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Logan asks court to terminate examination
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May
2011
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Over Logan’s objections, the court approved the Examination and ordered Logan to provide financial records. The Exam began on Jan. 15 and was to continue May 6.
County Attorney Jimmy Logan has asked the U.S. Bankruptcy Court to terminate a 2004 Examination (similar to a deposition) that started in January as part of the bankruptcy filing by John Mark Anderson of Charleston. Anderson filed for bankruptcy Sept. 3, 2010 after receiving a foreclosure notice from Anderson Partners, LP. The partnership had been formed after Anderson won the Georgia lottery in January 2000 and enlisted Logan’s help with managing the more than $813,000 he received. In his bankruptcy filing, Anderson questioned the loss of his lottery winnings. Logan said Anderson had dissipated the money.
Over Logan’s objections, the court approved the Examination and ordered Logan to provide financial records. The Exam began on Jan. 15 and was to continue May 6.
On May 5, Logan asked the Court to terminate the exam, noting he had been questioned for more than 6 1/2 hours in January. “The 2004 Examination should be terminated because claims, if existed, the debtor may have against James F. Logan Jr. are governed by the one year statute of limitations,” the filing states. It goes on to say no suit has been filed and all such claims, if existed, accrued more than year before the current date. It said continuation of the exam is a waste of time of all concerned “and is simply an exercise to attempt to harass and embarrass Mr. Logan.”
In an affidavit accompanying the filing, Logan states that Anderson has asserted through his lawyer that he is contemplating a claim against Logan for alleged errors or omission in providing or failing to provide legal services in the early 2000s, or other alleged errors or omissions. “Such claims would be based either on legal malpractice or tort for personal injury and would be governed by the one (1) year statute of limitations,” Logan stated. He said Anderson had spent all of his lottery winnings by sometime in 2005.
In response, attorneys Jeff Miller and Fred Hanzelik claimed that in January Logan continued to refuse to produce documents, copies of the debtor’s files and additional information that has been continually withheld. “Although Mr. Logan has claimed he has furnished documents,” the filing states,” the record is clear, from his own testimony, that he has failed and refused to disclose information and continues his pattern of non disclosure with his frivolous bad faith Motion.”
It goes on to say the May 6 exam was unilaterally cancelled by Logan the day before the exam was to continue and Logan then filed the Motion to Terminate. It notes that Logan asserts that the statute of limitations would bar any potential claims, “but there are issues that may give rise to a cause of action that would benefit the estate of the debtor.” These claims, the response states, include fraud, concealment, fraudulent concealment, outrageous conduct, breach of fiduciary duty, conversion and legal malpractice – “all just discovered and not reasonably discoverable until Jan. 15.” In fact, the Response states, the full disclosure of these facts have not yet been disclosed “as Mr. Logan continues to attempt to thwart all efforts to be forthright, revealing and candid.” It points out the Court ordered Logan to be examined “and his willful refusal is contemptuous and final.”
The Response concludes, “It appears Logan’s justification for his Motion to Terminate is that he committed actionable wrongs but is freed from accountability because he claims the statute of limitations has run; his Motion is an attempt to further fraudulently conceal additional wrongs.”
The transcript of the January Exam, which was attached to the Response, shows Anderson’s attorneys asking for a variety of information.
In one instance, Logan and Anderson each invested $25,000 in H Bar C, a company that ultimately failed. Anderson had paid $33,000 to Logan to cover the investment, with the remaining $8,000 to go to Logan’s law firm, although Logan said he didn’t have a record of that transfer. Logan said a broker he worked with in New York had sent material on H Bar C and he told Anderson about it, telling him it was risky but could turn into a substantial sum of money. He did not recall the name of the person in New York. He said the Securities & Exchange Commission contacted him and told him the broker was under investigation and the investment was kaput. Logan said he had purged all those records in 2006 or 2007. He said he did not have anything in writing about the investment, did not recall taking a tax loss for it, and did not have a copy of the back of the $33,000 check.
Asked about the $8,000 for legal services, Logan said he did not have a record of statements but he and Anderson had talked about it. He said he could not recall having an understanding or agreement with Anderson for legal work, adding he didn’t know if he made certain to charge for his time.
Questioned about Anderson’s required $1,250/month child support payments to Regina Hutto, Logan he did not think any payments had been made by Anderson or the partnership, which ran out of money in the spring of 2005. He said Hutto had contacted him about the payments. He said he had a great deal of sympathy for her and made arrangements with a bank for her to borrow funds in anticipation of the potential foreclosure. Logan said he advised her many times to get an attorney to proceed against the funds that Anderson would have. Because of his concern for her, he said, he personally signed a guaranty agreement for the funds she borrowed. After that, he said, he began issuing direct payments from a trust account with his law firm for which she signed assignment of her rights against Anderson over to Logan. He said he did not know the amount of the bank loan and did not have any paperwork on it and did not know how much she had borrowed from the firm’s trust account. He said he took the action to help her but Anderson Partners and Mr. Anderson are liable, saying she would be the ultimate beneficiary of a potential foreclosure and would be able to repay her obligations. He noted this is not the first time he has helped people get loans when they’ve been in financial extremes.
Questions were asked about the initial investment of money to SEI. Logan said he had suggested that Anderson talk to J. Michael Moultrie, an acquaintance of Logan who worked with an investment firm. Logan said he has known Moultrie, his wife and his mother-in-law for years. Anderson’s lawyers asked if Logan had considered moving the money when the losses and fees began piling up; Logan said he had suggested that Anderson meet with Moultrie to discuss alternatives and had also warned Anderson that taking money out would reduce the income.
Logan was also questioned about his responsibilities to Anderson Partners and he said he and Anderson made decisions jointly. He said his relationship with Anderson ceased in 2005, when he told Anderson he did not want to have anything to do with him again. He said he told Anderson to pay his debts – the notes to the partnership and the child support. Logan said he had begged Anderson to stop spending money, to stop writing bad checks, and to act for his son. He said he did not take any collection action against the partnership until 2010 even though no payments were made on the mortgage or other loans. Logan said he had repeatedly told Anderson that payments should be made. Anderson told Logan in 2009 that he no longer represented him.
Questions were also raised about the fact the partnership agreement called for irrevocable family trust agreements to be established for Anderson’s two children. Logan said the trusts, as he understands it, were never funded or established. He said the agreements would have to have been executed by Anderson and the family partnership. He said he remembered some discussion about whether they should be executed. Logan was asked several times about his role in the partnership. He said he was a general partner but Anderson was in charge. He said he did not think there was a managing partner, but Anderson’s attorney pointed out a section that named Logan as managing partner. Logan said he allowed Anderson to control the major assets. He said he had told Anderson to obtain the services of an expert in tax law for tax matters. Logan said it was crazy of him to sign the partnership agreement that named him as tax matters partner.
A hearing is scheduled to determine whether the 2004 Examination will continue. The court has already ruled again Anderson Partners’ claims for distribution by the bankruptcy plan. In disallowing the three claims filed by the partnership -- $164,352 for a mortgage, $114,999 on a promissory note, and $49,316 for a promissory note for a truck – the Court noted that Anderson contributed all or a substantial portion of the winnings to the partnership did not understand he was obligating himself to pay back to the partnership what he considered to be his money.