July 3, 2019, Eastern Pennsylvania– Trustee Christine Shubert for the bankruptcy estate of Worley and Obetz, Inc., a total energy provider, continues to recoup millions of dollars allegedly drained from the company. According to the Trustee, former Worley & Obetz CEO and others created nearly $2B in fake revenue as part of the fraud.
According to the filing in the court, the bankruptcy trustee alleged that for more than five years, former CEO Jefferey Lyons and two others overstated the gross revenue of the company by nearly $2 billion to obtain millions of dollars in bank loans. Lyons then made numerous real estate investments on behalf of the company. In addition to Lyons, several members of the Obetz family were named as defendants, claiming they “unjustly reaped the benefits of the scheme…by using the ill-begotten loan proceeds for their own interests, including acquiring rental properties, commercial properties, vacation homes, a million dollar yacht, and an airplane.” The Lyons had also been charged with years-long misuse of company funds totaling over $1 million to cover the CEO’s personal credit card debt.
Trustee Christine Shubert, who was appointed to the role by US Bankruptcy Court when Worley & Obetz entered bankruptcy in June 2018, has been busy since last summer trying to recoup money for the company’s creditors. Last week, Shubert initiated a complaint against James and Joseph Haggerty of Towanda, Bradford County to recover sales commissions and advance commissions, that Worley & Obetz paid to the defendants, as the property of the debtors’ estates under 11 USC. § 542 and according to 11 USC. §§ 544, 548 and 550 and Sections 5104 and 5105 of Pennsylvania’s Uniform Voidable Transactions Act, 12 Pa. CSA §§ 5101 et seq.
The Trustee is also ogling 18 suppliers who might have gotten incorrectly paid in full, outside the bankruptcy process. Under this, Shubert has urged the US Bankruptcy Court for permission to hire Karalis PC of Philadelphia, a specialist in that niche of bankruptcy law, to find and recoup any payments that fell outside the bankruptcy code’s rules. If Karalis PC is hired and succeeds at recovering any of the payments, those dollars would go into the pool of funds to be paid to the Manheim energy company’s creditors. The critical factors for Karalis PC would be determining when the payments were made and why. Based on the determination, it will be clear whether the payments come under the radar of being preferential and fraudulent transfers as anticipated by the Trustee. Under the bankruptcy code, all those payments which were made as early as 90 days before Worley & Obetz filed for bankruptcy on June 6, 2018, are likely to be voided and recovered as so-called “preference payments. Further, the payments where the purpose is not clear and which are not provided for reasonably equivalent value or for fair consideration are called fraudulent payments.
According to the recent filings in US Bankruptcy Court earlier last week, the Lyonses have agreed to put their four-bedroom house at 2601 Old Orchard Road, which they bought in 2005, up for sale. Worley & Obetz, a Manheim-based energy company, provides energy products & services for home, business, or fleet.
Chief Judge Magdeline D. Coleman is presiding over the Debtors case. The Case no. is 18-13774-MDC in the US Bankruptcy Court for the Eastern District of Pennsylvania.