Elbar Invs., Inc. v. Oluyemisi Omokafe Okedokun, Felix Amos, Eva S. Engelhart, Chapter 7 Tr., Todd A. Prins, United Sentry Mortg. Inv. Fund #1, LLC (In re Okedokun), Case No. 16-35021-H4-7

Decision Date28 September 2018
Docket NumberAdversary No. 17-03001,Case No. 16-35021-H4-7
CourtUnited States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Southern District of Texas

Chapter 7


[This Order Relates to Adv. Doc. No. 68]


The adversary proceeding pending before this Court was filed due to an unscrupulous attorney's theft of $2.4 million. This attorney has no moral compass whatsoever, and his perfidy has resulted in litigation among his former clients, friends, and various third parties who did not have the displeasure of knowing him. While he deservedly spends time behind bars—he has recently been sentenced to six years in prison for his illegal greed—the individuals and entities he deceived and cheated are left duking it out over who has a superior claim to the remaining proceeds that he stole but was prevented from spending.

This Court conducted a multi-day trial in this adversary proceeding, and then took the matter under advisement. The Court now issues this Memorandum Opinion explaining why it has decided to deny all relief requested by the plaintiff except for one of its claims against the dishonest attorney. Set forth below are this Court's Findings of Fact and Conclusions of Law, which this Court makes pursuant to Federal Bankruptcy Rule 7052. To the extent that any finding of fact is construed as a conclusion of law, it is adopted as such; and to the extent that any conclusion of law is construed as a finding of fact, it is adopted as such. The Court reserves the right to make additional findings and conclusions as it deems appropriate or as any of the parties may request.

A. The Parties
1. Elbar Investments, Inc.

Elbar Investments, Inc. ("Elbar"), the sole plaintiff in this adversary proceeding, is a privately-held company based in Houston, Texas, that buys properties at public foreclosure sales in Harris County, Texas and resells them for a profit. [See Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 53:9-11; TransWorld's Ex. JJ, Klaimy Dep. 5:20-6:5].

2. Oluyemisi Omokafe Okedokun

Oluyemisi Omokafe Okedokun is the debtor in the main Chapter 7 case (the "Debtor"). [See Main Case Doc. No. 1].

3. Felix Amos

Felix Amos ("Amos") is the Debtor's husband. [See Main Case Doc. No. 197 at 1-2 of 20, ¶ 21].

4. United Sentry Mortgage Investment #1, LLC

United Sentry Mortgage Investment #1, LLC ("United Sentry") is a private lender based in Spring, Texas, that provided financing to an entity owned by the Debtor and Amos—namely, Triple Gate Investment LLC ("Triple Gate"). [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 44:21-22, 46:10-13, 47:2-8; Pl.'s Ex. 13].

5. Donald Anthony MacKenzie

Donald Anthony MacKenzie ("MacKenzie") is the president and owner of United Sentry. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 44:10-20].

6. TransWorld Leasing Corporation

Transworld Leasing Corporation ("Transworld") is a privately-held leasing company based in San Antonio, Texas. [Id. at 28:23-30:6].

7. Industry Drive Partners, Ltd.

Industry Drive Partners, Ltd. ("Industry Drive") is a privately-held entity headquartered in San Antonio, Texas. [Id. at 111:7-10, 112:6-14].

8. Todd A. Prins

Todd A. Prins ("Prins") is a San Antonio-based attorney—now no longer licensed to practice law and, instead, confined in a federal prison—who was the principal of the Prins Law Firm (the "Prins Law Firm"). [See Main Case Doc. No. 197 at 2 of 20, ¶ 3].

9. Eva S. Engelhart, Chapter 7 Trustee

Eva S. Engelhart is the Chapter 7 Trustee in the Debtor's main Chapter 7 case (the "Trustee").

B. Relevant Pre-Bankruptcy Events Concerning TransWorld and Prins

1. Transworld is a leasing company headquartered in San Antonio, Texas, that leases a myriad of items, including automobiles, medical equipment, airplanes, bulldozers, and even a brewery. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 28:23-29:8]. Lenny Cash ("Mr. Cash") founded TransWorld in 1979. [Id. at 28:25-29:10]. Mr. Cash and Peggy Cash ("Ms. Cash") (collectively, the "Cashes") were married in 1996; shortly thereafter, Ms. Cash became the 100% shareholder of TransWorld. [Id. at 29:11-30:3]. Ms. Cash is presently the president of TransWorld. [Id. at 30:7-9]. TransWorld currently has 12 full-time employees, [id. at 30:10-14]; at one point, TransWorld had as many as 30 employees, as well as an office in Dallas, Texas, [id. at 30:15-18].

2. Prins, who was licensed to practice law in 1991,2 was referred to the Cashes by a friend and client of the Cashes. [Id. at 33:8-12]. Prins began providing legal services to the Cashes and to TransWorld in approximately 1999. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 17:14-18, 33:16-23; TransWorld's Ex. HH, Prins Dep. 93:5-13]. Aside from Prins representingthe Cashes and TransWorld, Prins and his wife, Paula Prins ("Ms. Prins"), were personal friends of the Cashes. [TransWorld's Ex. HH, Prins Dep. 225:17-22].

3. In 2005 or 2006, a tax issue arose with certain of TransWorld's taxes due to the misdeeds of a TransWorld employee. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 31:8-32:16]. Eventually, a tax suit was commenced by the Bexar County Tax Assessor-Collector in Bexar County, Texas (the "Tax Assessor") and a default judgment against TransWorld was entered on December 21, 2006, in the amount of $230,853.66. [TransWorld's Ex. K; TransWorld's Ex. HH, Prins Dep. 98:2-9]. On February 4, 2008, TransWorld wrote a check in the amount of $230,853.66 payable to the order of the IOLTA account of the Prins Law Firm (the "IOLTA")3 at BBVA Compass Bank ("BBVA") for the past due taxes related to the tax suit commenced by the Tax Assessor.4 [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 16:25-17:4; Pl.'s Ex. 46, Ex. D; TransWorld's Ex. D]. At this time, Prins told Ms. Cash she needed to make the check payable to the IOLTA, and that he would then write a check to Linebarger,5 and that Linebarger would then apply the money to the accounts for the county. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 35:16-24]. Ms. Cash initially questioned why she could not make the check directly payable to Sylvia Romo ("Romo")6 or to Linebarger, instead of to the IOLTA, as it was "kind of, you know, a long chain of everybody," [id. at 35:20-36:6], and Prins replied that this was the way thingswere done in order for the Tax Assessor to avoid receiving a bad check from the taxpayer, [id. at 36:6-8]. In reliance upon Prins' advice, Ms. Cash thus wrote the check payable to the order of the IOLTA instead of to the Tax Assessor directly because she believed "that's the way things are done." [Id. at 36:11-13]. Prins subsequently told the Cashes that TransWorld's debt to the Tax Assessor had been paid and was resolved. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 16:25-17:8; TransWorld's Ex. D, Prins Dep. 116:17-117:5, 118:2-5]. At his deposition, Prins asserted that he did in fact pay these monies to the Tax Assessor, [TransWorld's Ex. D, Prins Dep. 98:12-19, 99:1-19, 117:1-8], but TransWorld is currently in a half million dollar lawsuit with the Tax Assessor over the payment of these monies, interest, and legal fees,7 [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 13:23-14:4, 23:20-24:15, 36:14-37:1].

4. In 2011, Mr. Cash was diagnosed with cancer. [Id. at 17:9-13].

5. Sometime around the beginning of January 2014, Ms. Cash was reviewing TransWorld's 2014 tax statement regarding its 2013 taxes when she learned that TransWorld owed delinquent taxes in the amount of $496,198.52.8 [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 19:7-12; TransWorld's Ex. U at 2]. Ms. Cash contacted Prins regarding the 2014 tax statement from the Tax Assessor, as she believed that TransWorld did not owe any taxes and hadalready settled the matter back in 2008 when it gave Prins $230,853.66 to pay to the Tax Assessor. [See Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 19:7-15]. Prins assured Ms. Cash that TransWorld did not owe any taxes, that everything had been settled and paid previously, and that Prins would "take care of it." [Id. at 19:7-15]. Ms. Cash did not hear anything else about this tax dispute issue until a TransWorld customer called her in 2016 to let her know that TransWorld was on a delinquent tax list in a newspaper article. [Id. at 19:15-17].

6. At his deposition, Prins testified that in late 2015 or early 2016, he, as the attorney for TransWorld, was negotiating with the Tax Assessor over monies allegedly owed by TransWorld. [TransWorld's Ex. HH, Prins Dep. 77:2-7]. In addition to the amounts allegedly in dispute, Prins testified that the Tax Assessor stated that there were also monies due that were not in dispute. [Id. at 77:2-7]. Thus, in January 2016—without TransWorld's (i.e., the Cashes') knowledge or permission—Prins claims that he paid the Tax Assessor approximately $143,000.00 for TransWorld's alleged tax obligations that were not in dispute.9 [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 18:19-19:1; TransWorld's Ex. HH, Prins Dep. 77:17-25, 83:19-23, 223:13-21].

7. At or around this point in time (i.e., late 2015 to early 2016), Mr. Cash was suffering from terminal cancer. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 11:17-22, 17:9-13].

8. In January of 2016, Ms. Cash learned from a TransWorld customer that TransWorld was listed on a delinquent tax list for Bexar County, Texas, in a local newspaper article. [Id. at 17:23-18:2, 19:15-17, 38:7-17]. The Cashes contacted Prins about TransWorld's taxes being listed as delinquent, as the Cashes believed that TransWorld had paid alldelinquencies and the matter had been settled back in 2008. [Id. at 19:18-20]. In response, Prins told the Cashes that the Tax Assessor had likely "misapplied" the $230,853.66 that TransWorld had paid to...

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