.

While the bankruptcy trustee handed over to the state, the assets' rights, for the past 5 years, the state has been unable to get access to the cash and was hoping that the bankruptcy court would reopen the case and use its power to order the assets released back to the bankruptcy estate or to the state. However, the bankruptcy court has declined to reopen the case and has instead told the state that since it took the rights to the assets "as-is" they are responsible for tracking down the money, not the bankruptcy court.


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