Case Study:Illinois Insurance Regulator Accuses Maumelle Landowner of Bankruptcy Fraud

Hi everyone out there!!

Today, we are going to discuss one case in Illinois. This case was published in Arkansas Business on April 2, 2001. In previous 2 cases, we can see that the perpetrators concealed their assets in order to defraud the creditors. They also received help from their family, friends and also attorney. Now, let's have a look at this case modus operandi...

Case: Capitol Development of Arkansas Inc

Capitol Development of Arkansas Inc was the largest owner of undeveloped land in Maumelle. Capitol Development's parent company is Capitol Communities Corp. of Torrence. In July 2000, Capitol Development filed for bankruptcy protection from US Bankruptcy Court. Later, in April 2001, the largest secured creditor in the case, Illinois Insurance Regulator has asked US Bankruptcy judge to dismiss the contentious bankruptcy filing by the company. The Illinois Insurance Director alleges that Capitol Development has:

1. failed to disclose all of its sales and is diverting money without notice to creditors or court approval;
2. diverting $309,742 from 2 land sales that should have been paid to Illinois Insurance Regulator just before filing for bankruptcy;
3. disbursed $457,000 a portion which was owed Illinois Insurance Regulator, and removed and spent $50,000 from trust account - all without notice to creditors or court approval.

In this case, Capitol Development owed Illinois Insurance Regulator amounted to $6.5 million and hasn't paid a penny in nearly three years on the insurance debt. This debt was secured by 701 acres land in Maumelle. When the insurance company tried to take possession of the property, it triggered Capitol Development filed for bankruptcy.

This case also involved other fraud committed by the parent company such as defaulted on $6.7 million in promissory notes and accusation on fake sale deal with StarNet. For further information on this, you can the full article at:

http://www.arkansasbusiness.com/article/62102/illinois-insurance-regulator-accuses-maumelle-landowner-of-bankruptcy-fraud

Reference:
George, W., (2001). Illinois Insurance Regulator Accuses Maumelle Landowner of Bankruptcy Fraud, Arkansas Business. 18 (14), 1.