New York State Attorney General Eric T. Schneiderman is trying to achieve in federal bankruptcy court what he has been unable to achieve in two special proceedings in Westchester Supreme Court: make David DeSilva Sr. pay for stealing money from fuel oil customers.
In January, DeSilva filed for Chapter 7 liquidation in Bankruptcy Court in Poughkeepsie. Schneiderman recently filed an adversarial action accusing him of embezzlement and asking the court to block DeSilva from discharging debts from fuel oil scams.
DeSilva’s bankruptcy attorney, Gary R. Gjertsen, did not respond to a request for comment.Schneiderman prosecuted DeSilva, his son David DeSilva Jr., and their Nu Way Fuel & Service Corp. in 2013. The Peekskill firm sold home heating oil contracts that required customers to pay in advance for deliveries. But when customers called for fuel, they received less oil than ordered or none at all.
Nearly 100 customers claimed losses of more than $100,000 for undelivered oil and other services never received.
Schneiderman filed a special proceeding in Supreme Court and won a judgment requiring Nu Way and the DeSilvas to pay $692,879 in restitution, damages and penalties. They were banned from the home fuel oil delivery business unless they posted a $200,000 performance bond.
The DeSilvas, of Hopewell Junction, paid less than $50,000 of the judgment and never posted the performance bond. Even as they were under investigation in 2013, court records show, the DeSilvas and a partner were creating a new company, Champion Fuel & Service Corp. Schneiderman filed a new fraud case last year in Supreme Court, seeking $176,000 in damages and restitution.
Justice Charles D. Wood ruled in January that DeSilva Sr. is clearly the majority owner of Champion and ordered him to pay damages to victims of the scheme. DeSilva’s bankruptcy petition lists 288 creditors and a disputed debt of more than $1 million to Pennymac Loan Services that is secured by his house.
He does not put a number on his total debt, but he claims assets of $758,925, including $750,000 for his home at 249 Country Club Road.
He claims no income from working as a mechanic for Affordable Heating and Cooling of NY Inc., owned by his wife, Lisa.
Lisa DeSilva filed a separate, Chapter 7 bankruptcy petition in March, claiming assets of $769,972 and liabilities of $1.2 million.
She is employed as a bus monitor by the Wappingers Central School District, where she makes $1,300 a month. She shows another $2,500 a month in business income. Besides Affordable Heating, she said she is sole member since February of All Seasons Comfort Heating and Air Conditioning LLC in Danbury, Connecticut.
Schneiderman claims in the adversarial proceeding that DeSilva Sr. has committed fraud, embezzlement and larceny, therefore he should not be allowed to discharge state court judgments. Bankruptcy petitions automatically stop creditors from collecting debts.
Schneiderman is also asking the court to lift the stay of automatic enforcement of the state court actions.
Former heating oil customers also are appealing for justice.
“Mr. DeSilva willfully defrauded me,” Suzanne Lindsay of Granite Springs wrote in a letter to the court. Peekskill City Court awarded her a $2,121 judgment in 2013.
“There is no reason to dismiss what is rightfully owed me,” she says. “A discharge would be punishing the victim and rewarding the perpetrator.”