Add First Americans
Insurance Service Inc. to the growing list of corporate debtors that
are joined in bankruptcy by officers or directors who then file for
personal bankruptcy protection.
The CEO and owner of Pappas Telecasting Inc.
filed for Chapter 7, two days after the TV station owner filed for Chapter 11
on May 10. The CEO of Sunwest Management Inc. also filed for Chapter
11 on Dec. 31, four months after units of its senior living facilities
went bankrupt.
Now add James Paul Masat and Stella Levea to that list.
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First
Americans, an insurance agency catering to Native Americans and their
businesses, filed for Chapter 11 on Feb. 12, after it became the subject of
an investigation by the Nebraska attorney general and other state
authorities for perpetuating an alleged Ponzi scheme. Since then, Masat
and Levea, two of the company's principals, have filed for personal
bankruptcy protection in the same court as the debtor, the U.S.
Bankruptcy Court for the District of Nebraska in Lincoln.
Grand Isle, Neb., resident Masat and his wife, Carolyn, filed for Chapter 11 on Feb. 20, a day after Levea, the debtor's president, treasurer and director and also Grand Isle resident, filed for bankruptcy protection
and listed assets of $500,000 to $1 million and liabilities of $1
million to $10 million in her petition. Masat, the vice president,
secretary and director of the bankrupt insurance agency, listed his and
his wife's assets and liabilities at $1 million to $10 million.
The
U.S. Trustee Patricia Fahey is now trying to convert those cases to
Chapter 7 liquidation or to appoint a Chapter 11 trustee. Chief Judge
Thomas L. Saladino in Lincoln is set to consider the request at a March
5 hearing.
Fahey is asking for the conversion or the trustee appointment because
both Masat and Levea were both officers and directors in control of
First Americans when it made misrepresentations to the Nebraska
Department of Insurance and broke an agreement with the Nebraska
Department of Banking and Finance.
"[First Americans'] officers
and directors demonstrated financial irresponsibility and
untruthfulness in their operation of [First Americans]," Fahey said in
court documents.
Indeed, it seems the folks who couldn't keep a corporate house in order failed to do so in their own personal ones as well. - Jamie Mason
