In re Raejean S. Bonham dba World Plus
Bankruptcy No. F95-00897
Unofficial Web Site
The Trustee has negotiated a settlement in his case in Alaska Super Court against Richard Hompesch et al., as described below. Please take notice that if you object to approval of this settlement you must object in writing on or before January 26, 2001 Your objection is to be filed in the Office of the Clerk of the above entitled Court at 605 W. 4th Avenue, Suite 138, Anchorage, Alaska, 99501-2296 and a copy served on the undersigned on or before said date.
SHOULD YOU FAIL TO SO OBJECT OR HAVING OBJECTED FAIL TO TIMELY REQUEST A HEARING, PLEASE BE ADVISED THAT THE COURT MAY APPROVE THE SETTLEMENT WITHOUT FURTHER NOTICE TO YOU.
David H. Bundy, Esq.
Cabot Christianson, Esq.
BUNDY & CHRISTIANSON
911 W. 8th Avenue, Suite 302
Anchorage, AK 99501
Attorneys for Trustee
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF ALASKA
|In re RAEJEAN BONHAM, aka Jean Bonham, aka Jeannie Bonham, dba World Plus; WORLD PLUS, INC., an Alaska corporation; and ATLANTIC PACIFIC FUNDING CORP., a Nevada corporation,
|Case No. F95-00897-HAR
In Chapter 7
MOTION FOR APPROVAL OF SETTLEMENT OF HOMPESCH LITIGATION
Larry D. Compton, Trustee, through undersigned counsel, moves for authorization to settle the litigation entitled Larry D. Compton, Trustee for the Bankruptcy Estate of RaeJean Bonham,. Plaintiff, vs. Richard W. Hompesch, II and Hompesch & Associates, a professional corporation, successor to, Winfree & Hompesch, a Professional Corporation, Defendants, Superior Court for the State of Alaska, Fourth Judicial District, Case No. 4FA-97-2519 CI. The amount of the settlement which has been agreed to, subject to this Courts approval, is $950,000.
Litigation Background. The Trustee filed this action against Mr. Hompesch and his law firm in 1997, claiming that the defendants, formerly attorneys for RaeJean Bonham and World Plus, Inc., had failed to exercise their duties of care and loyalty to World Plus, Inc. and Atlantic Pacific Financing Corporation, thus allowing Ms. Bonham to continue and expand her Ponzi Scheme from 1992 through 1995. Similar lawsuits were also filed against Mr. Hompesch and the State of Alaska by two investors in the Ponzi Scheme, on behalf of all investors. (In 1999 the State obtained summary judgment dismissing the case against it, and the investors then dropped their claims against Hompesch.)
The Trustees case against Hompesch had a number of twists and turns. The case was filed in Anchorage, but venue was changed to Fairbanks and the case was assigned to Judge Mary Greene. In September 1998 Judge Greene dismissed the Trustees complaint, ruling that because World Plus Inc., was used by Bonham as an instrument of fraud the Trustee lacked standing to sue Hompesch and that the Trustees complaint was barred by the doctrine of in pari delicto. The Trustee appealed this dismissal but shortly after the appeal was filed, the States special prosecutor advised that Judge Greene had been a frequent flyer customer of World Plus, Inc. (although not an investor). The Trustee then moved for Judge Greenes recusal and she consented, vacating her dismissal of the case.
The action was then assigned to Judge Charles Pengilly, who disagreed with Judge Greene, ruling in May, 1999 that the Trustee had standing and that his complaint stated a claim for relief. Trial was then sent for January 8, 2001. The Defendants petitioned the Alaska Supreme Court for review, which was denied with leave to renew if the investors cases against Hompesch were dismissed. When those cases were dismissed later in 1999, the Defendants petitioned for review again. In May of this year, this petition was also denied, two justices dissenting. The Defendants then moved for summary judgment, which Judge Pengilly denied in November of this year. The Defendants then filed a third petition for review, and moved for a stay of the upcoming trial. The Supreme Court ordered accelerated briefing as the parties were busily preparing for trial and conducting discovery.
Settlement Progress. Settlement negotiations had commenced several months ago with a day of mediation, which did not achieve settlement. Negotiations resumed after the summary judgment motion was denied. An agreement to settle for a payment to the Trustee was reached on December 28, 2000. The various state courts have been notified and trial preparation has been halted. The Defendants, through their insurance carrier, will pay the settlement amount promptly on approval by this Court.
Merits of Settlement. The settlement is fair and reasonable. The Trustees case is subject to many variables. On the one hand, is seems clear that Mr. Hompesch failed to investigate what Ms. Bonham was telling him, and if he had investigated he would probably have found major inconsistencies. Had the scheme been shut down in 1992, many millions in claims against the corporations would have been avoided. However, the Trustees case is jeopardized by the standing and in pari delicto arguments. Alaska law on these questions is not clear, but several state and federal courts have dismissed claims like the Trustees on those and other grounds. In addition, recovery may be limited by available insurance limits, approximately $1.1 million. A jury verdict of several million, which is a distinct possibility, could thus be lost on appeal or be substantially uncollectible even if upheld. There is the possibility of collecting an "excess" verdict from the insurance carrier, but this is always a long shot. . The very substantial costs of trial and appeal (perhaps in the $200,000 range), and the associated delay, are also a consideration in favor of settlement.
Considering all these factors, the business judgment of the Trustee and on the recommendation of his counsel, (both the undersigned and trial counsel Ray Brown and Mauri Long of the Dillon & Findley firm) the settlement should be approved
Dated this 4th day of January, 2001.
BUNDY & CHRISTIANSON
Attorneys for Larry D. Compton, Trustee
/s/ David H. Bundy
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