Twice in the past 10 months, Joseph Holzberg has filed for bankruptcy protection, and both times he failed to mention a significant debt.
Executex Inc., a Hawthorne photocopy distributor he represented, has accused Holzberg of pocketing $436,000 in commissions on phony photocopy leases.
Now the office machine company is suing him in White Plains federal bankruptcy court for $4.4 million.
His conduct, the complaint states, “was wantonly dishonest, evinced a high degree of moral turpitude and was undertaken with criminal indifference to his civil obligations.”
Holzberg’s bankruptcy attorney, Gary R. Gjertsen of White Plains, did not immediately respond to a request for comment on the allegations.
Executex’s customers typically prefer to lease expensive copiers, the complaint states. It buys the equipment from a manufacturer, such as Sharp, Canon or Konica, and then sells it to a financing company. The finance company then leases the copier to the customer.
Executex makes a profit from service agreements and later reselling the equipment.
Holzberg, 52, worked for Executex as an independent contractor from 2012 to 2017. He was paid $435,518 in commissions on about $1 million in sales.
But Holzberg found a way to bypass procedures, according to court documents. He forged contracts and delivery certificates. Most of the machines were never delivered; instead, he stashed them in self-storage facilities in Rockland County.
The scheme worked, as long as customers did not notice they were paying monthly leases for machines they did not possess. However, one customer did notice.
USIS, a technology installation company headquartered in Pearl River, discovered the discrepancies in early 2017. It had been charged more than $250,000 on bogus leases for 20 ghost machines.
Holzberg admitted sole responsibility for the scheme, according to a transcript of an interview with Laura G. Weiss, a USIS attorney, and he apologized profusely.
“I’m sorry for what I did to you guys,” he said. “I’m so sorry, you guys were so good to me for all those years. I’m sorry. I want to make this all right.”
Executex claims it has discovered 60 phony leases in all. It says it has paid $1 million to buy back copiers from the finance companies and to compensate USIS.
The Rockland District Attorney’s Office charged Holzberg in February 2017 with criminal possession of stolen property and 42 counts of forgery.
Several months later, as Holzberg’s house in Eastchester was about to be sold in a foreclosure sale, he filed an emergency Chapter 7 bankruptcy petition.
He listed $738,293 in assets and $923,310 in liabilities. He did not notify Executex of the bankruptcy case and did not list the company as a creditor.
The court discharged his debt in July.
Executex, unaware of the bankruptcy, had sued Holzberg in Westchester Supreme Court on June 27. Dominick Mastrocola, the company president, accused his former salesman of fraud and breach of duty and is demanding $3 million.
Holzberg has not answered the charges.
Weeks later, on Aug. 31, he filed a Chapter 13 bankruptcy petition, declaring $732,080 in assets and $836,400 in liabilities. Again, he did not acknowledge the Executex debt or the lawsuit.
He has submitted a plan to pay $140 a month for five years to a U.S. Trustee for a total of $8,400, plus $2,500 a month on his home mortgage and $336 a month for his car.
Executex wants more.
Its bankruptcy proceeding says Holzberg should not be allowed to discharge his debt because he committed fraud and embezzlement. The company is demanding $1,435,518 in compensation for its losses and $3 million in punitive damages.
Executex is represented by Leonard Benowich of White Plains.