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John Coleman's state criminal fraud trial put off again; bankruptcy court updates

Monday, September 18, 2023, 6:43 pm News Flash Archive

The state court criminal trial of John Coleman has been put off again until Wednesday, November 15, 2023.

The case is before Circuit Court Judge Margaret Carey-McCray. The State Attorney General's office is prosecuting the case. To see the court docket sheet, view here: Weekly Criminal Docket Sheet

Coleman's federal trial has also been put off several times. It is now scheduled for November 27, 2023 before Federal District Court Judge Michael P. Mills.

Mr. Coleman was the president of Express Grain. Express Grain collapsed in September 2021, and it filed for bankruptcy, leaving over 100 farmers and other creditors owed some $210 million. The company liquidated for around $85 million, meaning that most of the company's debt will never be paid. Farmers were left being owed around $40 million after the liquidation.

EG's president, John Coleman, also filed for bankruptcy at the same time.

On December 6, 2022, John Coleman was arrested after both state and federal grand juries handed down indictments charging him with multiple counts of fraud in the EG collapse. He entered not guilty pleas to all the charges.

To find links to our previous reporting, see here: John Coleman's federal criminal trial put off until November 27, 2023

In his personal Chapter 7 bankruptcy case, John Coleman recently received his "discharge," which is always granted in successful Chapter 7 cases. According to the discharge document issued:

Creditors cannot collect discharged debts

This order means that no one may make any attempt to collect a discharged debt from the debtors personally. For example, creditors cannot sue, garnish wages, assert a deficiency, or otherwise try to collect from the debtors personally on discharged debts. Creditors cannot contact the debtors by mail, phone, or otherwise in any attempt to collect the debt personally. Creditors who violate this order can be required to pay debtors damages and attorney's fees.

Most debts are discharged

Most debts are covered by the discharge, but not all. Generally, a discharge removes the debtors' personal liability for debts owed before the debtors' bankruptcy case was filed.

Significantly, certain debts are not discharged:

Examples of debts that are not discharged are . . . debts that the bankruptcy court has decided or will decide are not discharged in this bankruptcy case;

To view the discharge order, see here: Order of Discharge

As first reported by The Taxpayers Channel, the bankruptcy court has already ruled that UMB Bank's claim against John Coleman will not be discharged.

UMB Bank had filed an adversary action against Coleman, charging that its losses in the Express Grain bankruptcy were the result of "actual fraud" by Mr. Coleman. According to UMB Bank's filing, Coleman employed "false pretenses, false representations of material facts that Debtor [John Coleman] knew to be false at the time the representations were made, and/or actual fraud."

Mr. Coleman defaulted, and filed no answer to UMB Bank's complaint.

The final court order awarded the damages to UMB Bank, and declared:

IT IS, THEREFORE, ORDERED, ADJUDGED AND DECREED that Plaintiff [UMB Bank] is granted a final Default Judgment against Defendant [John Coleman] in the amount of $70,589,128.70 plus post-judgment interest calculated in accordance with 28 U.S.C. Section 1961 from the date of the entry of this final Default Judgment until paid . . . .

. . . the Court finds and holds that this final Default Judgment against Defendant is entered and the indebtedness due and owing to Plaintiff by Defendant is non-dischargeable .... Any post-judgment interest and attorneys' fees awarded to Plaintiff is also non-dischargeable.

While originally exceeding $70 million, John Coleman's debt to UMB Bank has been reduced to just under $36 million, due to offsets received by UMB from the bankrupt EG estate.

To read our previous reporting on this matter, see here: Court hits Express Grain president John Coleman with $71 million judgment in favor of UMB Bank

John Coleman's discharge doesn't end his Chapter 7 bankruptcy case. Now it awaits the bankruptcy trustee, William Fava, to complete his investigation into possible additional assets.

Once that is complete, Fava will report on the money he distributes to the various creditors, and then close the bankruptcy case. To see our previous reporting on Mr. Fava's activities, view here: New trustee on the trail of "discovered assets" in Express Grain president John Coleman's personal bankruptcy

The overwhelming part of the claims filed against Coleman will never be paid. As of last report, his bankruptcy estate had less than $300,000 in assets, while claims against him topped $40 million.


Meanwhile, a snag has developed in efforts to finish off the bankruptcy of Express Processing, one of the Express Grain companies that filed for bankruptcy together on September 29, 2021.

According to EP's attorney Craig Geno, US Bancorp, of St Paul Minnesota, has locked Express Processing out of its checking account, and will not hand over the $887,201.80 that is in the account.

There is no explanation provided in the court filings about where this money came from, or why the bank won't release it to Express Processing:

The account holds funds that are property of the estate and, the Bank has been deducting, without authorization, post-petition charges from the account on a regular basis.

The Debtor has contacted the Bank and has advised it that the funds in the account belong to the Debtor [Express Processing] and they should be released to the Debtor/its counsel or the Chief Restructuring Officer. The Bank has declined.

There is no reason, justification or contract which allows the Bank to retain property of the bankruptcy estate.

EP wants the judge to order Bancorp to hand over the money:

The Court should enter an order, directing the Bank to immediately turnover those funds and transmit them to counsel for the Debtor [Express Processing], to be held pending Plan confirmation and/or other orders of the Court directing distribution of the funds being held.

EP's request to the bankruptcy court may be seen here: Motion for Turnover of Property of the Estate

According to the Mississippi Secretary of State's website, John Coleman is the only member of Express Processing LLC. That would make him the sole owner of that company.

Express Processing was started to handle the incredibly complicated New Market Tax Credits (NMTC) financing for EG. Essentially, Express Processing collected "pump priming" money from Dr. Michael Coleman, along with much smaller amounts from other entities, to drive the NMTC "leveraged lender" borrowing. The federal government allowed generous "tax credits" to other investors who loaned EG millions of dollars. The "pump priming money" was then supposed to be paid back to Dr. Coleman from the loan proceeds.

In all, EG ended up owing $40 million to seven different NMTC lenders. They all threw in the towel and had to dismiss their claims after receiving only a small portion of what was owed to them by EG. To read our coverage of these complicated NMTC loans, see here: Seven creditors of bankrupt Express Grain give up trying to collect $40+ million they are owed


Finally, there has been no further action in Don Barrett's three lawsuits filed on behalf of several farmers that were cheated out of their grain by EG when it filed for bankruptcy. Barrett has sued UMB Bank and Horne LLP, alleging that they enabled EG's fraud against the farmers. UMB Bank and Horne deny the allegations against them.

The three lawsuits presently sit in two different federal courts, awaiting the judges' rulings on motions to dismiss, and motions to remand to state court.

See our previous reporting on Barrett's claims here: Farmers, Don Barrett sue Horne CPA in the Express Grain collapse

It is presently unknown when any of the judges or courts will take further action in these lawsuits.


To read all our coverage of the Express Grain bankruptcy case, see here: Index of Express Grain articles

 

John Pittman Hey
The Taxpayers Channel

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