Bankruptcy law requires that professionals seeking to be paid from the estate to publicly disclose their connections to the case.    In 1998, John Gellene, a former partner of the prestigious law firm now known as Milbank LLP, was found guilty for knowingly and fraudulently making false declarations under penalty of perjury.   In connection with seeking to be retained as debtor’s counsel in a bankruptcy case, Gellene failed to disclosure connections the firm had to creditors in the case.   His motivation for not disclosing these connections is that if he had his firm would likely have been disqualified from representing the debtor.    As a result of Gellene’s actions, Gellene served prison time and Milbank had to disgorge $1.8 million in fees.   In this episode, Judge Elizabeth Gunn and Judge Steven Rhodes will discuss the Gellene case, the bankruptcy laws requiring disclosures and more recent situations involving parties in bankruptcy cases failing to disclose connections.

Bad Boys of Bankruptcy: Episode 6: John Gellene: A Bankruptcy Lawyer Goes to Jail

Since the Great Recession, foreclosure rescue and mortgage modification scams have been a growing problem, costing individuals thousands of dollars and even their homes. In one particular case, Owner Management Service, foreclosure rescue scammers convinced defaulting, desperate homeowners to transfer title to their homes to avoid an impending foreclosure. In this episode, Judge Elizabeth Gunn will be joined by bankruptcy attorney Sharon Weiss to discuss the substantive consolidation judgment that was achieved in the Owner Management case, dangers of foreclosure scams, and the challenges in trying to unwind these types of businesses and identify estate assets.

Bad Boys of Bankruptcy: Episode 7: The Case of Owner Management Service

The Rooker-Feldman doctrine is a regularly used legal precept often asserted as a defense in bankruptcy courts to characterize actions as appeals or reconsideration of state court judgments. This is exactly what happened after a Massachusetts based con-man manipulated 'Tess', a wealthy woman at a crossroads out of approximately $6M and then convinced her to dismiss, with prejudice, a pending state court action against him. After overcoming this legal struggle, the litigation team was able to track down and collect many of the assets acquired by the con-man with Tess’s money for the benefit of her creditors. Judge Gunn is joined by Stephen Huggard, Scott Magee, and Chris Condon to discuss Rooker-Feldman, its limitations, and how a chapter 11 bankruptcy allowed her to claw back $2+ million, and granted 'Tess' a fresh start.

Bad Boys of Bankruptcy: Episode 8: The Unfortunate Heiress: Unwinding a Swindle

Darren Berg started as a mortgage broker but then found himself orchestrating a $150 million Ponzi scheme. He diverted funds into a lavish lifestyle—owning multiple mansions, yachts, and a luxury bus company. When the fraud unraveled, bankruptcy proceedings led to significant legal battles, shaping Oregon’s fraudulent transfer law in the process. But Berg’s downfall didn’t end in prison—he pulled off a daring escape, fleeing custody and vanishing into Brazil. Judge Gunn, Mark Calvert, and Michael Gearan discuss Berg’s rise and fall, the legal aftermath, and the lingering question: will he ever be caught?

Bad Boys of Bankruptcy: S2E1: From Mortgage Mogul to Fugitive: The Rise and Fall of Darren Berg

In this episode, Judge Gunn discusses the case of Steven and Lori Palladino with Mark DeGiacomo, who served as the Chapter 7 trustee in their case. Mr. DeGiacomo was tasked with administering the fallout resulting from the debtors’ Ponzi scheme run through an entity called Viking Financial Group, Inc. Mr. Palladino used Viking to promise “investors” a guaranteed 12% return on their investments, initially meeting with family and friends at Dunkin Donuts or at his kitchen table, and paying out their “dividends” in cash-stuffed envelopes. Mr. Palladino was ultimately convicted of numerous crimes and sentenced to more than 10 years in prison after it was revealed that he had bilked his victims out of more than $10 million. Mr. DeGiacomo winded up conducting at least two dozen Rule 2004 examinations as part of his investigation into the assets and financial affairs of the debtors and used this information to prosecute numerous avoidance actions and liquidate assets of the debtors to repay their creditors and victims.  Mr. DeGiacomo recovered numerous lavish gifts Mr. Palladino had given to his wife as well as to his 20-year-old girlfriend, including jewelry, designer handbags, shoes, and dresses which the trustee sold at auction for the benefit of creditors. He also prosecuted an adversary proceeding against Sacred Heart University to recover nearly $65,000 in tuition Mr. Palladino had paid on his adult daughter’s behalf, resulting in a decision by the U.S. Court of Appeals for the First Circuit that Mr. Palladino had not received “reasonably equivalent value” in exchange for the tuition payments, because emotional, intangible, or non-economic benefits did not satisfy the standard, and thus the university was required to return the funds to the estate for the benefit of creditors. Mr. DeGiacomo ultimately recovered approximately $2.5 million for distribution to the estate. Mr. Palladino ultimately died in state prison in 2020 before he ever began to serve his 2-year federal prison term for criminal contempt due to his failure to obey orders imposed in a civil action brought against him by the SEC related to the Ponzi scheme.

Bad Boys of Bankruptcy: S2E2: Cash-Stuffed Envelopes at Dunkin’ Donuts: The Palladino Ponzi Scheme

In this special public service episode, Judge Elizabeth Gunn is joined by Rebecca A. Earl and Dana McWay to explore a growing and often overlooked corner of bankruptcy fraud: the exploitation of unclaimed funds. With over half a billion dollars currently held in unclaimed distributions, the system has become a target for fraudsters employing everything from falsified assignments to identity theft and wire fraud to steal from legitimate creditors.

The episode unpacks the legitimate process for recovering unclaimed funds and how bad actors have learned to exploit it. From fund locators—some legitimate, some not—to individuals impersonating creditors or creating companies with identical names to the true payees, the guests reveal just how elaborate these schemes have become. 

This cautionary tale doesn’t follow one fraudster—it shines a spotlight on a systemic vulnerability, offering insight into what courts and clerks are doing to protect the system. 

Tune in to hear how the courts are fighting back against this wave of bankruptcy fraud.

Bad Boys of Bankruptcy: S2E3: Fraud, Identity Theft, and the Battle Over Unclaimed Money

Ponzi schemes have persisted around the world even before the eponymous investment scheme of Charles Ponzi in the early 1920s. This case concerns a Ponzi scheme based on the purported sale of music that nobody really wanted, which was engineered by Ukrainian-American Volodimyr Pigida and his wife, Marinia Bondarenko. The scheme resulted in roughly $22 million in fraudulent proceeds. Pigida was ultimately convicted of 26 counts in a federal indictment, including conspiracy, wire fraud, mail fraud, and bankruptcy fraud, and was sentenced to 14 years in prison.  In this episode, Judge Gunn discusses the bankruptcy case filed by Trend Sound Promoter, the company the couple used to perpetrate their fraudulent scheme, with attorneys Mark Stern and Rory C. Livesey.  Issues discussed include how language barriers presented issues in the bankruptcy proceedings, how the trustee located assets to liquidate for the benefit of creditors (including victims of the scheme), and how the owners of Trend Sound Promoter were ultimately brought to justice. 

Bad Boys of Bankruptcy: S2E4: The Ponzi Scheme for Music Nobody Wanted: The Curious Case of Trend Sound Promoter

The debtor, a real estate contractor and developer, failed to cooperate with the chapter 7 trustee and engaged in aggressive tactics including suing the first judge presiding over the case leading to her recusal.  In addition to the typical Bad Boys of Bankruptcy content, the panel explored the standards and ethical considerations surrounding judicial recusal, including the process for sua sponte recusal, the risks of seeking disqualification, and the related ethical rules.   In addition to host Judge Gunn the panel included Judge Frank Bailey (ret.), Raychelle Ann Tasher, Ass’t U.S. Attorney (SD Fla.), with a special appearance by Judge Melvin Hoffman (ret.).  

Bad Boys of Bankruptcy: S2E5: Wise Cracking Real Estate Developer Finds His Way to Federal Prison

This case concerns the consequences for debtor misconduct in a Chapter 13 case. The Chapter 13 debtors, Marcus and Amanda Purdy, sought court approval to take out a mortgage to purchase a home, but the court denied the motion to incur debt and the debtor’s motion to reconsider the ruling. Undeterred, the debtors moved forward with obtaining a mortgage to purchase the property, providing a letter to the mortgage lender on the Chapter 13 trustee’s letterhead which was later discovered to have been forged by Mrs. Purdy. When the Chapter 13 trustee discovered the forged letter, he moved to dismiss the debtor’s case with prejudice with a 15-year bar to refiling. The bankruptcy court ultimately granted the motion, dismissing the case and barring Mrs. Purdy from filing for bankruptcy for 10 years, and barring Mr. Purdy, who did not have knowledge of the forged letter, from filing for 5 years.  The debtors appealed the order to the district court, which not only affirmed the bankruptcy court, but instructed the clerk to refer the matter to the U.S. Attorneys’ office for criminal prosecution. Mrs. Purdy was thereafter federally prosecuted for mortgage fraud, and in final tragic twist, the home purchased without bankruptcy court authorization wound up burning down a few months after it was purchased.  Judge Gunn discusses the bankruptcy case, the appeal to the district court, and the collateral criminal consequences with attorney Landon G. Van Winkle and the U.S. Bankruptcy Administrator (“BA”) for the Eastern District of North Carolina, Brian Behr.  Issues discussed include the investigative role of the Chapter 13 trustee and BA’s office into debtor misconduct, the role of local rules in bankruptcy cases, and the penalties debtors may face for violations of court orders in bankruptcy.

Bad Boys of Bankruptcy: S2E6: Forgery and Fire – The Purdy Case

In this episode, Judge Elizabeth Gunn is joined by attorneys Abigail Ryan and Jason Binford to discuss the astonishing saga of a relentless debtor who turned the bankruptcy system into his personal battlefield.

It began when Abigail Ryan’s client needed to evict a tenant for unpaid rent. But instead of leaving quietly, the tenant filed for bankruptcy, halting the eviction and launching a wave of litigation. As Abigail and Jason soon discovered, he was no stranger to this tactic, filing bankruptcy petitions on the eve of evictions, contempt hearings, and other legal trouble to stall proceedings and frustrate creditors. After exhausting his welcome in state court, where he was declared a vexatious litigant, he shifted to federal court, flooding dockets with motions, adversary proceedings, and procedural maneuvers. 

Join them for a riveting exploration of legal strategy, courtroom battles, and the fight to protect the integrity of the bankruptcy system from serial abusers.

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