Carolyn Dye, Chapter 7 Trustee v. Ronny Sussman
Published: May 10, 2001 | Result Date: Dec. 21, 2000 | Filing Date: Jan. 1, 1900 |Case number: 9802067 Verdict – $202,000
Judge
Attorneys
Plaintiff
Defendant
Facts
On June 14, 1996, Erwin Sussman, the debtor, filed for relief under Chapter 7 of the Bankruptcy Code. Plaintiff
Carolyn A. Dye was appointed as the Chapter 7 Trustee. The debtor was a director of the North American
Bank, Ltd., a bank in Israel. NA BankÆs failure in 1987 was one of the largest in the history of the state of
Israel and was highly publicized.
The debtorÆs bankruptcy was precipitated by two judgments entered against him and in favor of the state of
Israel in the approximate amount of $158 million. The debtor filed his bankruptcy petition shortly after the
Official Receiver of the state of Israel commenced efforts to enforce the judgments in the United States. At the
time the judgments were entered, the debtorÆs only remaining asset was $150,734 equity in his residence.
On Dec. 29, 1995, the debtorÆs son, Ronny Sussman applied for a loan of $150,734 from Bank Leumi. On Jan.
4, 1996, Leumi received a $150,000 irrevocable guarantee from its affiliate, Bank Leumi Switzerland, as
security for the Loan. Additionally, on Feb. 1, 1996, the debtor and his spouse provided additional security for
the Loan in the form of a personal guarantee. The personal guarantee was secured by a deed of trust on the
debtorÆs residence in Beverly Hills, Calif. Bank Leumi loaned Ronny $150,734.
Between Jan. 12, 1996 and March 21, 1996, Ronny wrote checks totaling $192,568 payable to his parents. On
March 21, 1996, the debtor sold his residence for $1.4 million and from the sale proceeds, paid the obligation
secured by the deed of trust to Bank Leumi. Other than an interest payment of $1,459, Ronny did not repay the
loan to Bank Leumi. The Trustee sued Ronny Sussman, alleging fraudulent transfers and for reimbursement.
The defendant contended that he gave reasonably equivalent value to the debtor in exchange for the guarantee
and deed of trust by his reconveyance of a properly recorded $700,000 trust deed that the defendant had held on
the debtorÆs residence; that the estate was not entitled to reimbursement because the debtorÆs payment to the
bank was voluntary and was made prior to the maturity date of the loan which was not in default. The
defendant also contended that the defendant was entitled to offset any claim for reimbursement by the
$192,568 in checks paid to or for the debtorÆs benefit. The statute of limitations had expired for bringing any
action to set aside the $700,000 trust deed.
Result
The trial was heard by Judge John L. Peterson without a jury. The judge found in favor of the Trustee on all theories, finding that the debtor had engaged in a fraudulent scheme to defraud his creditors. The court further determined that defendant Ronny Sussman had received fraudulent transfers and was indebted to the Trustee on a reimbursement theory. The judge ordered that judgment be entered against the defendant Ronny Sussman and in favor of the Trustee, Carolyn A. Dye in the sum of $150,849, plus prejudgment interest of 7 percent from March 21, 1996. The total judgment was approximately $202,000. As a result of the debtorÆs alleged actions, the Bankruptcy Court denied his discharge.
Other Information
The trial was heard by Chief Bankruptcy Judge for the District of Montana, John L. Peterson, without a jury. The judge found in favor of the Trustee on all theories, finding that the debtor had engaged in a fraudulent scheme to defraud his creditors. The court further determined that defendant Ronny Sussman had received fraudulent transfers and was indebted to the Trustee on a reimbursement theory. The judge ordered that judgment be entered against the defendant Ronny Sussman and in favor of the Trustee, Carolyn A. Dye in the sum of $150,849, plus prejudgment interest from March 21, 1996. The total judgment was approximately $202,000. The court found that Ronny SussmanÆs testimony regarding the $700,000 deed of trust was not credible. Furthermore, the court found that he did not carry his burden of proof showing that he gave the debtor reasonably equivalent value since Ronny failed to produce a promissory note evidencing the $700,000 loan to the debtor. In a related adversary, the Bankruptcy Court denied his discharge.
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