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October 13, 2019Cart

Business

by Westchester County Business Journal
by WCBJ

Trustee wants do-over in photocopier schemer’s bankruptcy

The U.S. Trustee’s Office is asking federal bankruptcy court to revoke the discharge from a Chapter 7 liquidation case by Eastchester photocopier salesman Joseph Holzberg.

Holzberg

Holzberg had testified that his petition was “true and correct,” but he had omitted a key creditor, Executex Inc. a Hawthorne company that had paid him $435,518 in commissions on $1 million in photocopy leases.

The omission was significant because customers had not actually ordered the machines and Holzberg, according to court records, had forged contracts, stashed the machines in a warehouse and hoped that customers didn’t notice they were making payments on equipment they didn’t possess.

“In failing to disclose significant liabilities and assets in his Chapter 7 case,” attorney Greg M. Zipes stated on behalf of U.S. Trustee William Harrington in a June 3 complaint filed in bankruptcy court in White Plains, “the defendant received his discharge through fraud.”

Holzberg worked for Executex as an independent contractor from 2012 to 2017. His scheme worked until USIS, a technology company in Pearl River, noticed $250,000 in charges for 20 photocopiers it never ordered.

In all, Executex discovered 60 bogus leases. It had to pay $1 million to buy back copiers from the companies that financed the phony transactions.

Holzberg had declared assets of $738,293 and liabilities of $923,310 in the 2017 Chapter 7 case. Tarrytown lawyer Mark S. Tulis was assigned as the trustee in the case, and he reviewed the documents and questioned Holzberg.

Tulis concluded, according to court records, “that there is no property available for distribution from the estate, over and above that exempted by law.”

The court granted Holzberg a discharge from his debts. Less than two months later, in August 2018, Holzberg filed a Chapter 13 bankruptcy petition to protect his home from foreclosure. He declared $732,080 in assets and $836,400 in liabilities.

Again, Executex was not listed as a creditor. This time, Executex sued Holzberg in bankruptcy court for fraud, embezzlement and larceny.

Holzberg did not respond to the charges, and in December Judge Robert D. Drain issued a default judgment in favor of Executex for nearly $1.7 million.

The Chapter 13 petition was dismissed for failure by Holzberg to make payments to creditors.

Now the trustee’s office wants to undo the Chapter 7 discharge.

Holzberg had not accounted for the $435,518 in commissions he had received, the trustee argues, thus possibly depriving creditors of assets.