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Case pits Fort Lauderdale bankruptcy judge vs higher federal courts

Case pits Fort Lauderdale bankruptcy judge vs higher federal courts
U.S. Bankruptcy Judge Raymond Ray, left, and U.S. District Judge Darrin Gayles

By Noreen Marcus, FloridaBulldog.org

not often criticize one another in public. A judge hardly calls out a
colleague for holding a bogus trial.

that’s exactly what Miami U.S. District Judge Darrin Gayles did last month to
Fort Lauderdale U.S. Bankruptcy Judge Raymond Ray. In response to Gayles, Ray
“should never have conducted” a 11-day trial within the case of Wortley v. Chrispus
Venture Capital.

That’s just one of the oddities on this only-in-South Florida legal saga. Other features are smoking-gun emails, a disgraced associate of the notorious Scott Rothstein, and a recreation plan to save lots of the planet with clean gasoline. The company shaped to try this, International Energies LLC, imploded into pieces which might be still being collected, 9 years later, in bankruptcy courtroom.

years ago the 11th Circuit U.S. Courtroom of Appeals powered previous another taboo
when its judges accused bankruptcy lawyer Chad Pugatch of masking up a
shopper’s false statements and hiding incriminating emails within the Wortley case.
The courtroom informed Ray to ensure Pugatch, his shopper, and the shopper’s enterprise
companion didn’t “profit from their misconduct.”

In an trade
between 11th Circuit Judge Peter Fay and Pugatch, Fay blurted, “That’s an
outright lie,” in line with the transcript of a July 30, 2014 listening to. Pugatch
had just repeated shopper Richard Tarrant’s denial that the scheme at the middle
of the case ever existed.

The Atlanta courtroom’s opinion, handed down two
weeks after the listening to, lists the various Florida Bar guidelines Pugatch might have
violated by allowing his shopper to provide false testimony. The opinion apparently
launched a Florida Bar investigation of Pugatch.

The litigation also calls into question the
methods and rulings of Ray, who announced in December he’ll retire from the
Fort Lauderdale bankruptcy bench later this yr.

Do-it-yourself lawyer

And it turned Boca Raton funding banker Joseph
Wortley into a do-it-yourself lawyer. When Ray ordered the trial that Gayles
just lately censured, Wortley needed to go buy a ebook about courtroom process.

Wortley additionally maintains an internet site concerning the case.

In his order last month, Gayles reversed Ray’s
anti-Wortley ruling, the results of that pointless trial. Gayles ordered Ray
to rule for Wortley, assess his damages, and sanction Pugatch and the others
simply as the 11th Circuit advised Ray to do 5 years ago.

Not solely has that not occurred, Ray primarily
tried to overrule the 11th Circuit, a courtroom that sits one rung under the U.S.
Supreme Courtroom – and two rungs above him.

Lawyer Chad Pugatch

In an interview with Florida Bulldog, Pugatch denied the false statement cost and stated he didn’t withhold any e-mail proof. Pugatch characterised the emails as benign and brought out of context.

He has requested Gayles to rethink his ruling
as a result of the trial in entrance of Ray was the first time he was allowed to defend
himself and his shopper, Pugatch stated. Before that, their due process rights
have been ignored, he asserted.

“Anyone who reads Judge Ray’s order can see
that we didn’t do anything mistaken,” Pugatch stated. “That’s vindication in our

Judges are barred from speaking about issues
which will come earlier than them, and the Wortley case may return to Ray.

Wortley stated lately he couldn’t recall
profitable a single argument in bankruptcy courtroom. “If I stated the sun rose within the
east, and Chad [Pugatch] stated it rose in the west, Judge Ray would say it rose
in the west,” he stated.

The 11th Circuit spots a plot

In 2014, the 11th Circuit ruled that James
Juranitch and Richard Tarrant, Wortley’s erstwhile partners in International Energies,
schemed to shove him out the door. International was owned by Wortley, Juranitch, and
Chrispus Venture Capital LLC, Tarrant’s firm.

Advised by Pugatch, the courtroom stated, Juranitch
and Tarrant used involuntary bankruptcy to pressure an public sale of International’s belongings.
The profitable bid was $750,000–a small fraction of what Wortley stated the corporate
was value. The successful bidder was Chrispus, the identify on the bankruptcy

James Juranitch

As Tarrant and Juranitch started a new firm, Plasma Power LLC, Wortley sued them for allegedly filing the International Energies petition in dangerous faith.

Pugatch stated the petition was a great faith
try and revive International Energies. “The company was lifeless earlier than the bankruptcy
was filed,” he stated.

Ray agreed with Pugatch. It wasn’t till the
case reached the 11th Circuit that Wortley started gaining floor.

Wortley’s Exhibit A is a string of emails
between Tarrant and Juranitch that Wortley found late in the recreation. The
emails dated June 17-19, 2010 detailed their plan to buy out International Energies on
a budget and open Plasma Energy.

“Lastly the [new company] might have to face
up to a legal battle from [Wortley] and must dot its I’s and cross its
T’s,” Juranitch stated in a June 17 e mail to Tarrant.

The elusive e-mail drop

Through the authorized battle, Wortley acquired a
load of documents from his former partners that should have included the
tell-tale emails, but didn’t, the 11th Circuit noticed. Pugatch stated he’d
handed over every related communication.

Steven Lippman

Ultimately Wortley acquired the emails from Steven
Lippman, an affiliate at Pugatch’s regulation agency who was tidying up a related state
courtroom case before going to jail. An ex-partner in Scott Rothstein’s Fort
Lauderdale agency, Lippman obtained a three-year sentence for aiding and profiting
from Rothstein’s large Ponzi scheme.

Pugatch stated the emails have been made obtainable to
Wortley, but he didn’t retrieve them. “The stuff he says was withheld was
sitting there in a field for months and his attorneys failed to select them up.”

The 11th Circuit disagreed. “In sum, the
parties, who had the evidence that Wortley wanted to substantiate his claims,
blocked his entry to it and deliberately prevented him from discovering it.”

The courtroom voided the International Energies sale and
ordered other next steps: Sanctions that Ray had imposed towards Wortley would
be vacated. Wortley was to be compensated “for any and all damages,” plus
attorneys’ fees and prices, the 11th Circuit decreed.

Ray’s supervisors on the appellate courtroom informed
him to do every part mandatory “to ensure that Chrispus, Juranitch, Tarrant,
and Pugatch do not profit from their misconduct and abuse of the bankruptcy
course of.”

Plasma Power continues to be in operation after 9
years. Juranitch declined to remark via an assistant.

A ‘resurrection’

Tarrant stated he needed to reorganize International Energies, and an e-mail stating his want to “resurrect” the corporate was shortened to remove that word and subsequently falsified.

Richard Tarrant

Tarrant denied ever
making a false assertion about his talks with Juranitch before the bankruptcy
filing. Based on Tarrant, when he stated he by no means discussed pushing Wortley
out of the corporate, he meant they by no means had a dialog about that.

Pugatch stated the company that succeeded International
Energies is one other failure. “Plasma Power has by no means made a penny, by no means had a
deal come via.”

Tarrant stated, “Plasma Power is on the again burner as we
now pursue a water remediation know-how.”

In 2017, Ray held the 11-day trial through which
Wortley represented himself. Then Ray issued a 70-page order that blasted
Wortley and awarded him nothing.

“It’s the opinion of the Courtroom that Mr.
Wortley’s private animosity and rancor in the direction of Mr. Juranitch and Mr. Tarrant
has fueled this case far past the rational stopping point of a standard
bankruptcy case,” Ray wrote in his June 25, 2018 order.

The judge held Tarrant and Juranitch blameless, finding they merely used bankruptcy as a car to reorganize the company. Based mostly on “new” and “substantially different” proof, he concluded that Wortley was the only one who benefited from the bankruptcy.

Enter the Florida Bar

And about these emails the 11th Circuit needed
Pugatch punished for concealing?

Ray stated the issue occurred in state courtroom,
so he had no right to difficulty sanctions. Even when he might act, “the delay in
producing the ‘smoking gun’ emails was justifiable or excusable, and the
alleged misconduct solely rose to the level of recklessness, on the most.”

Wortley stated he filed a grievance towards
Pugatch with the Florida Bar after the 11th Circuit’s opinion. Pugatch
stated the matter was resolved years in the past in his favor. Asked for written proof,
he declined to share it.

The Florida Bar doesn’t publicly acknowledge
it’s investigating a lawyer until and until there’s a discovering of possible
trigger to proceed towards the lawyer.

The International Energies bankruptcy, now a Chapter
7 liquidation, grinds on without Pugatch. He’s nonetheless within the struggle, but only on
his personal behalf. He anticipates clarification from a higher courtroom.

“By some means, it’s going back up to
the 11th Circuit and we’re going to seek out out what they meant,” Pugatch stated.

After Judge Gayles’ ruling last month, an
lawyer for Wortley asked him to step in and execute the 11th Circuit’s grasp
plan from 2014 due to Ray’s “hostility to Wortley’s position.” The movement
is pending.

Wherever the case lands, Wortley stated he’ll
struggle on. He spoke nostalgically about beginning International Energies together with his previous
buddies Juranitch and Tarrant. They moved in the identical social circle, meeting
and enjoying golf on the Royal Palm Yacht and Country Club in Boca Raton.
Tarrant has special status because he’s married to Hillsboro Seashore Mayor Deb

The three males needed to build an enterprise
that might turn trash into power. Juranitch contributed concepts, Tarrant seed
money, and Wortley administration.

“It will have been an enormous advance in dwelling
for human beings all through the world,” Wortley stated wistfully.

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