Freedom Arizona Information objects to Advocate’s use of its assets

By Linda Bentley | July 9, 2008

Seemeyers attempt to parlay collateral into more time
PHOENIX – First a correction. Last week’s article about deadbeats Tom and Karen Seemeyer indicated their filing for bankruptcy in a cross-named filing to stay another court proceeding was incorrect.

After going to press, Sonoran News learned the Seemeyers had indeed filed bankruptcy for the Desert Advocate. Because the voluntary petition was filed under “The Desert Advocate,” unlike all other courts, when searching “Desert Advocate” nothing was found.

The clerk advised Desert Advocate had to be prefaced with “The” in order to be found.
After one continuation so the Seemeyers could obtain council, after receiving the June 23 notice of bankruptcy filed by the Desert Advocate, Maricopa County Superior Court Judge Thomas Dunevant, III, vacated the June 24 order to show cause hearing as to why a receiver shouldn’t be appointed filed by Freedom Arizona Information, Inc. (FAZI) in an effort to collect more than $435,000 owed by the Desert Advocate.

Dunevant stated the case/claim would be dismissed on Dec. 22, 2008 (180 days) unless prior to the scheduled dismissal date FAZI demonstrates it has moved to lift the stay, sought to reduce the claim(s) against the debtor, obtained severance of the claim or somehow demonstrated a reasonable basis for continuance of the case on the inactive calendar.

Because Chapter 11 allows a business to remain in operation as it reorganizes its debt, the Seemeyers, with their 11th hour filing for bankruptcy were not only able to avoid the order to show cause hearing as to why a receiver shouldn’t be appointed, they were afforded another court-sanctioned opportunity to continue swindling advertisers by charging rates that defy their actual circulation, ripping off employees, by deducting payroll taxes that are never deposited and ripping off taxpayers who subsidize all the taxes, including the payroll and sales taxes the Seemeyers don’t pay.

Although the Desert Advocate was required to list creditors holding the 20 largest unsecured claims, the Seemeyers decided to list just ten and then grossly understate some of the amounts owed.

For example, the town of Carefree was omitted from the list altogether, although, according to Town Clerk Betsy Wise, the Desert Advocate has not paid a penny of the $68,705.19 it owes, plus accruing interest.

They listed the town of Cave Creek as owed $66,569.28, when, in reality, they owe $85,764.84 plus about18 months interest.

While the IRS is listed as a debt of only $85,000, if that were true, there would have been a Release of Federal Tax Lien recorded for the $245,008.33 payroll tax lien filed in 2007. In January 2008 the IRS filed an additional payroll tax lien against the Desert Advocate for $96,674.42.

The $60,096 they list as owed to the Industrial Commission is for only one workers compensation claim, less four years of interest. There are several other claims that were paid by the state because the Desert Advocate failed to carry workers compensation.

The Seemeyers list American Express as being owed $571.95, yet none of the employees who filed and won wage claims against the Desert Advocate are listed.
And, while the Seemeyers claim to owe $18,826 to Farley, Robinson & Larsen, the law firm they used to fight the town of Cave Creek’s foreclosure action against them for nonpayment of sales tax, their bankruptcy petition states they have paid $5,000 to James Leganke, their bankruptcy attorney.

 Last Thursday, FAZI filed a notice of nonconsent to debtor’s use of cash collateral, claiming, as a secured creditor of the Desert Advocate, it “hereby gives notice to the debtor and any and all other parties of interest of FAZI’s nonconsent to the use of its cash collateral” pursuant to specific sections of the U.S. Bankruptcy Code.

FAZI further stated its nonconsent extended to the use of cash collateral for purposes of obtaining an appraisal of the debtor’s assets and for all other purposes.

Pursuant to the terms of the original $451,554 Promissory Note and Security Agreement signed by Karen Seemeyer on behalf of the Desert Advocate in August 2007, and by recording the UCC Financing Statement with the Arizona Secretary of State, FAZI claims it possess “valid, perfected and enforceable first priority liens on and to, among other things, all prepetition accounts receivable, all equipment, inventory, and the proceeds and revenues thereof.”

This may be a hard one for the Seemeyers to swindle their way out of.