March 29, 2022, Texas – David A. Wallace, the liquidating trustee of the estates of the Debtors CFO Management Holdings LLC et al., filed a lawsuit (Adversary Proceeding No. 22-04019) against accounting professional Curtis W. Bulgerin and firms Carpenter and Langford, P.C. and Carpenter & Langford, PLLC (collectively, “C & L”) seeking a judgment that “the Defendants were in breach of their fiduciary duties” and for “exemplary damages.”
In his Complaint, Wallace alleges as follows:
- “Each of the Debtors was at one time wholly-owned and controlled by Phillip Carter.”
- “Defendants Bulgerin and C&L, individually and collectively, provided accounting for Carter and the Debtors” and “as a result of such roles, had a fiduciary relationship with Carter and the Debtors.”
- The Defendants sent out a letter that allegedly “read like a sales brochure to entice investors and lenders into investing with Carter’s Ponzi scheme, describing “very solid” and “very promising” businesses.”
- “Carter used the Letter for his purposes.” Debtor’s creditor TBG “apparently relied on this Letter in making their loan which added over $1.4 Million to the Debtors’ debt load at a time that it was engaging in Ponzi activities.”
- “The Debtors were damaged by Defendants Bulgerin’s and Old C&L’s breaches of fiduciary duties.”
The Complaint also seeks to claw back the payments of “the personal expenses” of Carter “paid by the Debtors,” alleging that these transfers were fraudulent transfers made with “an actual intent to hinder, delay, or defraud” the creditors of the Debtors. The Complaint does not specify the claim amount and the damages sought by the Plaintiff.
As gathered from the bankruptcy filings, the Debtors were a company engaged in real-estate development and sale. On February 17, 2019, CFO Management Holdings, LLC and its affiliated debtor companies filed voluntary petitions for relief under Chapter 11 of Title 11 of the Bankruptcy Code. The Debtors’ bankruptcy cases are filed in the Bankruptcy Court for the Eastern District of Texas and are substantively consolidated. The Lead Bankruptcy Case is Case No. 19-404026.