Source: CNN

A group of angry creditors will face-off against Rudy Giuliani in bankruptcy court on Wednesday, where they have asked a judge to put his finances under the control of an independent trustee in order to lock down his assets and begin to collect what they’re owed.

Since declaring bankruptcy late last year, Giuliani appears to have remained flush with cash, including being paid $75,000 by a documentary project. He’s also continued to spend thousands of dollars each month on dozens of Amazon, streaming media and other purchases, according to court records.

Those transactions and a general lack of transparency around Giuliani’s finances have drawn the ire and frustration of creditors seeking to enforce millions of dollars in claims against the former New York mayor, including $148 million in damages won by two Atlanta election workers who successfully argued in court last year that Giuliani defamed them after the 2020 election.

At Wednesday’s hearing, the creditors will push the judge presiding over the case to take drastic steps to rein in Giuliani’s spending and potentially liquidate his assets, according to court filings they’ve made this week. And Giuliani may have to answer detailed questions under oath about his financial situation that he has so far refused to reveal.

The hearing comes about a week after Giuliani lost his law license over his efforts in backing Donald Trump’s attempts to overturn the 2020 presidential election. Giuliani is also facing criminal charges in connection to those efforts in Georgia and Arizona.

Giuliani’s decision to file for Chapter 11 reorganization should have brought transparency to his finances and moved him toward a plan to pay his debts, bankruptcy experts say.

Instead, Giuliani has provided only snippets or inaccurate portraits of his financial records, some of which were provided late. He has even surprised his own lawyers with new sources of income, such as a recent deal he signed to promote coffee.

He has also managed to keep control of two condominiums worth millions in New York and Palm Beach, Florida, though he has been trying to sell the New York three-bedroom property.

“He’s using [bankruptcy] as a delay tactic, not being forthcoming with the process, and just sort of ducking and weaving his way in and out,” said Daniel Gielchinsky, a bankruptcy attorney based in Florida who is closely following the case. “It’s a real story from a fall from grace. It’s somewhat shocking, but it’s also sad.”

‘Bankruptcy process as a joke’

Giuliani’s creditors – including Ruby Freeman and Shaye Moss, the two Georgia election workers whom he owes $148 million for defaming them after the 2020 election – are furious with how the bankruptcy has failed to progress to begin to make them whole more than six months since he declared bankruptcy.

“Since day one, Giuliani has regarded this case and the bankruptcy process as a joke, hiding behind the façade of an elderly, doddering man who cannot even remember the address for his second multimillion dollar home and claims impending homelessness if he must sell that second multimillion dollar home,” wrote lawyers from the law firm Akin Gump, which represents a committee of Giuliani’s creditors in the bankruptcy proceeding. “In reality, Giuliani has treated this Court, the bankruptcy process and the Committee … with utter disrespect and without accountability. Giuliani is playing the delay game.”

Lawyers watching the case say that if Giuliani were to be assigned a Chapter 11 trustee by the judge Wednesday, that attorney could immediately move to sell his homes, so his creditors can collect, and take control of his companies like Giuliani Communications LLC, which court records say has received thousands of dollars in nominally explained wire transfers in recent months

Giuliani’s tactics

In response, Giuliani has asked the bankruptcy judge to change the classification of his bankruptcy, from Chapter 11 to Chapter 7, which would limit the creditors’ ability to pursue his incoming cash.

Giuliani’s close friend and colleague Maria Ryan last month sent a request to the bankruptcy judge to tell his creditors’ law firm to “stop lying in their filings to the court.” She wrote that she and others who work for Giuliani are trying to keep his businesses afloat and promised to be quicker to alert his bankruptcy lawyers of new business deals.

Giuliani’s bankruptcy attorneys and his spokesman didn’t provide additional comment to CNN for this story.

Freeman and Moss on their own are taking a slightly different tactic than the broader creditors’ committee, complaining to the court that Giuliani’s responses to requests for information about his finances in bankruptcy court are insufficient and being done in bad faith.

They want the bankruptcy judge on Wednesday to throw him out of bankruptcy court. That would allow their team of lawyers to pursue his assets directly, which would lose their current protections.

“Congress designed the Bankruptcy Code to ensure that bad faith debtors like Mr. Giuliani cannot successfully hop between various chapters to stay one step ahead of creditors,” Moss and Freeman’s lawyers wrote in a filing Monday night.

Appeals of their defamation case against Giuliani currently are not allowed while his bankruptcy progresses, but he could have another shot to appeal the jury verdict if the judge grants his request for Chapter 7 bankruptcy.

“He’s definitely in a difficult position and he’s still maneuvering. And he’s being very shrewd in his maneuvers,” Gielchinsky said. “Will it result in his assets being sold? Or will it result in a change in his lifestyle? It’s hard to say, because he’s very hard to nail down.”

Spending and new deals

Giuliani’s sporadic disclosures over the past several months offer glimpses into his finances. For instance, in recent weeks, according to his financial records available in court, Giuliani made 40 purchases from Amazon totaling nearly $3,500. He’s also bought plane tickets for himself and two business associates to fly to Palm Beach and other places.

He also has pocketed thousands of dollars from participating in a documentary film this spring, where money is being sent to his limited liability company, adding to the opaqueness around his finances.

His lawyers told the creditors on May 22 that a years-old documentary project, called “All the President’s Men,” was recently revived.

Giuliani Communications received a $75,000 payment in mid-May for his ties to the project, according to a letter from his lawyers made public in court. Paperwork from the 2021 deal around the documentary list a Russian-American, Igor Lopatonok, as the producer, and Sean Stone, a former host on the Russian-funded network RT America, as the director. Right-wing figures Chanel Rion, the One America News Network personality, and Simona Papadopoulos, the wife of a now-pardoned former Trump aide, are also involved.

And his creditors believe Giuliani may be making profit from his nascent “Rudy”-branded coffee bean.

The arrangement is with a company called Burke Brands for Giuliani to promote and take an 80% cut of coffee bean sales with his face on the bags, according to his court records. Those earnings are to be paid through wire transfers to a limited liability company Giuliani has, documents of his arrangements say.

The coffee deal is set to bring in to Giuliani between $4 and $12 a bag, the documents say. A business associate told the court that as of mid-June,  he had not been paid.

“Unfortunately, in this case, good news always seems to be accompanied with bad,” lawyers for his creditors wrote to the bankruptcy judge last month. “The Debtor is structuring the business deal in a way that funnels funds that would otherwise belong to his creditors” back into Giuliani’s pockets.

When the creditors’ lawyer noticed Giuliani promoting the Rudy beans in videos on social media in mid-May, they asked his lawyers about the venture. “We saw the same thing and have requested information, and a cup of coffee,” Giuliani’s own bankruptcy lawyers told the creditors.

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