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1031 Tax Group Trustee Seeks To Keep Crew On Okun’s Yacht
By Patrick Fitzgerald
DAILY BANKRUPTCY REVIEW -- The court-appointed trustee running Edward Okun’s troubled tax shelter business wants to pay the wages of the crew of the Miami businessman’s 131-foot luxury yacht to keep them from jumping ship before the yacht can be sold to pay back Okun’s creditors.
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 pay the crew of the yacht, christened the Simone, about $25,000 a month. A crew of eight must be on board the ship at all times or the boat - which has been valued at more than $14 million - loses its insurance coverage. Absent the crew, the value of the yacht could fall dramatically, according to the trustee.
Last month, Okun and his wife, Simone Bolanji, signed over most of their luxury “toys” - including the yacht, several jets and more than a dozen exotic cars - in order to pay back creditors of Okun’s 1031 Tax Group. After McHale took control of Okun’s toys, the yacht was seized for past due dockage fees by a South Florida marina. McHale paid off the marina and said he also had to pay $24,000 in past due October salary for the Simone’s crew “in order to entice them back to employment.”
Among the couple’s possessions, or “toys,” are two Gulfstream jets, a Learjet and a Bell helicopter, according to court papers filed by creditors. Okun also owned a number of boats in addition to the yacht, 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 race cars 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. The trustee said he hopes to have Okun’s toys sold off within two to nine months.
The Simone, now in the Bahamas, is already on the auction block. Fort Lauderdale yacht broker Moran Yacht & Ship has the yacht up for sale. The ship, which sleeps 10 plus room for crew of 8, comes complete with Jacuzzi, plasma TV and “exotic Tahitian paintings.” Built in 1993 by Hessen Yacht Builders, “the vessel Simone beckons you to explore, calling you to the sea with echoes of her regal opulence,” according to the yacht broker’s advertisement.
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 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.
Okun allegedly diverted investors’ cash to pay for real estate transactions conducted through a separate company under his ownership - Investment Properties of America LLC. 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
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