(On January 30, 2007, it was brought to Wells of Justice's attention that the attorney for the bankruptcy trustee in this subject case is searching for Jeff King. Leonard Gumport emailed us alleging that he finds the following article slanderous. This same article is posted on various sites on the internet and has been posted on some sites for public reading since 2003. Since receiving that email from Leonard Gumport whose law firm represents a chapter 7 trustee, we have began to research the case and present our findings in Part 2. In the meantime, we have added "confirm" and other notes to the following article of those details that we found documented in case decisions.)

There is a personal bankruptcy case in California that has been going on for almost 20 years and it could possibly be the longest running personal BK case in history. The case is full of judicial misconduct and outrageous rulings that have kept the case going for 2 decades.

Here is a short summary of facts on two California Bankruptcy cases that expose large Trustee and Attorney fee abuse and expenses that have gone out of control:

In 1984, Thelma V. Spirtos filed for voluntary petition in the US Bankruptcy Court, Central District of California, after her ex-husband, Dr. Basil Spirtos, defaulted on their Marital Settlement Agreement. Basil Spirtos also failed to pay outstanding child support and marital support and he filed for bankruptcy in 1987. Thelma Spirtos filed a proof of claim in the Basil Spirtos bankruptcy case in the amount of $2,130,000.00. The bankruptcy estate of Basil Spirtos remains pending to this day, even though he died in 1996.

Wayne Elggren of Neilson Elggren was the original Trustee. He has since left the United States under strange circumstances. His office states that he is in the Philippines working as a Mormon missionary and his partner R. Todd Neilson is now the Trustee. (A case decision confirms that Wayne Elggren left his trustee position to do missionary work.) Does anyone know where Wayne Elggren really is and why he left the country?

The Trustee Neilson and the attorneys have been keeping this case open and charging the estate fees for almost 20 years! (A case decision confirms that attorney fees charged to the Thelma Spirtos bankruptcy estate are approximately $400,000.00. There is approximately $300,000.00 of estate assets in the case, that is insufficient to pay the one claim and the trustee's attorneys.)

The Trustees and attorneys involved in the Spirtos case are: Trustees R. Todd Neilson and his partner Wayne Elggren of Neilson Elggren LLP, and their attorney John Reitman of Gumport, Reitman and Montgomery. (Confirmed) These are the same Trustee and attorneys involved in the Reed Slatkin bankruptcy case in Santa Barbara California.

The trustee and his attorneys are also milking the Slatkin estate for as much money as possible. The creditors in that case are rightly outraged at the amount that is being spent by the Trustee in fees and expenses. The creditors were cheated once by Slatkin and now by the estate's Trustee who is taking advantage of them again.

Slatkin was later arrested and in March 2002 he pled guilty to 15 counts of fraud and related crimes. He is currently serving his sentence. This was covered widely in the media because he was well known as one of the original investors who started Earthlink and

The bankruptcy was filed in Santa Barbara, before Judge Robin Riblet, the sole bankruptcy judge in that court. The Santa Barbara Court is a branch of the Central District of California (LA federal district court, same court as Spirtos).

R. Todd Neilson was appointed as the Trustee in the bankruptcy case. The Trustee is represented by the law firm Gumport, Reitman & Montgomery, and has as special litigation counsel, Richard Wynne of Kirkland & Ellis, a large national law firm.

Neilson (the Trustee), his attorneys and accountants have been paid a whopping $19,231,996 in fees and costs to date while collecting $31,000,000 for the estate to pay off Slatkin creditors. In other words the Trustee, his accountants and attorneys have been paid approximately 61.3% of every dollar they have collected. These administrative fees and expenses are 6 times higher in proportion to what was charged in the Enron bankruptcy case, which was the largest bankruptcy case in US history and a much more complex financial fraud than the Slatkin Ponzi scheme.

A review of the expenses that the Trustee has incurred on behalf of the estate shows incredible waste and extravagance. For example, according to documents filed with the court:

Neilson's accountancy firm, Neilson, Elggren LLP, made a total of $4,132,652.75 in fees from the Slatkin bankruptcy up through the end of June 2003. This equates to over $5 million paid to the Trustee and his accounting firm. Since Neilson is the Trustee and his own accounting firm is charging for services, isn't this double dipping by Neilson? Does he not profit from the fees charged by his own firm?

Gumport, Reitman & Montgomery, an attorney firm hired by Neislon have been paid a total of $4,316,304.50 through June of 2003 and have charged an additional $317,887.20 in costs to the estate.

Kirkland & Ellis, hired by Neilson as special counsel, collected $7,009,369 in fees and has charged another $992,771 in costs to the estate.

Crossroads LLC, who act as real estate and business consultants to the Trustee Neilson have been paid a hefty fee of $485,687 through the end of June 2003.

The Trustee Neilson's special counsel, Kirkland & Ellis, spent $240,651.43 in outside paralegal assistance and have paid $91,264.60 in computer database research.

Kirkland & Ellis, the Trustee's special counsel, have spent a total of $343,571.49 in making photocopies. (Even at 10 cents per copy, that would be 3,435,714.90 photocopies.)

It cost Neilson $184,520 just in fees paid to Kirkland and Ellis to get back only $650,000 in property and cash from Brian Cave (Slatkin's former attorney).

Why hasn't the Judge in the Slatkin case ordered an audit of the Trustees' fees and expenses, like Judge Gonzalez did in the WorldCom bankruptcy? At least in the WorldCom case the auditing committee found hundreds of thousands of dollars in over billing!

The opinions and views expressed in this article are those of the authors unless it is noted as a Wells of Justice comment. Wells of Justice does not confirm or deny the contents. Any disputes, factual or otherwise, must be addressed to the authors themselves, who are solely responsible for their articles. Wells of Justice welcomes comment from anyone and if those comments provide greater understanding of facts referencing the case, we will almost always post it.