Sec. 2-1403. Judgment debtor as beneficiary of trust. No court, except as otherwise provided in this Section, shall order the satisfaction of a judgment out of any property held in trust for the judgment debtor if such trust has, in good faith, been created by, or the fund so held in trust has proceeded from, a person other than the judgment debtor.

When it comes to bankruptcy and property in a Trust, one must look to state law. It must determine if creditors can lien the property in a Trust to satisfy debts. If creditors cannot, the bankruptcy trustee cannot. In a case that did not take place in the Northern District of Illinois, Western Division, Judge Easterbrook stated that state law gives no greater rights to bankruptcy trustees than a judgment creditor would have.

In bankruptcy case number 98-53595, the debtor is beneficiary in a Trust. She did not establish the trust. Her ex-husband established the trust, making his ex-wife beneficiary until their son reached the age of 21. Bankruptcy Trustee, Stephen Balsley, confused the issues in this case. By doing so, anyone not knowing the facts about the property being in a Trust will be deceived by the issue the bankruptcy trustee did use.

Trustee, Stephen Balsley, admits that the property he sought to acquire is property in a Trust. He also admits that the debtor is a beneficiary in that Trust. However, bankruptcy trustee Stephen Balsley did not admit these facts until AFTER he received $8,000 from the non-debtor Trustee of the Trust, and filed his Final Report wherein he requested $4,413.53 as recovery commission and compensation. On page 4 of his Final Report, filed September 25, 2000, as Entry No. 20 on the docket sheet for the bankruptcy case, bankruptcy trustee Stephen Balsley states:

"For some period of time prior to May, 1998 the Debtor, [redacted] owned a partial interest in the Debtors residence located at [redacted] McHenry, Illinois by terms of a Trust Agreement dated September 21, 1994. The Trust Agreement provided that [snip] was the 100% beneficiary of said Trust, but at the time her children reached the age of 21 years, they would be entitled to a 1/2 interest of the Trust holding the residence. "

Chapter 7 bankruptcy trustee, Stephen Balsley, disregarded the law pertaining to property in a Trust and preceded to use threats, Motions, and a void order entered by Judge Manuel Barbosa to intimidate the Trustee of the Trust into giving him $8,000 to avoid selling the property. For anyone assuming that this was buying out the debtor's interest in the Trust -- it was not. The $8,000 was demanded by bankruptcy trustee Stephen Balsley, and submitted to him, so he would not sell the property.

The third-party, non-debtor in this case, who is the ex-husband, knows the law that protects his property. After their divorce, the non-debtor retained an attorney to draw up the Trust so that his ex-wife would have housing for their child, and the child would become half beneficiary of the property under the Trust when becoming 21 years of age. This also protected the property from becoming marital property by the ex-wife's subsequent husband when she remarried.

The non-debtor's attorney, Michael S. Drella, answered trustee Stephen Balsley's adversary complaint, and then withdrew from the case. The debtor/ex-wife, also knew that the property in Trust is protected by State law. She said that her attorney told her so. Why didn't her attorney argue this point? Chapter 7 trustee Stephen Balsley's Final Report reveals that the debtors' attorney conspired with the trustee to coerce the parties into a settlement. He was not interested in presenting law in his clients' defense.

In bankruptcy trustee Stephen Balsley's Final Report, he also included an itemized bill for the work he performed for disregarding law, confusing issues, and clouding the facts. Pages 18 through 20 of the Final Report provide evidence of using the color of official right to perpetrate extortion. In his Motions, the bankruptcy trustee avoids mentioning that the property is in a Trust agreement. Chapter 7 trustee, Stephen Balsley, filed his adversary proceeding on the basis that the debtor signed a quit claim to the property several months before filing bankruptcy. That issue is moot. The property was, and remained, in a Trust agreement, established by, and according to the laws of the State of Illinois, which clearly establishes that no court, other than Circuit Court, has jurisdiction to order the satisfaction of a judgment out of property held in Trust. The creditors of the debtor could not place judgments against the property because of the law. What then, gave Chapter 7 trustee Stephen Balsley power and authority to disregard the same law that the debtor's creditors honored?

The debtor reports that she discussed the quit claim with her attorney Richard Jones, who assured her that she would not lose the house. She had seen all the ads declaring, "File bankruptcy and keep your house and your car." The debts that were giving her the most problem in paying were all medically related. She had been in the hospital, and did not have medical insurance. The debtor signed the quit claim at the request of her ex-husband, who found that conducting financial business was difficult due to his ex-wife's credit rating after her hospitalization. Wells of Justice checked the claims filed in this case, and they were mostly for medical services rendered.

As reported in "It's A Bunch of Lies," on this site, the attorney for the debtors conspired with the trustee, agreeing not to contest. The debtors report that their attorney never advised them that he was not contesting. Click here to see a copy of the bankruptcy trustee's itemized billing, incorporated in his Final Report that notes attorney Richard Jones' AGREEMENT not to contest.

The debtors filed their voluntary petition under Chapter 7 bankruptcy on October 28, 1998. Their Section 341 Meeting of Creditors took place on December 3, 1998. They received their discharge of debts on February 12, 1999. According to his Final Report, bankruptcy trustee, Stephen Balsley began contacting the non-debtor ex-husband on December 4, 1998. If bankruptcy trustee Stephen Balsley intended to perform the duties of his position in good faith, and according to bankruptcy law, he could have, and should have entered a motion to object to the discharge, or extend time to object to the discharge. The Chapter 7 trustee did not. This reveals that his motives for allowing the discharge were in bad faith.

It is reasonable to believe that attorney Richard Jones conspired with bankruptcy trustee Stephen Balsley, sharing information with him concerning the quit claim and the property being in a Trust. For example, attorney Richard Jones did not include ownership in real estate on the debtors' Schedules, although he did enter that real estate taxes are paid as part of their rent. Those acts contradict themselves. The bankruptcy trustee, in his Adversary Complaint, had all the dates and information about the property, when it was transferred and why. Knowing the true reason why the transfer was made should have been reason enough for the bankruptcy trustee not to file false charges. Federal bankruptcy is filled with rules regarding transfers of property and other acts, that tack on motives, such as, the transfer was made to avoid paying debts. In this case, the trustee knew, or had reason to know, that the transfer was not because the debtor wanted to avoid paying her debts.

Chapter 7 trustee, Stephen Balsley, filed his adversary complaint on March 3, 1999. That is the date stamped on the document by the U.S. Bankruptcy Court. HOWEVER, on page 18 of his itemized billing, Stephen Balsley alleges that he filed said complaint on December 23, 1998, and again on February 22, 1999. What occurs between the time he alleges he originally filed his complaint, and March 3, 1999 when he actually filed it, reveals a systematic pattern of forceful coercion, under color of official right, to get the non-debtor to agree to give him money in exchange to keep his property in Trust. For example:

On December 23, 1998, bankruptcy trustee Stephen Balsley itemized for time spent preparing his statement of disinterest, proposed order to employ attorneys, sending notices to creditors, filing the adversary complaint, and preparation of the summons. However, based on case documents, the bankruptcy trustee did not file his application to employ attorneys, nor his affidavit, until February 25, 1999. The notice to creditors, fixing time for filing claims, was not filed until March 1, 1999. The summons was not filed until March 3, 1999.

According to the debtors, they received copies of the trustee's proposed order to employ himself as attorney for the U.S. Trustee, the adversary complaint, and summons, although he did not file these documents with the court until several months later. Therefore, sending such documents to the debtors without filing them with the court, were acts to instill fear to coerce them into giving the bankruptcy trustee money.

On December 23, 1998, bankruptcy trustee, Stephen Balsley, also itemized for time spent preparing correspondence to the attorney for the debtors, and to the non-debtor, in attempt to "resolve matter prior to litigation." How could such a matter be resolved? The law is in favor of the non-debtor and Trust beneficiary debtor. According to Illinois State law, bankruptcy court has no jurisdiction to order the sale of property in a Trust. Trustee, Stephen Balsley's, Adversary Complaint does not ask for Judge Manuel Barbosa to void the transfer. The bankruptcy trustee asked that Judge Manuel Barbosa enter an order,

"Ordering the Defendants, to transfer the aforesaid real estate to the Bankruptcy Estate, and directing the Defendants to execute and deliver necessary documents to accomplish such transfer." (From Adversary Complaint, Adv. Case No. 99-05026, filed March 3, 1999, page 3, Item B)

In other words, the bankruptcy trustee does not want the transfer void, which under normal circumstances pertaining to real estate, would re-establish the debtor as co-owner and qualify the debtor for the homestead exemption, and the non-debtor to receive half the sale proceeds. Bankruptcy trustee, Stephen Balsley, wants all ownership interests (of the debtor and non-debtor, all being Defendants), in the property transferred to him. There is a reason why, that provides evidence of conspiratorial behavior. Later in the case, Judge Manuel Barbosa does not disappoint the trustee in entering such order.

On January 8, 1999, bankruptcy trustee, Stephen Balsley reveals on his itemized billing that he received Trust records from the non-debtor defendant. Based on the report of the debtor, the non-debtor provided all the documents requested by the bankruptcy trustee, with confidence that the bankruptcy trustee would acknowledge the law and withdraw his fraudulent charges. It is by betraying confidence that trusting people are personally and financially violated. Trustee Stephen Balsley betrayed confidence in State law, by disregarding it in his complaint.

Sure enough, the bankruptcy trustee reveals that after reviewing the documents given to him by the non-debtor, he betrayed trust in the law and in his position as an officer of the United States government, and wrote the non-debtor "regarding sale procedure in lieu of litigation." Bankruptcy trustee Stephen Balsley, reveals in his itemized billing that his first intent was to "resolve the matter prior to litigation." After reviewing Trust documents, bankruptcy trustee Stephen Balsley changes his threats. Applying intimidation, he changes the rules from resolving the matter prior to litigation, to selling the property "in lieu of litigation." In other words, the trustee's first attempt was to avoid litigation by resolving the matter. The trustee's second offer was to avoid litigation by selling the property. The bankruptcy trustee wants to give the Defendants the impression that they should avoid litigation. That leaves them with only two options -- give him money, or voluntarily surrender the property in a Trust to him.

On March 18, 1999, Chapter 7 trustee Stephen Balsley, and the attorney for the non-debtor Defendant, discussed calculating "figures for settlement." Although trustee Stephen Balsley already threatened the Defendants with selling the property in lieu of litigation, he reveals his true intent is to negotiate on an amount of money that will stop him from issuing threats to the non-debtor Defendant.

According to the docket sheet, the trustee did not Motion to hire a realtor. According to the trustee's itemized billing, he used a realtor to go to the home of the debtors to appraise their home. According to the trustee's itemized billing, he also discussed listing the house with the realtor. These actions, under color of official right, were enacted by trustee Stephen Balsley without court approval. How was the realtor to be paid for selling the house if the court had not approved her hiring? It is reasonable to conclude that the realtor assisted the bankruptcy trustee in intimidating the debtors --- and she did so without directly charging the bankruptcy estate.

The itemization included in the Final Report continues to reveal a systematic pattern of threats and the use of color of official right to force the Defendants into submitting to "settle." For example, before the trustee reviewed the Defendants responses to his adversary complaint, bankruptcy trustee, Stephen Balsley, discussed "settlement" on four different occasions. Without knowing if he had to argue law, bankruptcy trustee Stephen Balsley had already launched his plan to effect extortion under color of official right by disregarding the law. What he needed to carry this to fruition, was a judge who conspires by entering orders to intimidate, while deceitfully knowing how to avoid stepping over his line of jurisdiction.

With the attorney for the non-debtor doing nothing more than discussing "settlement" with the bankruptcy trustee, and the attorney for the debtor agreeing not to contest the case, the victims in this case were left without impartial, just, legal representation.

Judge Barbosa handled this case deceptively. On September 13, 1999, Judge Manuel Barbosa entered an order instructing the NON-DEBTOR, and debtors, to transfer and convey all interest in the property to Chapter 7 trustee, Stephen Balsley. Judge Barbosa's order is entered on the docket under the adversary proceeding, case number 99-05026, entry no 14. We quote from Judge Manuel Barbosa's Order of September 13, 1999, page 2, Item B:

It is reasonable to conclude by this order that Judge Manuel Barbosa knew he lacked jurisdiction to order the sale of property under a Trust agreement, which was entered in good faith, and not established by the debtor. Therefore, he ordered the NON-DEBTOR Trustee of the Trust, and the beneficiary of the Trust, to transfer and convey their interest to the bankruptcy trustee. Once that transfer was made, trustee Stephen Balsley could dissolve the Trust. Once that was done, Judge Barbosa could THEN order the sale, because it would be the same as selling any other real estate co-owned by a debtor.

There is another issue here also -- Judge Manuel Barbosa knew, or had reason to know, that Jerry, the debtor's current husband, had absolutely no ownership interest in the property. Therefore, Judge Barbosa's order is considered void in the sense that he ordered the impossible. You cannot transfer interest in real estate, when you have no interest in said property. It is our opinion that Judge Manuel Barbosa included the name of the current husband, who has no ownership interest in the property, to give the impression that the house is marital property. By doing so, Judge Barbosa hides his disregard of the facts and law pertaining to property in a Trust.

Bankruptcy Court has certain strong-arm powers. However, it does not have legal power to order a NON-DEBTOR to transfer and convey all interest in property to the bankruptcy trustee, when the NON-DEBTOR had been a co-owner of the property before the transfer to sole ownership. If the property is sold by bankruptcy court, the co-owner receives half of the NET proceeds. The bankruptcy trustee receives recovery commission on the gross sale, including any interest earned on the money. The bankruptcy trustee receives 100% of his compensation. However, co-owners in the Northern District of Illinois, Western Division, pay for the costs of sale, realtor commission, the trustee's recovery commission and compensation, THEN receive half of what remains.

Although the ex-husband had been co-owner of the property for a significant period of time, by Judge Barbosa's ordering him to convey all his interest in the property to the bankruptcy trustee, the co-owner would not receive any money from any subsequent sale. This is not a case where the debtor transferred property to another person who had no previous financial interest in the property. Until the NON-DEBTOR became sole owner, his was half-owner, as well as Trustee of the Trust agreement for the property. Judge Barbosa crossed the line by taking all rights of ownership from a NON-DEBTOR, CO-OWNER.

Why are we placing emphasis on the title, "Non-Debtor?" For several reasons. People who do not file for bankruptcy seem to believe that their ownership in property is protected. As we see in this case, that is not true. In the case, Stealing Non-Debtor Owned Property, the debtor had not had ownership interest in the property in a Trust agreement for 14 years before he filed for bankruptcy. The bankruptcy trustee, Thomas Lester, and Judge Manuel Barbosa, sold solely owned non-debtor property anyway.

Another reason for placing emphasis on the term, "non-debtor," is because the tactic of divide and conquer is often used in financial confidence crimes committed under color of official right. With two attorneys involved, one for the non-debtor, and another for the debtors, it automatically gives the impression that they are challenging each other, instead of both challenging the bankruptcy trustee's allegations. In general, the attorneys work together as good cop, bad cop. In this case, the good cop's role is to convince the non-debtor that his problems are caused by his ex-wife, who did so badly after their divorce, that she needs debt relief. So of course, it's the ex-wife who is causing him to lose years of investment in the property.

The bad cop's role, is to convince the ex-wife that she would not be in court if her ex-husband would just cooperate with the bankruptcy trustee and surrender the house. The ex-husband does not need a place to live. The ex-wife and child from their marriage does. So of course, threatening the home of his own child makes the ex-husband uncooperative and evil.

This type of confidence method causes blame to be passed back and forth. With blame comes guilt. With guilt, the false or distorted charges and demands of the trustee are more acceptable. The victims no longer recognize the perpetrators of this confidence scam, because they are too busy fighting with each other.

Often, what follows the divide and conquer plan and an Order from Judge Manual Barbosa, is the threat of being found in contempt of court. The debtors in this case report that their attorney advised them that the ex-husband, Trustee of the Trust, was going to cause the debtors to be imprisoned because he was not cooperating with the bankruptcy trustee. What the attorney forgot, is that he had assured his client before she filed for bankruptcy, that her home would not be threatened. The topsy-turvy logic of professional con artists is to eliminate accountability for what they promised, by making someone else responsible.

In this case, the divide and conquer did not work out as the attorneys and the bankruptcy trustee assumed it would. The ex-husband knew the truth of what caused his ex-wife's need for debt relief. He also knew the truth about the State law pertaining to property in a Trust. He insisted that his attorney present law and facts. Instead, his attorney withdrew.

In the U.S. Bankruptcy Court, Northern District of Illinois, Western Division, attorneys withdrawing from adversary proceedings sometimes happens by design, and at other times happens as retribution for not being able to get the client to willfully submit to the extortion scheme. As we can see from trustee Stephen Balsley's itemized billing, compared with docket sheet entries, the withdrawal of attorney Michael Drella was conspired. According to the docket sheet, entry no. 10 under adversary proceeding number 99-05026, Michael S. Drella entered his motion to withdraw on June 9, 1999. According to page 19 of trustee Stephen Balsley's Final Report, he had a conversation with Michael Drella on June 14, 1999, regarding his motion to withdraw. Did Stephen Balsley discuss Michael Drella's withdrawal AFTER he withdrew? Or, was he tidying up the loose ends to make sure that the NON-DEBTOR Defendant would not receive documents from Michael Drella to pass on to subsequent legal counsel?

All victims of crimes of extortion and embezzlement committed under color of official right that we have spoken with, report that when their attorneys withdrew, they did not turn over ANY documents pertaining to their case. When some people were able to obtain subsequent legal counsel, their current attorney had to contact their prior attorney in order to get the documents. That means conversation between the two attorneys. In all occurrences when legal counsel withdrew, and Defendants retained another attorney, the victim was advised by their new attorney, that giving the trustee the money he wanted would be less than legal fees to present facts and law.

In this case, the non-debtor Defendant was left with a choice. Either borrow money to retain replacement legal counsel, (and take the chance of having that attorney withdraw after not convincing him to submit to extortion), or borrow money to give to the bankruptcy trustee and get the case over with.

Judge Manuel Barbosa did not enforce his order for all parties involved in the case to convey their interest in property in Trust to the bankruptcy trustee. That reveals that Judge Barbosa knew he had no jurisdiction to do so. As Judge Barbosa has demonstrated in other cases, he uses Orders to force victims into agreeing with the alternative option, which is to give the bankruptcy trustee money. According to the debtor/victim, she agreed to give $8,000 to Chapter 7 trustee, Stephen Balsley AFTER the order was entered, and on the contingency that he stop harassing her. Her attestation includes that she was pregnant while going through this ordeal. Her blood pressure reached dangerous levels, and she miscarried. On October 8, 1999, bankruptcy trustee Stephen Balsley closed the adversary proceeding. Keep this date in mind.

Based on the trustee's adversary complaint, the value of the house was $129,900. The outstanding mortgage was $89,000. That leaves a gross profit of $40,900 if the house was sold. Since Judge Barbosa's order was entered to transfer all interests in the property to bankruptcy trustee Stephen Balsley, one would consider that if the trustee's actions were in good faith, he would pursue a course of action "for the best interest of the bankruptcy estate." Accepting $8,000 AFTER receiving a Court Order to gain all interest in the property, evidences that motives for pursuing and entering such Order were in BAD FAITH.

How can one describe the emotional impact of having trust in your attorney betrayed -- having confidence in the judicial system repressed by experiencing officers of the United States government dishonoring law -- threats of losing your home -- while the only judge in that court sits on Motions and answers to Motions for 5 months without making any decision? When he does make a decision, the specifics of his order are unlawful. Not only does he order a person who never had ownership interest in property to transfer non-existent interest to the bankruptcy trustee, but he also orders a non-debtor who had been co-owner "for some period of time prior to May, 1998," to transfer his interests to the bankruptcy trustee as well.

On September 13, 1999, there is an order for the NON-DEBTOR and debtors to transfer and convey all interest in the property to the bankruptcy trustee. Without any evidence proving they obeyed said order, the bankruptcy trustee closes the adversary proceeding less than a month later, on October 8, 1999.

Chapter 7 bankruptcy trustee, Stephen Balsley, did not file his Motion to Compromise until December 22, 1999. That is approximately 3 months AFTER the entering of Judge Barbosa's order. One will not find the Motion to Compromise under the adversary proceeding. It was entered under the bankruptcy case, number 98-53595, entry No. 17. If anyone is so ambitious as to investigate or verify this information, please pay attention to the description for Entry No. 19, entered January 19, 2000. It states in part:

On January 19, 2000, Judge Manuel Barbosa ordered the dismissal of the adversary case that had been closed since October 8, 1999! Was the closing not an actual closing, or was it a closing as part of the bargain to cease the use of force under color of official right until the victims obtained a loan for $8,000 to give to bankruptcy trustee Stephen Balsley?

Although bankruptcy trustee Stephen Balsley received the $8,000 in January 2000, he did not report it until February 2, 2001. For over one year, trustee Stephen Balsley retained the money. On page 6 of his Final Report, Stephen Balsley entered "Initial Projected Date of Final Report (TFP): May 31, 2000." Apparently, neither the U.S. Trustee for the District, nor Judge Manuel Barbosa, saw any discrepancy or lack of fiduciary duties in having trustee Stephen Balsley file the Final Report 9 months after his projected date, and a year and one month after he had the money in hand.

Based on the debtor's report, the non-debtor, Trustee of the Trust, took out a second mortgage and gave $8,000 to bankruptcy trustee Stephen Balsley in a cashier's check in January 2000. Page 9 of the Final Report states that the money was deposited on January 17, 2000. The Final Report also states that on September 12, 2000, the money was transferred to an interest bearing account. However, money and interest on the money, disappeared on September 13, 2000. The bankruptcy trustee's Final Report does not show any entry for the whereabouts of the money, nor the interest, after September 12, 2000. From September 12, 2000, until the filing of the Final Report on February 2, 2001, bankruptcy trustee Stephen Balsley does not account for the whereabouts of the money.

Assistant U.S. Trustee for the District, Sheree G. Dandurand, and Judge Manuel Barbosa, approved Stephen Balsley's Final Report, and his compensation. Out of the $8,000, trustee Stephen Balsley received $4,413.53 for his recovery commission and compensation. If he invested the total of $8,000 for personal benefit from September 12, 2000 until February 2, 2001, he benefited more than the $4,413.53 awarded to him by the Court. In addition, since he received the money in the year 2000, and could very well have received the $4,413.53 during the same year, by delaying the Final Report, he also delayed having to pay income taxes on such compensation and recovery commission.

Professional confidence artists are deceptive. They practice the art of using partial truths. To avoid the appearance of committing extortion, (the illegal obtaining of property from another by actual or threatened force, fear or violence, or under color of official right), some Chapter 7 trustees and Judge Manuel Barbosa do not take possession of the property they threatened to take. Professional confidence artists lead investigators to see that the victims voluntarily agreed to give money to the bankruptcy estate. Therefore, the perpetrators of extortion under color of official right lead people to see what they want --- They DID NOT illegally take property (the house) --- they were offered $8,000 that they accepted and distributed to pay administration costs and debts of the bankruptcy estate.

Question the legalities of Judge Barbosa ordering a non-debtor Trustee of a Trust to transfer ownership interests to the bankruptcy trustee, and chances are that the answer will a condescending question, asking what the questioner knows about the law.

By hiding the use of threats, force, and void orders used to coerce their victims into giving them money, the perpetrators of financial confidence crimes committed under color of official right divert attention to the RESULT of the case. The RESULT of the case might appear legal. However, the RESULT of the case does not reveal their unlawful and unethical practices in obtaining said result.