A Santa Ana bankruptcy trustee has accused National Association of Realtors President Gary Thomas of fraudulently transferring $578,000 to himself and two sons in the year before his real estate brokerage sought bankruptcy protection.
Thomas made "an attempt to divert and conceal assets from the creditors" of his real estate firm, Beneficial Services Inc., trustee John M. Wolfe alleged in a bankruptcy court lawsuit filed Friday. The company did business as the Altera Real Estate chain in South Orange County.
The payments included $199,497 paid to Thomas. His sons Timothy Thomas, Beneficial's chief financial officer, received $135,962, while Steven Thomas, the executive vice president, received $242,819, according to the lawsuit.
"Defendants knew or should have known that they were not entitled to these funds," the lawsuit states.
Gary Thomas responded that the $578,000 was salary paid during the final year before the 2011 bankruptcy, adding that he stopped taking a paycheck as his company's finances worsened.
Both Gary and Steve Thomas denied there was any effort to divert funds out of their real estate chain before the bankruptcy filing. Both stated that the collapse of their business left them broke after going through personal bankruptcies.
"If we had enriched ourselves, we would have money," Gary Thomas, a Mission Viejo resident, said Monday during a break from a National Association of Realtors meeting in Washington, D.C. "We wouldn't have had to file bankruptcy. No way we enriched ourselves."
Court records showed that the combined debts from Gary Thomas' corporate and personal bankruptcies totaled $13.2 million, while the combined assets totaled $1.7 million.
"If I had concealed assets, would I be living in an apartment?" said Gary Thomas, who lost his Coto de Caza home in a short sale.
Steve Thomas, who now works for a title insurance company and runs ReportsOnHousing.com, also denied the accusations.
"I understand the need for the bankruptcy court to do their diligences, but ... they'll find I have no assets, nor were there any to report," Steve Thomas said. "I regret the business ended as it did."
Timothy Thomas couldn't be reached for comment Monday.
In addition to seeking repayment of the $578,000, the lawsuit also seeks punitive damages.
The lawsuit was one of two "claw back" actions bankruptcy trustee Wolfe filed last week seeking to recover "preferential transfers" made before the bankruptcy. (A trustee is appointed by a bankruptcy judge to administer Chapter 7 proceedings.)
Wolfe also sued the owners of a regional Re/Max Real Estate chain that collected at least $98,000 in payments from Gary Thomas and Beneficial in a 2008 out-of-court settlement.
In November, Gary Thomas became president of the National Association of Realtors. Some members, however, objected to his appointment, saying his financial woes made Thomas a poor choice to represent the nation's Realtors. Thomas and his supporters blamed his problems on the nation's housing market collapse.
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