The bankruptcy trustee overseeing the liquidation of a Greenwood Village firm whose executive committed suicide by nail gun says a Texas insurance company he was stealing from unfairly gained from the man’s death by ensuring its bills were paid long before other creditors.
A lawsuit by John Smiley, the bankruptcy trustee for American Title Services Co., was filed against Title Resources Guaranty Co. and seeks to rake back roughly $2 million that Richard Talley had paid the company on legitimate debts he owed.
The problem, Smiley asserts in the 19-page complaint, from his own companies required such a complex commingling of funds that it’s impossible to tell what belonged to which firm.
In that way, Smiley says money Talley owed to TRGC for title policies he sold on the company’s behalf was actually funds stolen from ATS — money that belongs to the estate to pay back creditors.
A spokesman for TRGC said the company had no comment.
Talley was to pay 15 percent of premiums collected on policies he sold for TRGC — Talley averaged 500 closings per month — keeping those payments segregated in different bank accounts. Instead, Talley commingled millions of dollars from a variety of his title businesses in several accounts, moving money between them, Smiley said, to cover up the trail of embezzlements that ultimately topped $2 million.
As Talley’s companies foundered toward bankruptcy and auditors at TRGC began unraveling his years of theft, TRGC stepped in to help control American Title’s finances, ensuring its debts would be paid, Smiley’s lawsuit alleges.
Although TRGC ultimately would have been a creditor in ATS’s bankruptcy, Smiley asserts that it wrongly benefited from its position while auditing Talley’s companies.
Talley committed suicide in the garage of his home in February 2014, on the day he was to again meet with TRGC auditors who had uncovered the missing funds.
After the suicide, though, TRGC took control of ATS’s finances — even forcing Talley’s employees to work without compensation — and continued to make sure its bills were paid before all others, Smiley’s lawsuit alleges.
Smiles said TRGC unfairly collected about $2 million out of Talley-company accounts, money the trustee said should be returned to the estate so creditors — including unpaid employees — can be compensated.
When ATS finally filed for bankruptcy protection, TRGC said it still was owed another $2 million that was mismanaged from escrow funds held on behalf of real estate purchases.
David Migoya: 303-954-1506, dmigoya@denverpost.com or twitter.com/davidmigoya
