October 2012 Plein Update

The Trustee in the Plein Matter is still in the process of finalizing liquidation of assets and processing of claims on behalf of the Bankruptcy Estate.  Part of the wrap up of the Estate was the filing of Adversary Proceedings (i.e., Complaints) against any parties that received checks from Plein within the two years immediately preceding the filing of his Bankruptcy Petitions on behalf of himself, his late wife, and Plein Enterprises.  The Trustee has previously determined that, at the time of filing, and for a period prior to his filing, Plein was not running a business, but rather a “Ponzi Scheme”, wherein he was taking money from new investors and paying some of those funds to investors and keeping the rest.  Therefore those individuals that cashed out their investments or otherwise received large cash distributions during the two years prior to the filing date may be required to reimburse the Bankruptcy Estate all or a portion of the amounts that they received.

We do not believe most of those that received cash outs from Plein in the two years prior to the filing were aware that he was operating a Ponzi Scheme, but certainly his family and other “insiders” had knowledge that he was essentially engaged in fraudulent activity.  Consequently, those funds should be paid back and we encouraged the Trustee’s Counsel to pursue claims against family members that were given checks during that period.  Unfortunately, the amounts the Trustee is likely to recover will not mean much in the final distribution to the investors.  There will be some ultimate distribution to our clients that did not receive anything from the Estate thus far, but it will inevitably be less than ten cents on a dollar.  This distribution will be made when all of the pending adversary proceedings are resolved and a final accounting can occur.  In the meantime our office continues to work with Trustee’s Counsel to deal with the remaining issues affecting our clients.  Over the past two years, there have been over 1,200 documents filed in this proceeding making it by far the most extensive case our office has handled. If any of our clients have any questions concerning the Plain matter, they should call our office and speak with one of our attorneys.

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