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Initial Filing of Bankruptcy On November 27, 2006, CRI under intense scrutiny by the Department of Education and being pursued by numerous creditors and at least one lawsuit, finally filed for bankruptcy. The bankruptcy case no. is Bankruptcy No. 06-14202 in the United States Bankruptcy Court For the Western District of Washington at Seattle. The names of approximately 2900 ex-students were listed as possible creditors in the original summary of schedules. Mr. Janisch, CRI's sole shareholder and director filed the bankruptcy as a "no asset" case claiming that CRI had no assets. A handful of ex-students went to the initial Section 341 Meeting of Creditors and provided information to the trustee that CRI had failed to disclose numerous assets in its filing. The trustee hired a forensic accountant and it was discovered that not only had CRI not disclosed assets, Alen Janisch took $600,000 - $800,000 out of the corporation the last six months it was in operation! (See top of page 8 of transcript of hearing) He virtually caused his own insolvency, considering he only filed bankruptcy on $750,000 worth of debt.
Students Protest Hiring of Collection Agency to Pursue Student Debts
For assets, CRI gave the court $200,000 worth of accounts receivables from students who owed the school after their financial aid had run out. CRI wanted to turn these account receivables over to collection agencies. Students objected to the court allowing CRI payment from students who had been cheated by the school. Judge Karen Overstreet agreed, and signed an order denying the trustee's request to hire a collection agency to pursue the overdue accounts, commenting that she didn't want the students who had essentially been defrauded to be pursued by collectors. If you or someone you know is in collections, please direct them to the transcript of the hearing and order. You or they may need to consult an attorney or possibly the bankruptcy court itself for the effect it may have on you. Though it takes away from money that could have gone to pay creditors, it would have been re-victimizing the same people!
WTECB Owed $540,877
According to the Private Vocational School Act, the state is obligated to pursue repayment to the Tuition Reimbursement Fund. In the Section 341 Meeting of Creditors in the Bankruptcy Court in December of 2006, Mr. Janisch stated under oath it was his understanding that by taking the bankruptcy action, the state would not pursue him for that money, and the WTECB was not listed as a potential creditor in his filing. However, shortly before the deadline, the WTECB did indeed file a claim in bankruptcy totaling $540,877 that had been reimbursed to students due to complaints and CRI's closure.
Janisch Deposition
Alen Janisch was deposed on June 6, 2007, by James Rigby who is representing the U.S. trustee's attorney. There is a copy of his deposition including exhibits. This deposition showed how Alen manipulated CRI's finances in order to appear to be solvent before Department of Education audits. It also showed how he transferred almost 1 million dollars from CRI right before it closed.
On June 22, 2007
Preference Complaint
Mr. Rigby filed a preference complaint filed against Alen Janisch and Kai Moldskred, his former finance manager, demanding the return to CRI of principal sums of $905,360 from Alen Janisch and $464,152 from Kai Moldskred. The allegations are that Alen Janisch looted almost a million dollars from CRI before it closed. The trustee's complaint demands a release of a trust deed worth $295,000 and two diamond rings worth approximately $60,000. This complaint was filed right after Alen Janisch was deposed and the trustee inquired as to what the legitimate basis was for Janisch's withdrawing $905,360 from CRI's bank accounts within six months before CRI declared bankruptcy. Mr. Janisch's responses in the deposition provided enough evidence for the trustee to feel that he had pilfered money and other assets from the corporation. A preference complaint is basically an allegation that a corporate officer, director, or shareholder has "transferred money to himself or others in an attempt to defraud, hinder or delay a creditor." Alen Janish and Kai Moldskred have both filed responses to the preference complaint denying they did anything wrong despite the fact their answers direct contradict Alen Janisch's deposition testimony. Here a copy of Janisch's response and here is Moldskred's.
October 23, 2007
Motion for Summary Judgment
The trustee in the bankruptcy case has filed for a motion for summary judgment against both Janisch and Moldskred. Should this be granted, the preference case would be over and judgment would be entered against both of these defendants for the amounts prayed for. The Trustee would enforce these judgments on behalf of the CRI estate.
November 23, 2007
Janisch Declares Personal Bankruptcy
January 17, 2008
Janisch Finally Files His Personal Bankruptcy Schedules
Here are Alen Janisch's personal bankruptcy schedules which include a summary of schedules, a creditor matrix and the Chapter 7 means test. He has claimed heirloom exemptions for two diamond rings worse in the neighborhood of $72,000 and the trustee has objected to those exemptions.
February 25, 2008
Janisch Does Not Show Up for Second Meeting of Creditors
The Bankruptcy Trustee has made a motion to extend the date to for creditors and the trustee to object to discharge because of Janisch's various delays and noncompliance in his personal bankruptcy. His schedules contain many errors and omissions and statements which appear to be in stark contrast to reality as the trustee points out in his motion to be heard on March 14, 2008. In a declaration to the court Alen Janisch claims that he is seeking treatment for alcoholism.
February 25, 2008
Trustee Moves to Evict Janisch From House
Janisch returned from his "treatment" and has apparently neglected the house which of course the trustee is in the process of selling. Thus, the trustee has made a motion to evict him and have the U.S. Marshall assist if necessary. That motion will be heard on March 14, 2008.
March 7, 2008
Judge Has Lifted the Automatic Stay to Allow CRI Preference Suit To Continue
The Judge in Alen Janisch's personal bankruptcy has lifted the automatic stay so that the CRI preference suit can continue. That suit seeks the approximately $800,000 that Janisch took from CRI's coffers prior to the bankruptcy, approximately half of that which he transferred to Kai Moldskred allegedly for loans that Moldskred had made to CRI.
Alen Janisch Is Ordered to Appear for the Meeting of Creditors
The court has ordered Alen Janisch to appear for the meeting of the creditors and he did not appear. In previous court filings he had testified that he was unemployed and homeless having been evicted from his house. The attorneys for the trustees in both cases discussed the case with the creditors. A transcript of the hearing will be posted soon.
Alen Janisch's House Is Finally Sold for $300k to Kai Moldskred
Well finally, after all the impediments to the sale of Alen Janisch's house were lifted, i.e., the Alen Janisch bankruptcy filing which came automatic stay that stopped the sale of the house which the mortgage company succeeded in lifting. Janisch finally left the house after the court threatened to evict him. The house was finally listed and when a buyer pulled out of the sale at the last minute the bankruptcy court approved Kai Moldskred purchasing the house for $300,000.
The Court Granted Partial Judgment Against Kai Moldskred for $150,000
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