Another Tidbit On Surviving Financial Meltdown.

Date : April 17, 2008

This is another tidbit on how to survive financial meltdown. More importantly, I've explained one thing NOT to do.

There is a recent case posted on my bulletin board which illustrates what can (and often does) happen when debtors phony up friendly liens. You can view it here.

When people come to me with their world imploding, they have often spent hundreds of hours and many sleepless nights worrying about what they can and should do. In many cases, one of their ideas is to give their major assets away to some trusted friend or relative or to encumber their assets with friendly (aka phony) loans. This is ALWAYS a bad idea and almost never works.

In this case we have some debtor trying to play fast and loose with a well-funded creditor, Hyundai. The debtor relied upon the technology of Bill Reed at the Asset Protection Group. All of this friendly/phony lien Asset Protection Planning is similar and will normally collapse when examined. The Court noted:

[T]the Debtor testified that he had never heard of Hawaiian Princess, Inc. [this is the company set up for the phony lien], that he had never heard of William S. Reed, and that he had never heard of Asset Protection Group, Inc. or APG, Inc. Despite his testimony, Hyundai submitted evidence that he prepared a “Worksheet for New Asset Protection.” In that document, he identified himself as an APG Consultant and gave his address as P.O. Box 274, Hampton Falls, NH 03844, the same address used by his spouse, Dwana Adamo when she executed a mortgage to Hawaiian Princess, Inc. on May 23, 2006. On the Worksheet, the Debtor also requested William S. Reed to serve as a director and officer of Hawaiian Princess, Inc., as well as the issuance of one bearer share in Hawaiian Princess, Inc. Hyundai also introduced evidence that on May 22, 2006, the Debtor communicated by e-mail with an individual by the name of Kimberly A. Toy, a custodian of the records and a vice-president of APG, Inc. at... about “our new corp [sic],” Hawaiian Princess, Inc., advising her that the address of the corporation was to be 380 Lafayette Rd. # 11-197, Seabrook, NH 03874.

The court then reviewed the actions of this typically slimy AGP phony lien program and found it amounted to a fraud on the court and creditor. The Judge was slightly more polite, but the bottom line is that the judge found the debtor and his phony lien Asset Protection Group structure to be a scam and denied discharge. The opinion is worth reading.

Remember, when you are facing trouble you must assume that everything you do can be discovered by your opponents. The technology needs to work regardless of whether it is discovered or not. Stealth alone is never enough…and the easy “solutions”, often involving a gift or transfer to a friend, usually don’t work.

Do not get out of the frying pan and into the fire by jumping on board some touted plan involving friendly/phony loans or gifts to friends. If it sounds too good to be true, you can be confident that it is.

ABOUT THIS EDITOR:

Rob Lambert, Founder and former law professor is considered to be foremost expert on tax compliant asset protection structures. A contributing editor to Lexus Nexus debtor creditors series of law books Rob's passion is implement client wealth plans that stand the test of time and hold up under duress.

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