Adversary Proceeding Answer due January 6, 2011

[Scapegoat]

HELP...I am trying to answer an adversary proceeding pro se. I do not know where to begin. I cannot afford an attorney, they begin at $1500 and go up from there for a retainer. I am being sued by my former employer for $150000. I was the 'fiscal officer' and my boss found a way to embezzle funds. He is in prison now and they are coming after me. I filed chapter 7, and 5 days before it closed, they filed an adversary proceeding. I have too much at stake and I need some guidance...I am starting to panic. Any assistance anyone can offer would be very much appreciated...

[HHM]

Hate to say it, but WITH THAT MUCH AT STAKE and given the legal complexities of the case (this is not your run of the mill creditor objection AP), you NEED an attorney; there really is no question there; so I suggest you find a way to hire one.

I know it's not the answer you "want," but it really is the only answer.

[despritfreya]

I must agree with HHM. At least hire an attorney to help formulate your Answer thus making sure you also properly plead your various Affirmative Defenses, which, if not referenced can be deemed waived. This alone is worth every penny charged.

Once the Answer is filed, you can explore attempting to settle as litigating will cost on both sides.

Des.

[AngelinaCatHub]

I cannot disagree with two pros. However, the Truth is your defense. First, what are the charges? Second, it is a Civil case, not criminal. Last, tell the truth as best you can if you have to go pro se. You are in a bk so what do you have to lose? They cannot get blood from a stone, they can only get a Judgment or in an AP not discharge a particular debt.

So, under these circumstances, best I can tell you. 'Hub

[dneil]

I am not sure why you would be personally liable for your bosses loss when there was already an employee charged and convicted of embezzlement. How in the world can they try to say you owe the money to them and hold up your bankruptcy. Were you charged of this crime and did you sign anything accepting personal liability for this companies losses...ever?

If you can not afford an attorney, perhaps there is one who does free consultation and will help you formulate your answers. I am in Michigan and here we have 3rd level crisis center. They provide one night a week (I believe it is every week) where it is first come first serve and attorney's will help you with whatever legal matter you have.

Good Luck..... again, I am curious how you became personally liable for this companies losses?????

[BigJohn]

What were your duties?

What was embezzeled?

How did they connect you to the embezzelement?

Do you still have access to company records?

[despritfreya]

The questions raised by the various posters is exactly why OP needs representation.

The Complaint is most likely under 523(a)(4) and (a)(6). OP was the "fiscal officer" and probably had direct control over the company's finances. As such he had a fiduciary duty to protect the company coffers. My guess is that the employer is asserting he either knew or should have known of (or even participated in) the theft and therefore either committed the act of embezzlement and/or breached his fiduciary duty (express trust) to the company. The issue of whether or not criminal charges have been brought against OP is not relevant since the burden of proof, as it relates to the 523 Complaint, is not the same as the burden of proof in a criminal matter (just think about OJ-not guilty of murder but found responsible for wrongful death).

The problem OP has is this type of a suit, if not settled, may require him to file a 3rd Party Complaint against the individual(s) who were responsible, assuming he is “innocent”. He has to point the finger at someone else. . . "If I am responsible to the employer than X is responsible to me or, I did nothing wrong but X did" - that kind of thing. The “fact” that someone else was charged with a crime is not enough - all that could mean is that OP is less involved than someone else, but involved, nonetheless.

Yes, hiring an attorney to defend through trial is very expensive - and one could lose. However, unless one is a highly skilled litigator (which OP admits he is not) this is not something one can defend pro se.

My experience with these types of matters is that they eventually settle with neither party being very happy but both parties realizing that litigating is too expensive. I just finished one. Lost the trial but the parties settled because we filed a Notice of Appeal and the Plaintiff did not want to deal with an appeal.

Des.

[Scapegoat]

Yes, my title was 'Finance Director' and as such I was the fiscal officer. I did not have the responsibility of budgets and approving checks, my boss did this and our Board was aware (all personal family friends and family to the boss). my other duties included Human Resources, student enrollment from speaking w/parents to assisting with the completion of the application, to processing it, Nurse, door answerer, receptionist, mail courier, mail opener, after hours emergency contact for the alarm company, bank runner and all other duties as required. With all of these duties, it was impossible to cover everything in a timely manner. I was promised help and given a pep talk when I complained the job was too much. We were a small start up, and when the budget allows, I would be given an assistant. Just hang in there. I was paid decent and convinced I was needed, so I did hang in there. I never got the assistant so with all I had to do, it was impossible to pay attention to all details like reconciling the checks in a timely fashion. So, therefore, I was negligent in my duties is what they are stating. It is a civil suit. I have a home that is unpaid for, and I guess they are trying to take that.

[despritfreya]

with all I had to do, it was impossible to pay attention to all details like reconciling the checks in a timely fashion. So, therefore, I was negligent in my duties. . .

This is why I implore you to get legal representation. Negligence alone does not rise to the level necessary to except an alleged "debt" under 523. There must be more. . . gross negligence maybe even reckless disregard, a breach of an express trust, willful misconduct. . .something. My guess is that the employer holds all of the cards. Once it makes a prima facia showing of your “liability” the burden is going to shift to you to show that, based upon the circumstances, your conduct was either not negligent or, if negligent was nothing more than simple negligence. In fact, it sounds like part of your defense is the contributory negligence of the employer. Maybe you should be suing the employer in a Counterclaim. Again, these are all issues you need to discuss with a qualified attny.

Des.

[chrisdfw]

Negligence is not enough for them to prevail, but you will need legal representation.

[Peeps]

Scapegoat,

I have a family member who ended up with a lot of problems when someone at his company, lower in the organization, did some overly-creative things in the accounting arena. It was a high-profile company and I now go visit this family member several times each month... in a federal prison. I realize that this might just be about a BK right now, but I can't stress the urgency of getting solid representation. If you think you're a scapegoat for your former employer, just wait to see how it feels when some overzealous, career-promoting district attorney takes interest. All it takes is a DA with aspirations of becoming a judge or a senator/congressman. Your post kinda freaks me out because I've seen just how fast the rug can get pulled out from under people. It's hard to explain because we're all brought up to believe the system stands on "innocent until proven guilty." Not always the case. Just be careful.

[Scapegoat]

I appreciate all of the advise I have received from everyone....and belive me I have tried to secure counsel. However, attorney's will practically hang up on the phone when they hear you don't have the amount of retainer they are requesting. No one works on payments. The Legal Aide Society in my area does not handle these types of cases. I have even reached out to a friend whose husband is an attorney, and have not heard back. It's all about money. So, I am afraid I will be forced to attempt a reply on my own. I dont want to just not respond. I did contact the bankruptcy court and they cant give legal advise, but was told to just write a letter explaining my side like I was talking to another person. I think I wiil attempt to write it in legal format and letter form.....wish me luck...I am going to need it.

[Scapegoat]

I successfully filed the answer to the complaint on my own...I just received a letter from the plaintiff notifying me of a conference date that we need to set for a phone conference and discovery. I have not been successful in securing an attorney and financially, I don't believe getting an attorney is going to be possible. Any advice anyone has on handling the conference for 'voluntary disclosures' Rule 26(a)(1) and making a discovery plan would be very much appreciated.