A case in Florida courts for bankruptcy, drags on from 1997. A federal bankruptcy judge has refused to give Stephan Jay Lawrence his bankruptcy.
Lawrence was a financial trader. He did real well. In his profession, which I share ( but not the winnings unfortunately!), he managed to accumulate $30 million dollars from a startup with $50,000. Like any trader, you take your losses with your winnings. You know how cyclical it can be. Through judicious and flamboyant use of margin (credit up to 100% sometimes), you can trade ( or gamble a bet ) twice as much as you can afford in real money. The high risk players can lose badly, or gain amazingly. Lawrence hit a bull market run and turned his $50,000 into $30 million.
Prudence says that a financial trader should stick something away, for the day when you start to lose and cannot control your losses. All good things come to an end.
Stephan Jay Lawrence had done just that. Somewhere during his heyday, he formed a TRUST in offshore Mauritius and socked $7 million away in it for his retirement and family. The Trustee was International Financial Services Ltd. of Mauritius. Trading went on and Lawrence still did well.
In Florida bankruptcy law, if you try to hide assets in the last two years before bankruptcy, the court will not recognize this and claim the assets; whoever may own them. Along came the 1987, or maybe it was the 1990 Bear Market overnight CRASH! Lawrence was on the wrong side and betting the other way. He also was using credit to it's full, or margin as it is called. Bear, Stearns was his broker and provided the margin. The brokerage sold out everything he had. It doesn't matter if your market and trades come back profitable four hours later. They will sell you out, without recourse, or permission, to satisfy your margin loans should the market drop even temporarily. They then take all your money in the account and in this case, this would only represent somewhat less than half of the value of the trades and sue you and put liens on any assets you own.
In this case, Lawrence had some provisions in his Mauritius family TRUST. It said in the Offshore TRUST, that should Lawrence file for bankruptcy he will be automatically removed as a BENEFICIARY of the TRUST. If Creditors sue him to recover assets, he will also be removed automatically as a BENEFICIARY of the TRUST. And thirdly, if he simply loses interest in the TRUST he will automatically be removed as BENEFICIARY.
All three things happened to Lawrence.
Now if Lawrence had hidden his involvment in this offshore TRUST, you could find him guilty of a criminal act. But Lawrence declared his beneficiary status in this offshore Mauritius TRUST. He also stated that he had lost interest in the TRUST prior to filing for bankruptcy and no longer knew anything about it. Bear Sterns lawyers want that $7 million stashed away for his family, but they have no claims on his family members. They have to go after Lawrence.
Allen Reed his lawyer, states it is not the burden of Lawrence to prove he could turn over the TRUST, or had any beneficial interest now. He has turned over his passport to the bankruptcy court and that is the end of it. Lawrence claims he has no legal interest as a beneficiary in the TRUST anymore and has no control, or influence over it.
On order of the bankruptcy court, Lawrence sent a letter to the former TRUSTEE for this offshore TRUST in Mauritius on Sept. 13th., requesting it let the bankruptcy court assume control of the family TRUST. Nobody has heard a word back from the TRUSTEE, International Financial Services Ltd.
The bankruptcy judge on the other hand, says that the court does not know if he lost beneficial interest before the two year period, more or less, and does not care one way, or the other. The judge wants the money for Bear, Stearns the brokerage. But nobody, including the Judge, Bear-Stearns lawyers, or Lawrence claim any knowledge even if the TRUST has any money left in it anyway. The court suspects the money is in Switzerland someplace under a different TRUST name. Lawrence says he is out of the business and had lost his beneficial interest and has no knowledge whatsover of the TRUST over the last few years.
The bankruptcy judge now is threatening Lawrence with "Contempt" and jail time and evasion if he does not turn over the assets of this TRUST. Presuming the TRUST has any assets left.
Lawrence claims inability to do anything, as he is no longer connected with the TRUST and has no knowledge.