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1031 Tax Group Trustee Moves To Sell Some Okun Possessions
By Patrick Fitzgerald
DAILY BANKRUPTCY REVIEW -- The court-appointed trustee for Edward Okun’s 1031 Tax Group LLC has begun to sell off some of the embattled Miami businessman’s possessions - including a helicopter and a lakefront New Hampshire vacation home - to pay back creditors in the company’s bankruptcy case. 1031 Tax Group Trustee Gerald McHale[sic], in papers filed in U.S. Bankruptcy Court in Manhattan, asked Bankruptcy Judge Martin Glenn for the green light to sell some of Okun’s assets. McHale wants to sell Okun’s vacation home on New Hampshire’s Lake Winnipesaukee for $1.75 million to a buyer identified as Ronald Harrison. The trustee also said an unidentified buyer has offered $860,000 for Okun’s 1996 Bell 206 B-3 helicopter. McHale wants Glenn to sign off on the sales without conducting auctions, which are typically held when a company in Chapter 11 seeks to sell its assets.
The auction process is supposed to ensure creditors receive the greatest possible recovery of what they’re owed.
Last month, Okun and his wife, Simone Bolanji, signed over most of their assets - including a Houston mall, dozens of luxury “toys” and several properties in addition to the New Hampshire home - to McHale in order to pay back creditors of 1031 Tax Group.
Among the couple’s possessions, or “toys,” are two Gulfstream jets, a Learjet and the Bell helicopter, according to court papers filed by creditors. Okun also owns seven boats including a 37-foot Heim wooden replica and a 38-foot Cigarette speedboat. His
collection of classic cars features two Ferraris, two Lamborghinis, a Bentley, a Rolls-Royce, four Indy racecars and an Aston Martin.
The asset sales are necessary to make sure 1031 Tax Group’s investors, many of whom lost much of their life savings when the company went bankrupt, get some of their cash back. Whether those creditors will see the proceeds from the sale of the New Hampshire home has yet to be determined. Okun’s bankruptcy law firm Klugler, Peretz, Kaplan & Berlin say Okun granted it a mortgage on the property for unpaid legal fees. The Miami-based firm is seeking to drop Okun as a client. Okun has been accused of fraud in operating his company, which has served as a real estate tax shelter. The company collapsed after Okun allegedly “borrowed” $150 million of his investors’ money,according to court filings. About 300 investors across the U.S. were owed $150 million when the company filed for Chapter 11 protection in May. 1031 Tax Group was a “qualified intermediary” that let investors, who sell investment properties, defer capital-gains taxes if they invest the proceeds in similar-type properties within 180 days. To qualify for the benefit, the seller can’t touch the money from the sale. Instead, the money must go into an account until it’s used for the purchase of a new property.
Okun allegedly diverted investors’ cash to pay for real estate transactions conducted through a separate company under his ownership - Investment Properties of America LLC. One of the purchases was IPofA West Oaks Mall, a 1-million-square-foot Houston mall, also under Chapter 11 protection. McHale is fighting with a Texas commercial real-estate trust, which loaned Okun $86 million to buy the mall, over control of the mall. New York-based 1031 Tax Group filed for Chapter 11 protection on May 14, along with more than a dozen affiliates. The companies listed combined assets of $154.6 million and debts of $152.1 million.
The U.S. Attorney’s Office in Richmond, Va., and the U.S. Postal Inspection Service are investigating Okun’s dealings and the conversion of funds from creditors. Okun has previously said in court papers that he’s cooperating with that investigation. DBR
Daily Business Review -- November 26, 2007 (PDF)
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