DENVER — An effort by a Berthoud man to shed debt through Chapter 13 bankruptcy may be foiled by application of a federal law.
The law: U.S. Code Section 523 of Title 11, which says that debt incurred through false pretenses or fraud cannot be discharged in bankruptcy.
U.S. Bankruptcy Court for the District of Colorado is determining whether the federal law will apply to the reorganization bankruptcy of Christopher Patrick Boyd.
Christopher Boyd, along with his father, former president of the failed BestBank Thomas Alan Boyd, lost a lawsuit decided in Denver District Court in January 2020 and affirmed by the Colorado Court of Appeals Sept. 9, 2021. Thomas Boyd was determined to be liable for securities fraud and a scheme to defraud. Christopher Boyd and all defendants in the case were judged liable for false representation, nondisclosure, concealment and negligent misrepresentation. Thomas Alan Boyd lives in Longmont.
The case was brought by Hemp Recovery Co. LLC, which was the assignee of claims belonging to Adam A. Desmond and DD Needle Rock Farms LLC, a hemp producer. Needle Rock Farms is a Crawford, Colorado, company.
As alleged in the lawsuit filed Feb. 6, 2019, Desmond and Needle Rock Farms, based upon representations made by the Boyds, agreed to transfer 4,415 pounds of hemp flower, valued at $75 per pound, to Christopher Boyd’s company, Foothills Ventures LLC of Berthoud, for processing and extraction of its CBD oil. Needle Rock and Foothills had agreed to a 50/50 split of proceeds from sale of products derived from the hemp, according to the lawsuit.
Foothills, however, didn’t have the ability to process the hemp, and when Needle Rock Farms sought the return of the hemp, it couldn’t be found.
The court determined, and the appeals court confirmed, that fraud occurred and that the father-son team and companies they controlled were liable for damages. Thomas Alan Boyd was “jointly and severally” responsible for $606,714 in damages, and Christopher Boyd was liable for $337,306, also jointly and severally, which means that each of them along with their companies share responsibility equally for the damages.
In 2019, a company named Hemp Recovery Co. LLC, which shares a Crawford, Colorado, address with Needle Rock Farms, was created. Since the conclusion of the lawsuit, it has sought to collect on the judgment. Hundreds of court filings, garnishments, and motions to compel participation, motions to permit service of legal documents via certified mail instead of in-person delivery when service was dodged, and other legal maneuvers dot the court record in Denver District Court.
On July 12, 2022, Christopher Boyd filed for Chapter 13 bankruptcy reorganization, which resulted in a court order to stay or halt proceedings as it applied to his part in the collection campaign.
In Boyd’s first Chapter 13 statement of income, dated July 8, he claimed net monthly income of $454 and his spouse’s net monthly income of $3,101, or $45,030 for a year. On Sept. 21, he amended the income statement to claim monthly income of $12,385 and his spouse’s monthly income of $6,162, which equates to an annual income of $224,934. The amended statement listed the ability to pay $272 per month against his debts.
The trustee assigned to the bankruptcy, Adam Goodman, objected to the Chapter 13 plan on Sept. 28, saying that he needs further documentation to support Boyd’s income statement. The trustee also said Christopher Boyd has 80% ownership interest in High Altitude Wellness LLC and Foothills Ventures LLC, and he wanted to know the value of those companies.
Then on Oct. 5, Hemp Recovery Co. also objected. The Chapter 13 plan “was not filed in good faith due to the fact that the debtor disclosed having monthly income from a business of $454 in his initial Chapter 13 CMI, and following an objection, later disclosed this amount to actually be 27 times higher at $12,423. Yet debtor has provided no documentation… Even after disclosing the true amount of his income, debtor has made no attempt to change his payment plan.”
Hemp Recovery asked that the reorganization bankruptcy case be dismissed or converted to Chapter 7 liquidation.
Boyd disputed the allegations in Hemp Recovery’s filing in a confirmation status report dated Oct. 19.
Hemp Recovery responded a day later with a “forthwith” motion — meaning a request for immediate action — to serve a writ of garnishment on Christopher Boyd’s attorney, Sean Cloyes, in an attempt to secure assets held by Boyd. The motion was filed forthwith because “judgment creditor [Hemp Recovery] is concerned that C. Boyd may quickly move Foothills’ assets in response.”
The filing detailed attempts by Hemp Recovery to serve Boyd personally “no less than eight times, all of which were unsuccessful.
“The process server that [sic] visited Mr. C. Boyd’s residence noted that he had erected a gate that prevented her from knocking directly on the door, and further stated ‘the blinds are always closed and always have car(s) parked in the garage. He [Boyd] is being very careful between the dog and the trash cans being put out and brought in.’”
The court denied the motion, saying that the collection effort was stayed pending the bankruptcy case.
The court denial then resulted in a motion on Oct. 24 from Hemp Recovery objecting to the discharge of the judgment from the case of the missing hemp, citing federal law that limits debt discharge in bankruptcy when fraudulent acts resulted in the debt.
The court set a Jan. 31, 2023, hearing to resolve the issues.
Thomas Werge of the Werge Law Group, which represents Hemp Recovery, said his client “has been the one who said he wants to hold these folks accountable. … Chris Boyd filed for bankruptcy to avoid paying a judgment for fraud. We want to assure he does not get a discharge [of the debt.]”
A message to Christopher Boyd’s attorney was not returned.