Wednesday, January 14, 2009

Setting the Record Straight

Not being one unable to say they are mistaken, I would like to address this statement in my last post:

"Question: A petition under the Bankruptcy Act of 1898 or the Bankruptcy Reform Act of 1978 has previously been filed by or against the debtor, his/her spouse, an affiliate of the debtor, …yada, yada, yada …
Answer: NONE

She must have forgot those two other times, eh?"

I've been doing some studying. This particular question on the bankruptcy forms that Heidi filed falls under Local Rule 1015-2. Local rules apply to - well, local areas. They are rules specific to a particular jurisdiction.

This particular rule is asking about Related Cases - is this case related to any other bankruptcy proceedings, either current or within the three years prior to this current filing.

Heidi answered that question as none, which is correct. Her prior bankruptcies do not fit the criteria.

I apologize if any of you followed me down this bunny trail. Mea culpa, mea culpa, mea maxima culpa

Finer Points

Edited below - see note

I see that I need to clear a couple of things up and answer some questions here.

Her "here is the money I get to live on each month" income is not $11,666. That is her gross monthly income, before her business expenses. And the other is factored in to it all. After all her business expenses that she claims she has is taken out and all her living expenses that she claims she has are taken out, she STILL has over $1,000 a month. Call that go to town money. Blow money. Retirement fund, except she doesn't have one of those. Still far more than most people have at the end of the month.

Next thing, those taxes, I assume, are for 2007 AND 2008. I wonder if she has even gotten around to filing her taxes for 2007? Time will tell. At some point she will be required to produce her returns.

That $4,500+ in other expenses are broken out below that question - all those various business expenses, including bunches to Clexus. Wasn't the $400,000 she sent them just before the lawsuit was filed enough?

Didn't she claim repeatedly on her website for sure and in her depo as I recall that she had paid all those expenses in advance for like 2-3 years? Maybe it was in private emails and such. To Tippy maybe? Jeannie, if you're reading, send me a note and let me know, would you? Thanks.

Here is some more from my notes written during my first read through of the docs:

More stuff ….

This is just some of my notes that I’ve jotted down during the first reading.

She filed as an individual
Chap 11
Debts are mostly business debts
Largest Debt: State of CA Franchise Tax Board: $154,832
Student Loans
Dental Bill – wow – massive work - $9,200
Small credit cards
Large unsecured loan, with $4000 worth of collateral … total $26,724 – 22,724 unsecured (Edited to add: They have apparently reversed the numbers on here, as it has been documented that she put $4,000 down and the rest is on a note. In that case, the $22,724 would be secured. Maybe that's how she is going to defend against any "errors" in this paperwork - her lawyer is unfamiliar with matters of bankruptcy law)

Now is when it gets interesting …

Question: A petition under the Bankruptcy Act of 1898 or the Bankruptcy Reform Act of 1978 has previously been filed by or against the debtor, his/her spouse, an affiliate of the debtor, …yada, yada, yada …
Answer: NONE

She must have forgot those two other times, eh?

She signed that specific piece of paper declaring under penalty of perjury that it was true and correct. Oops!

She claims her household property has a value of only $1,500. Good thing she never bought Brandon a bed. That figure would have been MUCH higher then. I suppose it is possible if she has really old and beat up stuff. I’d think that flat screen television that hangs on the wall of her office would be worth more than that, but what do I know?

Personal wearing apparel is $200.00. She does say in the documents that she hasn’t had a fire, flood or other major event like that. I guess stretch pants and spandex are really cheap in California.

No money. Serious. $100 cash. $200 PayPal. $4 in another bank. She has definitely fallen on hard times here.

Here it says Halcyon is a joint venture or partnership – non-viable – value $1…

Of course there is the $52,698.01 in that trust account that is frozen and attached.

Doesn’t know the value of her Kimkins customer list … let me help you with that one, Heidi. You’ve burnt most of those folks and they are likely not candidates to join yet another diet scam, so I’d put that one at zero. I’m sure some other scammer would be willing to pay you a bit more than that, though, for that list …

A 2006 Toyota Corolla worth $4,000 – is that what the collateral is on the above note?

We need to check property values in her neighborhood – have they really declined 50% plus?

That’s it for now. The next section starts dealing with the creditors and I need to reread that slowly to make sure I get it right.

It's That Pesky Lawsuit, I Tell You!

Some details from Heidi's bankruptcy filing. I see what sticks out to me, but what sticks out to you?

Heidi claims $11,666 a MONTH in income from KK, and $8915 a month in operating expenses (sorry, have to wipe off my computer screen), minus $1748 in living expenses, leaving her $1003 a month. Now, this is AFTER her taxes and insurance on her house, her food, her $25 a month clothing allowance, her utilities, everything. I think most folks would WISH for that sort of monthly excess, don’t you?

And she swears, once again, that this is accurate information. We’ll see.

Now, this is the fun stuff. Her business statements.

Monthly gross income: $11,666
Office supplies: 167.00
Legal, Accounting and other Professional Fees: $4,166 - Cottle made his money for the year, I see. That might include her CPA and bookkeeper (or whatever that other guy did) from January until September.

$4,582 in other? I can’t wait to see what that is, can you?

Here it is!
Web Hosting: $583.00
Advertising: $667.00
Clexus: $833.00
Tech Support Services: $750.00
Forum Support Services: $416.00
Refunds: $167.00
Google Adwords: $1,166.00

Someone asked specifically about her California taxes ... according to Becky's blog, in Part One of her deposition she said she sent them $100,000. She either underestimated it by $$154,832, or she lied about sending the $100,000, or she is lying on her bankruptcy filing. I wonder which one it will turn out to be ...

I would like to invite any experts in bankruptcy to comment on this matter.

There is much more in these documents. Stay tuned.