Legal

Does Crime Pay?

MayorBob.

Posted to Legal on Mon Sep 22, 2008 at 08:59:02 PM EST (promoted by DEMachina). RSS.

How would you feel if you were victimized by someone and then told you had to pay your victimizer?  Outraged, perplexed, and confused - all of these things describe Mark Poveromo.  The Connecticut pet store owner was cheated by an unscrupulous contractor and used the courts to prosecute the crook and make things right for himself.  However, because the contractor filed for bankruptcy, Poveromo now finds himself behind the eight ball.  Poveromo must pay back the contractor what he recovered and he must also pay the contractor's legal fees.

Poveromo's troubles began in 2006 when he hired Mark Koch of Illinois to do $80,000 worth of work on his store.  Koch never did any work, even though he had been given $39,500 up front.  Poveromo eventually had to file a complaint with police against Koch, which resulted in Koch being convicted.  Koch was ordered to repay Poveromo and he began by giving him $25,000 back and began making monthly payments to Poveromo.  Unbeknownst to Poveromo, or so he claims, Koch applied for bankruptcy protection two months before his conviction.

The federal judge in Missouri, where Koch filed for bankruptcy, ruled that Poveromo had "interfered with (Koch's) attempt to file for bankruptcy" and ordered the $25,000 be given back to Koch.  Oh, and he also ordered that Poveromo compensate Koch for whatever costs he put up trying to defend himself against the criminal charges.  Poveromo is perplexed, "I cannot understand how he can justify letting this man rob me and forcing me to pay him back through bankruptcy protection money that was stolen from me."  He says if he didn't comply with the judge's order, he would have had a lien slapped on his business.

Judge Charles Rendlen, the federal bankruptcy judge, said Poveromo's complaint to the police was "highly suspect."  According to Rendlen, "allowing a creditor to use the threat of incarceration on charges related to a prepetition debt undermines the most fundamental premise of bankruptcy law: the guarantee of equal treatment among creditors pursuant to the bankruptcy code."  He was also unconvinced about Poveromo's excuse (he didn't receive notices of the filing) for not showing up in court in St. Louis to contest the matter.  Rendlen also didn't want to hear about Poveromo's request to testify by phone against Koch: "Inconvenience experienced by the defendant's parents does not outweigh the need of the court to observe the defendant in person as he gives his testimony, to allow the court to best weigh his credibility."

Jeff Weisman, Poveromo's lawyer, called the ruling "an injustice."  Jack Williams, a bankruptcy expert, said the problem lay in bankruptcy law which will give debts owed priority over criminal convictions and suggested Congress could easily fix this if it wanted to.  Stuart Hirshfield, another bankruptcy expert, says the law is fair and clear and bankruptcy judges have the power to issue a stay of claims, even in light of criminal convictions against the debtor.  Public opinion in Connecticut is solidly behind Poveromo with him offering some additional insight into his case.

Tags: written by MayorBob, edited by DEMachina, crime, bankruptcy, contractors (all tags)

This story: 16 comments (3 from subqueue)
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4

get in line

wetkarma.

Tue Sep 23, 2008 at 11:29:08 AM EST

5.00 (astute)

So if I understand whats going on here -- the bankruptcy judge isn't giving the criminal back the businessman's money, he's stating that all creditors should have equal access to the assets of the person declaring bankruptcy.

The 25k Poveromo has to give back is money due to all of Koch's creditors - not just one.

 However there is not enough detail to say whether or not Poveromo's police claim was indeed 'highly suspect' -- in fact the idea that filing a police claim is a bad thing, especially against someone who was later convicted of fraud from that claim seems weak.

If someone owed me 25k, I'd at minimum be using the threat of incarceration.

Memory is a strange bell, jubilee and knell.

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Re: get in line

DEMachina.

Wed Sep 24, 2008 at 12:24:27 PM EST

5.00 (informative)

If someone owed me 25k, I'd at minimum be using the threat of incarceration.

Be careful here...in some places (I know it's true in my state), criminal prosecution to collect a debt is de facto malicious prosecution.

It's different in the case of fraud, obviously, but still something you have to be careful with.

Q: What do you think of western civilization? Gandhi: I think it would be a good idea.

3

Re: Does Crime Pay?

skeptic.

Tue Sep 23, 2008 at 09:33:27 AM EST

3.00

So, Poveromo is legally required to repay money to Koch which we know was originally stolen from Poveromo by Koch, due to the bizarre implications of bankruptcy law.  But then, American law is increasingly a joke.  Under some circumstances, theft is legal, and even murder is legal, as in the O.J. Simpson case, the murder of Harvey Milk, and others.  Poveromo could kill Koch as well as judge Rendlen, and then claim that the police are prejudiced against him for being Italian, or possibly that he ate a twinkie before he went berserk and therefore is not legally responsible for his actions, being under the influence of high blood sugar.  Any reasonable jury would acquit him.    

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Re: Does Crime Pay?

thefadd.

Tue Sep 23, 2008 at 12:51:13 PM EST

5.00 (astute)

There was no finding at law in the OJ Simpson criminal murder trial that killing someone is suddenly legal.

It is easy to buy small plaster models of what you think life is like.

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Re: Does Crime Pay?

skeptic.

Tue Sep 23, 2008 at 03:09:13 PM EST

none

You are taking my comment too literally.  Obviously, murder is not now legal.  However, it is also true that O.J. Simpson murdered two people and was found not guilty, primarily because of the suggestion that the accusation against Simpson was racially motivated.  I merely suggested that since other people also belong to identifiable races, they too could claim that they are being accused because of racism.

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Re: Does Crime Pay?

profwhat.

Tue Sep 23, 2008 at 02:59:53 PM EST

none

The "twinkie defense" story is largely untrue.  Dan White got a light sentence because he was mentally ill (and no, not from eating Twinkies).

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twinkies

skeptic.

Tue Sep 23, 2008 at 03:30:02 PM EST

5.00 (interesting)

Thanks, that is an informative link.  So, the twinkie defense is mythical.  Since Dan White received a relatively light sentence based upon his mental illness, I could still suggest that in this particular case, Poveromo might commit murder and plead mental illness.  The whole mental illness defense has always struck me as peculiar, insofar as anyone who commits murder would seem to be acting in an insane manner.  But apparently, not all forms of insanity are equally useful as legal defenses.

Other than my original suggestion that Poveromo could avenge himself through murder, there are other possibilities suggested by this situation.  He could also avail himself of the bankruptcy defense.  Although he is not currently bankrupt, he could bankrupt himself very rapidly if he wanted to, by giving away all his money and major assets to deserving friends and relatives.  Then he would be unable to make the payments that were ordered by the court, and could even apply for welfare and be paid for having no money.  If society is going to reward parasitism and crime, while penalizing honesty and economic productivity, perhaps it is the former that Poveromo should aspire to, rather than the latter.

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Re: Does Crime Pay?

arromdee.

Wed Sep 24, 2008 at 10:20:34 AM EST

none

Money is fungible.  There's no sauch thing as "money which we know was originally stolen from..."; money doesn't have little labels on it saying who it came from.  The money was essentially stolen from all the people he owes money to, and has to be distributed back to all of them, not to one.

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Re: Does Crime Pay?

skeptic.

Wed Sep 24, 2008 at 10:42:17 AM EST

none

That is certainly one way to look at it.  It's not stolen money, it's just money.  However, the fact remains that the only reason why Mr. Poveromo is deemed to owe money to Mr. Koch is that Koch, under court order, had repaid money that he had stolen from Poveromo.  Now another court effectively legitimizes that previous theft.  The money was stolen fair and square and Koch deserves to have it, to use it to pay off his other debts.  Koch's creditors must not be penalized for having loaned money to a criminal.  Poveromo must now give up his own money in order to pay off the debts of Koch, which Poveromo did not incur.  Rather than do that, it would be more appropriate for Poveromo to divest himself of all his assets (by giving them away to deserving friends and relatives) and then declare bankruptcy himself.  He too can benefit from bankruptcy.  He should give up his business and become unemployed.  Society needs fewer taxpayers and more welfare recipients, don't you agree?  When the entire country is bankrupt, then EVERYBODY can enjoy the same benefits now offered to Mr. Koch.  A glorious day is coming.

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Re: Does Crime Pay?

arromdee.

Wed Sep 24, 2008 at 02:44:10 PM EST

none

That is certainly one way to look at it.  It's not stolen money, it's just money.

You miss my point.  It is stolen money.  But it's not stolen from a particular person.  It's stolen from the group and has to be distributed to the group.

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Re: Does Crime Pay?

thefadd.

Wed Sep 24, 2008 at 04:37:22 PM EST

none

Yes but Poveromo is the only one who Koch has been found to have defrauded--he is the only one who can legally say he's been stolen from. Legitimately filing bankruptcy is not equal to theft by any stretch of the imagination. What the bankruptcy judge found was that the evidence from his view made it look like Poveromo was filing the fraud claim in order to an end run around the bankruptcy system. It's hard to say he's wrong based on the facts of the case. The $25k is being returned to creditors as part of a bankruptcy settlement. No one else is even claiming to have been stolen from.

It is easy to buy small plaster models of what you think life is like.

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Re: Does Crime Pay?

skeptic.

Thu Sep 25, 2008 at 09:51:38 AM EST

none

As thefadd points out, there is a difference between borrowed money and stolen money.  Not all creditors have an equal claim on the money of a given debtor.  And although it seems to you that the money was stolen from a group and not from a particular person, from the perspective of Mr. Poveromo, the money was indeed stolen from a particular person, that person being himself.

Poveromo owes Koch money for one reason only, which is that Koch defrauded him out of that money, which Koch is now legally entitled to have, despite having gained it through fraud, as a result of filing bankruptcy.  That is insane.

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the compulsory loan

skeptic.

Thu Sep 25, 2008 at 01:22:50 PM EST

none

We do seem to have a new legal entity here, the compulsory loan.  Mr. Poveromo didn't think he was lending money to Koch, he thought he was purchasing a renovation, but in fact he was lending money, which due to bankruptcy will not be repaid.  What other kinds of compulsory loans can Mr. Koch arrange?  Perhaps he should be mugging old ladies on the street and grabbing their wallets, which would be considered theft if not for his condition of bankruptcy, which means he is actually borrowing money from those generous old ladies.  Similarly, he could go into convenience stores and hold a gun on the sales clerk to encourage the issuance of a generous loan.  There are endless other opportunities for people who are deemed to be exempt from all normal laws, as a result of bankruptcy.  It doesn't matter what he does to obtain money as long as that money is applied toward his debts, apparently.  How convenient!

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Re: Does Crime Pay?

DEMachina.

Wed Sep 24, 2008 at 12:26:51 PM EST

none

Eh, that's not necessarily true; the law traces the source of money all the time, and not just in criminal cases.  Divorce proceedings and secured transactions (which is not the same thing as securities) do this pretty often.

Q: What do you think of western civilization? Gandhi: I think it would be a good idea.

1

Re: Does Crime Pay?

thefadd.

Mon Sep 22, 2008 at 09:05:14 PM EST

none

To ask if crime pays is to presuppose this case's conclusions. Rendlen says this wasn't a crime and he's the one whose opinion matters.

Jack Williams, a bankruptcy expert, said the problem lay in bankruptcy law which will give debts owed priority over criminal convictions and suggested Congress could easily fix this if it wanted to.

Why should they want to "fix" this. It's not even clear anything is the matter.

It is easy to buy small plaster models of what you think life is like.

2

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I disagree.

MayorBob.

Mon Sep 22, 2008 at 09:27:02 PM EST

4.00 (astute)

I don't  think the judge made a determination as to whether this was a crime or not.  He simply ruled that the timing of Poveromo's criminal complaint looked like it was a ruse to get around the bankruptcy law.  There was a crime because a court in Connecticut found Koch guilty of committing one.

Illegitimi non carborundum.

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