The following was filed with the Bankruptcy Fraud unit of the U.S. Attorney, Northern District of Illinois on March 4, 1996.

The U.S. Attorney James Burns and Deputy U.S. Attorney Joan Safford connived with the parties involved in defrauding the Bankruptcy estate, becoming participants in the fraud upon the court and fraud upon the Bankruptcy estate.

The current U.S. Attorney for the Northern District of Illinois, Scott Lasser, has not taken any action, and therefore has connived with, and participated with the fraud upon the court and fraud upon the estate.

March 4, 1996
 

Deputy U.S. Attorney Joan B. Safford
United States Attorney
Northern District of Illinois
219 S. Dearborn St. - 5th Floor
Chicago, IL 60604

Dear Ms. Safford:

          Re: Operation Full Disclosure

I had intended to file a complaint of bankruptcy fraud upon the following participants last week. [Exhibit A].

Previously I had advised Lawrence Fisher, the law firm of Gardner, Carton & Douglas and their attorneys on February 26, 1996 [Exhibit A] of my intent and asked them whether they wished to join me in reporting this fraud. Apparently they prefer to aid, abet, assist, and/or participate in a fraud upon, and in a scheme to defraud, the bankruptcy court.

The news that your task force publicly disclosed specific complaints against certain participants involved in bankruptcy fraud on February 28, 1996 was encouraging.

I talked with your Mr. Randall Samborn on March 1, 1996 and he advised me that your Task Force covered all areas of fraud in the bankruptcy sphere, including fraud by creditors, attorneys, and/or by trustees, and includes the making of any false statements to the bankruptcy court or in bankruptcy court documents.

As I am not an attorney and am appearing without counsel in the bankruptcy court, the purported creditors and their attorneys evidently decided that they could make any claim, and the bankruptcy judge would accept their version rather than the true facts of the case.

Janet Reno is quoted as saying "Bankruptcy fraud victimizes all of us. It is wrong, it is cheating, and it is criminal. And we are committed to action."

U.S. Attorney James B. Burns is quoted as saying in his press conference on Thursday, February 29, 1996 "We must have a bankruptcy system that is fair to those debtors and creditors and all other people that participate in the bankruptcy court that are honest and do it the right way." In this instance, the purported creditors, with the complete assistance and participation of the trustee, connived to defraud the bankruptcy court and the debtor. I hope that the Task Force will promptly investigate and stop the described fraud, before the debtor unlawfully loses his property.

I am being defrauded by a scheme involving the purported creditors, with the full help, assistance, participation and collusion of the trustee. The purported creditors and the trustee have manipulated the bankruptcy process to have false claims made against, and to enforce the payment of false claims upon, the estate.

Acts of bankruptcy fraud, in addition to those cited herein, have occurred and will be evident to the trained eye of your task force as they review the entire action. I have tried to present only some of the most glaring acts of bankruptcy fraud within the few days since Operation Full Disclosure was made public.

I am filing charges of bankruptcy fraud, mail fraud, and involvement in a scheme to defraud against the following attorneys: Regina A. Scannicchio, Allen S. Gabe, Robert K. Blain, Benjamin P. Hyink, Michael J. Dioguardi, Lawrence Fisher, James D. Parsons, Linda A. Green, and Robert H. Skilton, for being either directly involved, or in having knowledge or information of, and aiding, abetting, assisting and/or participating in, bankruptcy fraud, mail fraud, and in a scheme to defraud.

I submit that some or all of the above attorneys have acted in violation of 18 U.S.C. §152; that some or all of the above attorneys have acted in violation of 18 U.S.C. §2; that some or all of the above attorneys have acted in violation of both 18 U.S.C. §§2 and 152; and that some or all of the above attorneys have engaged in actions involving mail fraud.

On September 24, 1993 attorney Regina Scannicchio, an attorney with Hyink & Scannicchio, Ctd., filed her "Creditor's Motion to Convert Debtor's Chapter 11 Case to Case under Chapter 7. [Exhibit B]. In her motion, she falsely claimed that Eugene's chapter 7 case was converted to a chapter 11 case on June 28, 1993. [Exhibit B, pg. 8].

She further claims that Eugene was required to file certain documents under chapter 11 Rules, by July 28, 1993 under Rule 1007(a)(3), [Exhibit B, pg. 8], and by July 13, 1993 under other Rules.

In addition, she claimed that since Eugene was not a business debtor, Eugene could not lawfully be a chapter 11 debtor [Exhibit B, pg. 13].

These claims were false and were presented only for the purpose of manipulating the bankruptcy court proceeding for the purpose of defrauding Eugene's estate, and covering up her filing of fraudulent filings, motions, and proofs of claims with the bankruptcy court.

The Order converting Eugene's chapter 7 case to a chapter 11 case was not issued until October 12, 1993. [Exhibit C]. This Order was actually issued 105 days after Ms. Scannicchio falsely informed the court that it was issued.

This same Order was also issued 18 days after Ms. Scannicchio filed her motion to have Eugene's chapter 11 case reconverted to a chapter 7 case. As Eugene's case was not a chapter 11 case before or on September 24, 1993, Eugene could not, under law, operate as a chapter 11 case until October 12, 1993, and therefore he could not lawfully comply with chapter 11 requirements, e.g. Rule 1007, prior to his case being converted to a chapter 11 case on October 12, 1993, as falsely claimed by Ms. Scannicchio.

Ms. Scannicchio was in court on October 12, 1993 when this Order was issued; she could have, she should have, and she had a duty to, inform the court of her false pleading, but she did not. Regina Scannicchio continued perpetuating her fraud upon the bankruptcy court; it was knowing, intentional and deliberate.

More than two years prior to Ms. Scannicchio filing her above motion, the United States Supreme Court, in Toibb v. Radloff, 501 U.S. 157, 111 S.Ct. 2197 (1991), held that any person who was a chapter 7 debtor could be a chapter 11 debtor. A business requirement was not part of the requirement to be a chapter 11 debtor.

I submit that Regina Scannicchio's purpose was to falsely accuse Eugene for the non-performance of acts that, under law, he could not perform at that time, to manipulate the judicial process, to deprive Eugene of his legal right to be a chapter 11 debtor, and to have assigned a trustee who would approve her false claims against the estate filed previously on August 19, 1993.

Having filed multiple fraudulent proofs of claims in the bankruptcy court, Ms. Scannicchio had to prevent them from being challenged, and had to keep control of the process. Having Eugene as the debtor-in-possession under chapter 11 would expose her fraudulent filings. Regina Scannicchio filed fraudulent pleadings to cover-up her filing of fraudulent proofs of claims.

Regina Scannicchio, Allen S. Gabe, and Robert K. Blain shared the same office, and probably were in reality and in practice, partners, but they went under different law-firm names. Ms. Scannicchio had to protect her partners from being exposed as having acted to create a fraud upon the Illinois courts.

Attorney Scannicchio knew that Eugene, as debtor-in-possession, would vigorously contest the false and fraudulent claims.

On August 19, 1993, attorney Regina A. Scannicchio filed a proof of claim on behalf of her client, Phyllis Alpern, for the amount of $76,000. plus interest.

Regina Scannicchio failed to inform the bankruptcy court that her client had, inter alia, (1) filed multiple lawsuits in the Domestic Relations Division, Circuit Court of Cook County, case nos. 90-D-2723/91-D-5122 and possibly others that this non-represented party has not found, for the unlawful purpose of obtaining the Illinois judge of her choice ("judge-shopping"), (2) committed fraud in the procurement of the court's jurisdiction ⁽¹⁾, (3) no cause of action in the Illinois courts, (4) not filed a petition for dissolution of marriage in the Illinois courts, (5) not properly served a summons on the respondent, (6) the court act in violation of due process, (7) not complied with procedures that confered any Constitutional or statutory authority upon the Illinois court, and other acts that did not confer upon, and/or deprived, the Illinois courts of any lawful authority. The Petitioner had unlawfully concealed those facts from both the Illinois courts and the bankruptcy court. Her client than selected the judge which she presumed would gave her the unlawful relief that she wanted. Regina Scannicchio also failed to inform the bankruptcy court that her client did not select the judge assigned in the first-filed action. Since only the judge assigned in the first-filed action had any lawful authority, the purported judgment of $76,000. plus interest, issued by the 91-D-5122 judge, was null and void. The court did not have any lawful authority due also to the other causes of the lack of lawful authority.

Regina Scannicchio did not make a full disclosure to the bankruptcy court.

The purported judgment of $76,000. plus interest was part of a scheme to defraud Eugene.

On October 19, 1993, attorney Regina A. Scannicchio filed an additional proof of claim on behalf of her client, Phyllis Alpern, for the amount of $5,000. As this purported judgment was issued by the aforementioned court without any lawful authority, it also is null and void and is an additional fraudulent act by attorney Regina A. Scannicchio in the attorneys' scheme to defraud the estate in bankruptcy court.

Regina Scannicchio, as attorney for Robert K. Blain, was required by law to report the filing of a false proof of claim against the estate, see below.

I submit that Regina Scannicchio was also involved in mail fraud.

On August 19, 1993 attorney Robert K. Blain filed a purported proof of claim against Eugene's estate in the amount of $6,100 plus interest. This claim was based on a purported judgment entered against Eugene in Alpern v. Liebcase no. 92C2391.

On October 28, 1994 the Seventh Circuit court of Appeals vacated the entire judgment, Alpern v. Lieb, 38 F.3d 933, 935 (1994), as the judge "lacked authority" to issue the judgment. When a judge lacks authority, the judgment becomes void ab initio and was fraudulent from day one, i.e. it was null and void on September 22, 1992 and at all times since. It was never a valid claim against the estate, even when it was filed on August 19, 1993.

Attorney Blain, as of March 1, 1996, still had not vacated the void claim of $6,100. plus interest against the estate, even though, at no time, has there ever been a valid claim by attorney Blain against the estate.

Even though attorney Robert K. Blain's purported claim against Eugene and against his estate was vacated by the 7th Circuit on October 28, 1994, Mr. Blain still claims that the $6,100 judgment is valid and intends to collect these funds fraudulently from the estate, with the collusion of Lawrence Fisher and Regina Scannicchio.

Attorney Blain is not entitled to even one-cent from the estate. Having lost in the 7th Circuit, he apparently intends to defraud the estate of $6,100. plus interest in the bankruptcy court.

Robert K. Blain persists in pressing such warrantless claim.

I submit that the purported proof of claim by Robert K. Blain was filed in violation of 18 U.S.C. §152.

On August 19, 1993, attorney Regina A. Scannicchio filed a proof of claim on behalf of her client, attorney Allen S. Gabe, for the amount of $10,499.40 ⁽²⁾ plus interest.

No judgment of interest was ever granted to attorney Allen S. Gabe. This false claim was filed to further defraud Eugene and Eugene's estate.

I submit that the purported proof of claim by Allen S. Gabe is in violation of 18 U.S.C. §152.

Under prevailing law, Lawrence Fisher should not be the trustee of the estate. Under Toibb,supra, the purpose of the Bankruptcy Code is the protection of the debtor, and the debtor has the right to reorganize, rather than liquidate, should he wish. The Supreme Court, in Toibb, has ruled that a chapter 11 debtor does not have to be a business to be entitled to use chapter 11 relief.

In Toibb, the chapter 7 trustee-respondent was represented by Judge Kenneth Winston Starr, at that time the Solicitor-General of the United States. In Judge Starr's "Brief of the Respondent in Support of the Petitioner", Judge Starr argued to the Court that under the Bankruptcy Code reorganization (chapter 11) was the intent of Congress, and not liquidation (chapter 7). If the debtor preferred the benefits of chapter 11, then he had a right to chapter 11 relief, except under certain specific enumerated circumstances that are not applicable here. Judge Starr's argument was fully accepted by the Supreme Court.

Fisher should have informed the bankruptcy court that Scannicchio's motion to convert the case from a chapter 11 case to a chapter 7 case was false and contrary to law, but that would have deprived Fisher of trustee's fees from the estate. Eugene then would be the debtor-in-possession and Fisher would not be the designated trustee. By his actions, Fisher is defrauding the estate with fees that should not have to be paid by the estate, and by covering up the fraudulent actions of Scannicchio, Gabe, and Blain. Without Fisher, the scheme to defraud the estate could not, and would not, exist.

Toibb further requires that the trustee maximize the value of the estate. Toibb, at 2201. Fisher knows of the fraudulent claims against the estate, and yet he has done nothing to stop them; for if he does, he will be unable to defraud the estate with his fees. By his failure to act to maximize the value of the estate, Lawrence Fisher has engaged in bankruptcy fraud upon the estate.

Under Toibb, Fisher has no legal right to be a trustee of the estate; he is unlawfully protecting the fraud by the purported creditors and the fraud by the attorneys of the purported creditors and those in Gardner, Carton & Douglas. With Fisher not being the trustee, the purported creditors could not defraud the estate, and neither Fisher nor the attorneys in Gardner, Carton & Douglas would be able to collect any unlawful fees.

Fisher has not applied the set-offs against the purported claim of Phyllis Alpern.

Even if the purported proof of claim of $5000.00, reported above, was valid, the trustee had the fiduciary duty to mitigate any claim against the estate. Phyllis Alpern had previously stated that she could apply for a reissue of the $5000. bond that she misplaced for a sum of $200.00. It was the trustee's duty in preserving and maximizing the assets of the estate to order her to replace the purportedly lost $5000. bond and charge the estate only the $200.00 that it would cost her to have it replaced.

Further, since I believe that the bond was only a 5-year bond and since the claim in the Illinois court was made in 1992, when the bond was several years old at that time, Phyllis Alpern ⁽³⁾ has probably already redeemed that bond. If so, then there is a scheme to collect twice, once from the bond issuer and then again from the estate. This would represent another bankruptcy fraud upon the estate, and effectuated with the approval of the trustee.

The trustee violated his fiduciary duty to the estate by his failure to require any of the creditors to produce strict proof of their claims.

The trustee violated his fiduciary duty to the estate and to the debtor; he has no fiduciary duty to the creditors. He continues to countenance false claims against the estate; he continues to pursue and to enforce erroneous claims against the estate; he advocates incorrect law to the bankruptcy court; and he states law to the bankruptcy court that is different from what the law is. The trustee has not been open, honest, forthright, and/or candid to the bankruptcy court; he connives to defraud the bankruptcy court.

The trustee sat with the creditors in court, and leaves the court with the creditors' attorney. The trustee forgot whom he represented.

At no time did Fisher inquire about any aspect of the purported claims; he only attempted to intimidate Eugene into going along with the fraud.

Attorney Benjamin P. Hyink, of Hyink & Scannicchio, Ctd., appeared in court on behalf of the purported creditors, and sat with the trustee and Linda Green. All claims of fraud upon Regina A. Scannicchio applies to Mr. Hyink.

Attorney Michael J. Dioguardi, of Hyink & Scannicchio, Ctd., appeared in court and sat with the trustee. All claims of fraud upon Regina A. Scannicchio applies to Mr. Dioguardi.

I have been informed that attorney James D. Parsons is the managing director of the law firm of Gardner, Carton & Douglas. Upon the order of the bankruptcy judge dated January 22, 1996 and made effective as of September 8, 1994, the entire law firm of Gardner, Carton & Douglas was approved to represent Lawrence Fisher, the purported trustee. Mr. Parsons had been informed of the fraud by Lawrence Fisher, some examples being Exhibits A and D, but he has failed to do anything to stop the fraud by members of his firm. Mr. Parsons had been informed that, under the prevailing law of Toibb, Fisher could not be the lawful trustee. Had Mr. Parsons acted to demand that Fisher resign as trustee, his law firm would lose fees. I submit that he prefers to remain a participant in bankruptcy fraud. He has put the firm's fee issue ahead of the firm's responsibility to the court and has chosen to have the firm engage in bankruptcy fraud.

James D. Parsons and the law firm of Gardner, Carton & Douglas have therefore been involved in bankruptcy fraud and mail fraud since September 8, 1994.

Attorney Linda A. Green represented Mr. Fisher/Gardner, Carton & Douglas before the bankruptcy court.

Under F.R.C.P. Rule 11, she represented to the bankruptcy court that she had personally reviewed all claims and statements made by, and on behalf of, the trustee, Regina Scannicchio, and the purported creditors, had found them all to be true and warranted by existing law, and that she has evidence to support her pleading. As she had reviewed all evidence and prior proceedings, she knew, or should have known, of the fraud upon the bankruptcy court, and she should have advised the bankruptcy court of the fraud. Having failed to do so, she became an accessory to the fraud.

Having personally reviewed all preceeding motions and acts, pursuant to F.R.C.P. Rule 11, all claims of bankruptcy fraud of Lawrence Fisher and of Regina A. Scannichio also apply to Linda A. Green.

I summit that in addition to bankruptcy fraud, Ms. Green is involved in mail fraud.

Attorney Robert H. Skilton filed the latest motion [Exhibit D]. In his motion, he included Eugene's February 26, 1996 letter to James D. Parsons, Managing Director of Gardner, Carton & Douglas, relative to the fraud by FISHER (Lawrence Fisher, the law firm of Gardner, Carton & Douglas, and each and every attorney therein, footnote 1). [Exhibit D, subexhibit]. This motion confirmed that he, James D. Parsons, and the law firm of Gardner, Carton & Douglas had been given notice of the trustee's fraud. Instead of taking any action to stop the fraud, Skilton filed his motion to enforce the fraud and to unlawfully take Eugene's property away from him.

Under F.R.C.P. Rule 11, he represented to the bankruptcy court that he had personally reviewed all claims and statements made by, and on behalf of, the trustee, Regina Scannicchio, and the purported creditors, had found them all to be true and warranted by existing law, and that he has evidence to support his pleading. As he had reviewed all evidence and prior proceedings, he knew, or should have known, of the fraud upon the bankruptcy court, and he should have advised the bankruptcy court of the fraud. Having failed to do so, he became an accessory to the fraud.

Instead of proceeding with caution to avail himself of more time to investigate, should it be necessary, attorney Skilton moves, on behalf of Fisher, to hasten the fraud rather than to eradicate it.

Having personally reviewed all preceeding motions and acts, pursuant to F.R.C.P. Rule 11, all claims of bankruptcy fraud of Lawrence Fisher and of Regina A. Scannichio also apply to Mr. Skilton.

In addition to bankruptcy fraud, Mr. Skilton is involved in mail fraud.

Although all of the RULES OF PROFESSIONAL CONDUCT for the NORTHERN DISTRICT OF ILLINOIS applies to all of the above attorneys, I call special attention to Rules 3.3, 8.3, and 8.4. Each and every attorney herein named as participants in bankruptcy fraud and/or mail fraud, whether the creditors, the trustee, and the lawyers of Gardner, Carton & Douglas, are bound by these Rules. They have engaged in actions in violation of these Rules.

The RULES OF PROFESSIONAL CONDUCT for the NORTHERN DISTRICT OF ILLINOIS are law. Failure to fully comply with the Rules is an unlawful act. Failure to inform the court is an act contrary to full disclosure and is unlawful.

The above attorneys have knowingly, intentionally, and deliberately failed to make a full disclosure to the bankruptcy court; they have committed fraud upon the bankruptcy court.

I understand that fraud also occurs when one uses lawful means to accomplish an unlawful action.

I trust that you are committed to action to stop all types of bankruptcy fraud and that you will immediately proceed to stop the above fraud from continuing, before I lose my property through unlawful means by the above attorneys.

Yours truly,
 

Eugene Alpern
 

bc:

1. Vulcan Materials Co. v. Bee Const. Co., Inc., 101 Ill.App.3d 30, 40, 427 N.E.2d 797 (1st Dist. 1981)

2. Eugene claims that the amount of $10,499.40 is part of a scheme to defraud, and a part of the overall broader scheme to defraud Eugene, his estate, and the bankruptcy court.

This purported claim was issued without lawful authority by the earlier referenced 91-D-5122 court, and is null and void.

Eugene believes that he does not owe Gabe any monies; Gabe's proof of claim is fraudulent and a violation of 18 U.S.C. §152.

3. The bond had been purchased prior to 1989.

Shortly thereafter, Phyllis Alpern left Illinois and moved to Virginia, taking with her property that Eugene believes lawfully belongs to the bankruptcy estate. The trustee has not made any effort to obtain this estate property.

Having participated in a scheme to defraud Eugene and the Illinois courts, Phyllis moved out of state to continue her participation with her attorneys in a new fraudulent scheme upon the bankruptcy court.

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