Alamo files Chapter 11 petition to avoid paying debts owed
Arkansas Democrat
June 23, 1992
BY LARRY AULT
Democrat-Gazette Staff Writer
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Cult leader Tony Alamo filed a $16.8 million bankruptcy petition Monday that lists $6.6 million in federal taxes and $5 million owed to the U.S. Department of Labor.
Jeffrey Dickstein, a Tulsa attorney representing Alamo, said Alamo filed for bankruptcy because he has no money and no way of working out an arrangement to pay off the debts.
If allowed, Alamo has an enormous ability to raise money, Dickstein said.
Alamo, 57, recently settled a 15-year legal battle with the Labor Department in which he agreed to pay $2 million by Sept. 1 and another six installments of $500,000 each by June 30, 1994.
Besides the $6.6 million in taxes owed to the Internal Revenue Service and the $5 million owed to the Labor Department, the petition lists $2.1 million owed to six former followers who successfully sued for alleged unfair labor practices.
The petition also reported $500,000 in disputed attorney’s fees owed to Peter N. Georgiades of Pittsburgh. Georgiades represents the former followers. No assets were reported.
Filing a federal bankruptcy petition automatically blocks all other lawsuits.
“We tried to have a meeting with the Department of Labor, the Internal Revenue Service, and Peter Georgiades (on June 8 at Fort Smith) to work out a plan where Tony could open another business and raise money,” Dickstein said.
“We couldn’t get the cooperation of the IRS or Georgiades,” he said. Dickstein said he didn’t know where Alamo’s proposed clothing store would be located.
“The Labor Department was willing to work with us,” he said. But Dickstein said the IRS and Georgiades “would have seized the property” to pay debts.
“The only method available to get everybody together was the bankruptcy court,” he said.
With all the creditors sitting equally in bankruptcy court, Dickstein said, “This way, I don’t think they will have much choice.” Dickstein also was listed as a creditor owed $210,000 in attorney’s fees. Dickstein said Alamo wasn’t available to comment.
The bankruptcy petition was filed by the Fort Smith law firm of Gean, Gean and Gean, which has represented Alamo’s business interests.
Lazar Palnick, a former Little Rock attorney with the Georgiades law firm at Pittsburgh, said the bankruptcy was expected. Georgiades wasn’t available to comment.
“We’re studying the question and will do whatever is best for our clients,” Palnick said.
Palnick said Alamo threatened last week to file for bankruptcy because he was facing paying $500,000 in disputed fees and costs to the attorneys of the former followers.
Alamo’s ministry and several businesses were based in Crawford County. He operated a 250-acre commune in Crawford County where followers made designer jackets to finance his ministry.
Alamo Foundation property that included 1,500 to 2,000 elaborate denim jackets was seized by federal marshals in February 1991. The proceeds from the sale were to be used to pay the former Alamo church followers for the violations of federal labor laws.
A spokesman for the Internal Revenue Service said the bankruptcy wouldn’t free Alamo from his responsibility to pay taxes.
“All of our collection activities stop and we have to deal with the individual’s tax liability within the restrictions of the bankruptcy court,” IRS spokesman Phil Beasley said.
“We became a creditor. We stand in line just like everybody else,” Beasley said, “Once a person is discharged from bankruptcy, the IRS can resume collection of the tax.”
A Labor Department spokesman wasn’t available to comment.
A 1981 federal court ruling in the Labor Department case said Tony and Susan Alamo Foundation associates were employees under the Fair Labor Standards Act and should be paid minimum wages and overtime.
Alamo has been living in Los Angeles. The $5 million settlement in the Labor Department case said the first payment was to be made from the sale of property held in the name of Music Square Church in Saugus, Calif. That property also has liens attached to it by the IRS and the Pittsburgh attorneys for the six former followers.
Monday’s bankruptcy petition was assigned to U.S. Bankruptcy Judge James G. Mixon. No hearing was scheduled.
A Chapter 11 bankruptcy petition permits a company or person with enormous debts to remain in business while reorganizing business activities and developing a plan to repay debts.
Alamo’s petition listed his residence as Fort Smith and said he also had gone by the name of Bernie Lazar Hoffman. It was filed on behalf of Alamo as an individual and for commercial, retail, wholesale, charitable and religious activities.
The petition says Alamo owed 95 creditors. In addition to the major debts, the petition reported debts that included bank loans, car leasing expenses and medical expenses.