Excerpts: “Buffa’s Bad Tuna: Debtor Owning 99% Of LLC Dodges Charging Order By Paying Oversized Salary To Wife.”

• Buckeye Retirement Co. v. Buffa, 2011 WL 3439022 (D.Conn., Slip Copy, Aug. 5, 2011)
• Anthony Buffa is a private equity investor who got behind on his promissory note to First Third Bank and stipulated to judgment against him in the amount of $180,000. First Third Bank then sold the judgment to Buckeye Retirement.
• Buffa — who admitted to having numerous other creditors including the IRS — conducted his investment activities through an entity called Endeavor, LLC, of which he owned 99% and his wife, Nancy Haar, owns the other 1%. Buffa testified that he worked from 54 to 66 hours per week for Endeavor, LLC, which earned him an annual salary of $20,000.
• Haar, however, who seemed to be a full-time housemom, worked only 18 to 32 hours per week for Endeavor LLC, but was given a $120,000 annual salary which had actually paid $75,000 to $100,000 per year. Endeavor LLC also paid for vacations for Buffa and Haar as reflected in its tax returns.
• For his part, Buffa testified that Haar received so much more money than he did to maintain the marital stability of their household, which was probably right. But that’s not a legal defense to stiffing creditors. And it didn’t explain why tax returns prepared by Buffa’s brother, a tax attorney, didn’t jive with Buffa’s testimony as to how the allocation of Endeavor LLC’s income should really occur.
• Probably no story of the debtor will ever be believed again, plus if the debtor attempts bankruptcy these shenanigans are quite likely to lead to a denial of discharge. Hole – Deeper – Dig.

Source: Forbes