Jean Marc Eljwaidi, right, appears in court with attorney Steven Wolfson at the Regional Justice Center in Las Vegas on Jan. 21, 2010.
The strange bankruptcy case of Las Vegas real estate developer Jean Marc El Jwaidi has taken another unusual twist, with a benefactor stepping up yet again to pay off some of El Jwaidi’s debts.
Under a settlement disclosed in U.S. Bankruptcy Court for Nevada in Las Vegas last week, an unnamed benefactor will pay El Jwaidi’s bankruptcy estate $1 million to settle a lawsuit against El Jwaidi filed by his case’s bankruptcy trustee.
As plans for his "PG Plaza" real estate development at the Las Vegas Beltway and Russell Road fell apart in 2009, El Jwaidi was arrested on charges of bilking elderly investors in what state investigators called a Ponzi scheme to raise money for PG Plaza.
El Jwaidi and his company, Babuski LLC, separately filed for bankruptcy in 2009.
The Babuski bankruptcy case was dismissed after the company’s sole asset, the PG Plaza land, was foreclosed on by Vestin Mortgage.
The criminal charge against El Jwaidi was resolved when a benefactor, Paris limousine company owner Tony Skayem, paid restitution of $338,000 to two of the victims on El Jwaidi’s behalf.
This is the same way El Jwaidi settled for $400,000 a lawsuit filed in the bankruptcy case by investor Rito Favela Jr. The identity of the benefactor in the Favela settlement wasn’t disclosed.
The settlements involving the elderly fraud victims and Favela were noteworthy because the settlement funds were made available only to them – not to other creditors who have filed $23.3 million in claims in El Jwaidi’s personal Chapter 7 bankruptcy case.
Now, for a third time, an unidentified benefactor or benefactors will provide $1 million to settle the trustee’s lawsuit, which was filed last year. Trustees are routinely appointed by the U.S. Justice Department to ensure bankruptcy cases are properly administered.
The trustee in his case alleged El Jwaidi had failed to explain transactions that occurred in the two years preceding his bankruptcy that caused losses to the bankruptcy estate or prevented El Jwaidi from meeting his financial obligations.
The trustee threatened to oppose El Jwaidi’s discharge from bankruptcy – meaning creditors could still go after him and his assets.
A settlement of that complaint filed last week says $1 million will be provided to El Jwaidi’s bankruptcy estate for the benefit of all creditors.
"The Trustee (William Leonard Jr.) alleges that there are various potential claims pursuant (to bankruptcy law) for charges made by the debtor or his spouse on the debtor’s American Express card, and various payments made to American Express prior to the bankruptcy filing, that, if proven, would potentially bring hundreds of thousands of dollars to the estate," the settlement says.
"The Trustee shall have the opportunity to investigate the source of the $1 million to ensure that it is not property of the estate or funds of the debtor, including questioning the person or persons who will lend or gift to the debtor the funds used for the settlement," the document says.
Matthew Johnson, an attorney for El Jwaidi, said the source of the $1 million will be disclosed later as the bankruptcy case proceeds.
"Mr. El Jwaidi has always intended to repay his legitimate creditors in full. The Trustee asked for $1 million to settle all claims raised by the bankruptcy estate. Mr. El Jwaidi agreed in order to put the bankruptcy behind him and to try to move forward in life," Johnson said Tuesday. "The source of the funds will be disclosed at the appropriate time so that the Trustee may investigate the source and ensure that the settlement funds are not property of the bankruptcy estate. It will be either a gift or a loan, and all proper disclosures will be made prior to the hearing on the motion to approve settlement."
Additional creditors, including investor/lenders, in the meantime, are challenging efforts by El Jwaidi to have their claims extinguished or slashed in his bankruptcy case.
They are:
--Scott and Sherry Klempke, owed $1.195 million. Their attorney wrote in a recent filing, "To date, no money has been paid on the note."
--R&L Straightline Tile LLC. An attorney for R&L Straightline said in a recent filing the company is owed $900,000 and, "The debtor has provided no evidence of its allegation that only $250,000 is presently owed. No payments have ever been made on this account."
--Georges Nader, who says he is owed $130,000, not the $75,000 claimed by El Jwaidi.
Creditors earlier fighting these motions include Vestin Mortgage, Andrea Weiland and Judith Anderson; Davric Corp. and Jerry E. Polis Family Trust.
Many of these creditors say El Jwaidi has no standing to object to their claims and that under Chapter 7 bankruptcy law, only the trustee has standing to object on behalf of the bankruptcy estate.
Reducing the claims appears to be important for El Jwaidi as his assets of $6.3 million appear to be dwarfed by creditors’ claims.