Bradley bankruptcy trustee continues pursuit of Lazarus fund
Colin Pope Austin Business Journal Staff
Published: November 12, 2003
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Ronald Ingalls, the bankruptcy trustee trying to hold developer Gary Bradley responsible for his debt, has renewed his argument that the millions of dollars worth of assets in the controversial Lazarus Trust should be available to creditors.
Included in the claims is that the trust gained nearly 900,000 percent in value in less than two years thanks to alleged illicit deals.
In an amended complaint filed Nov. 5, Ingalls alleges Brad Beutel -- Bradley's cousin and a Lazarus trustee -- ''participates in illegal self-dealing transactions which constitute a material breach of trust.''
The complaint claims Bradley is aware of those actions but hasn't taken steps to rectify the situation.
Eric Taube, an attorney at Austin law firm Hohmann Taube & Summers LLP defending the Lazarus Trust, couldn't be reached for comment. Taube has said Ingalls' allegations are unfounded and will be disproved during a trial.
A trial date hasn't yet been set, but Bradley and Beutel are scheduled for depositions later this month.
The recent allegations were brought forward by Ingalls' attorneys at Austin law firms Ikard & Golden PC and Hargadon & Wise PC, which have been investigating Bradley's finances for about a year.
The allegation of self-dealing is meant to bolster Ingalls' larger assertion: Bradley and his associates have used the Lazarus Trust to conceal assets from creditors.
Of the $77 million Bradley owes to his creditors, about $73.5 million is claimed by the Federal Deposit Insurance Corp., or FDIC. That money was used, in part, to finance construction of the Circle C Ranch subdivision in Southwest Austin during the 1980s.
In the latest complaint, Ingalls' lawyers claim the Lazarus Trust controls and owns more than a dozen business entities and several tracts of land around Austin. A previous complaint filed by Ingalls estimated the value of the Lazarus fund exceeds $30 million.
Ingalls' team of lawyers claim money has quietly been moved in and out of the Lazarus fund since it was created in May 2000. Ingalls' recent complaint cites more allegations that this has happened by claiming the Lazarus fund generated an 888,832 percent return on investment in the first 23 months.
''The magnitude of this return is impossible during this time period without others making undisclosed contributions to the trust estate of the Lazarus trust,'' the complaint states.
As before, Ingalls is asking a bankruptcy judge to determine whether the Lazarus fund can be used to pay off Bradley's debt. The complaint's ultimate goal is to get Beutel to hand over Lazarus and its assets to the court. In the meantime, Ingalls wants the court to keep a closer eye on the Lazarus trust and is requesting judicial supervision of its administration.
For now, Beutel is relying on a provision of the Lazarus fund stating that ''while in the hands of the trustees, neither the principal nor the income from any of the trusts created in this agreement shall be liable for the debts, contracts, or torts of any beneficiary.''
Ingalls has said recovering the assets of the Lazarus fund is the only way Bradley's debt will be repaid.
Colin Pope Austin Business Journal Staff
Published: November 12, 2003
------------------------------------------------------------
Ronald Ingalls, the bankruptcy trustee trying to hold developer Gary Bradley responsible for his debt, has renewed his argument that the millions of dollars worth of assets in the controversial Lazarus Trust should be available to creditors.
Included in the claims is that the trust gained nearly 900,000 percent in value in less than two years thanks to alleged illicit deals.
In an amended complaint filed Nov. 5, Ingalls alleges Brad Beutel -- Bradley's cousin and a Lazarus trustee -- ''participates in illegal self-dealing transactions which constitute a material breach of trust.''
The complaint claims Bradley is aware of those actions but hasn't taken steps to rectify the situation.
Eric Taube, an attorney at Austin law firm Hohmann Taube & Summers LLP defending the Lazarus Trust, couldn't be reached for comment. Taube has said Ingalls' allegations are unfounded and will be disproved during a trial.
A trial date hasn't yet been set, but Bradley and Beutel are scheduled for depositions later this month.
The recent allegations were brought forward by Ingalls' attorneys at Austin law firms Ikard & Golden PC and Hargadon & Wise PC, which have been investigating Bradley's finances for about a year.
The allegation of self-dealing is meant to bolster Ingalls' larger assertion: Bradley and his associates have used the Lazarus Trust to conceal assets from creditors.
Of the $77 million Bradley owes to his creditors, about $73.5 million is claimed by the Federal Deposit Insurance Corp., or FDIC. That money was used, in part, to finance construction of the Circle C Ranch subdivision in Southwest Austin during the 1980s.
In the latest complaint, Ingalls' lawyers claim the Lazarus Trust controls and owns more than a dozen business entities and several tracts of land around Austin. A previous complaint filed by Ingalls estimated the value of the Lazarus fund exceeds $30 million.
Ingalls' team of lawyers claim money has quietly been moved in and out of the Lazarus fund since it was created in May 2000. Ingalls' recent complaint cites more allegations that this has happened by claiming the Lazarus fund generated an 888,832 percent return on investment in the first 23 months.
''The magnitude of this return is impossible during this time period without others making undisclosed contributions to the trust estate of the Lazarus trust,'' the complaint states.
As before, Ingalls is asking a bankruptcy judge to determine whether the Lazarus fund can be used to pay off Bradley's debt. The complaint's ultimate goal is to get Beutel to hand over Lazarus and its assets to the court. In the meantime, Ingalls wants the court to keep a closer eye on the Lazarus trust and is requesting judicial supervision of its administration.
For now, Beutel is relying on a provision of the Lazarus fund stating that ''while in the hands of the trustees, neither the principal nor the income from any of the trusts created in this agreement shall be liable for the debts, contracts, or torts of any beneficiary.''
Ingalls has said recovering the assets of the Lazarus fund is the only way Bradley's debt will be repaid.
