First he gave executives who killed Circuit City his blessing to blow the company’s last dime on bonuses for themselves. Now U.S. Bankruptcy Judge Kevin Huennekens is telling the defrauded customers of defunct LandAmerica 1031 Exchange Services the money they entrusted to LandAm is no longer theirs.
These poor suckers made the mistake of letting LandAm hold the proceeds from sales of investment properties so they could avoid paying capital gains tax while they found other properties to invest in. LandAm collected these deposits with a smile almost right up to the moment it went under.
Huenneken’s ruling that the money now belongs to LandAm is based on the loophole that customers’ agreements with the company didn’t contain the words “trust” or “escrow.”
Silly people just believed what the company stated was its whole reason for existing.
Huenneken’s anti-consumer interpretation may ultimately kill the 1031 exchange business altogether. Only an idiot would give a penny to such a company, knowing the company could disappear tomorrow and keep everything, no strings attached.
To top it off, these ripped-off customers now owe those capital gains taxes on the money Huenneken is letting LandAm steal, unless President Obama himself declares the situation a disaster and lets them off the hook with the IRS.
The customers’ only recourse is to line up with all LandAm’s other creditors and hope someone throws them a scrap.
Justice may be blind, but this ruling is so morally and ethically repugnant and utterly devoid of common sense, Huennekens needs to be de-benched and psychologically evaluated before other bankrupt companies launch the biggest siege Richmond has seen since the Civil War, seeking more sweet deals.
Home Depot will probably see a big spike in shovel sales, now that investors know a hole in the backyard is the only safe place to keep their fortunes.