Opinion
Miscellaneous Proceeding No. 18-00101
05-25-2018
IN RE: Timothy Jermaine Pate a/k/a Akenaten Ali
ORDER
On May 21, 2018, Timothy Jermaine Pate a/k/a Akenaten Ali ("Petitioner") acting pro se filed five Official Form 105 proposed involuntary petitions against five (5) individuals that appear to be government officials. No filing fees have been paid for any of the filings. These pleadings were accepted and filed by the Clerk's office and forwarded to Chambers for review. Each of the filings is largely incoherent as an involuntary bankruptcy petition.
The Court is not identifying the names of the individuals in the purported involuntary petitions for the reasons explained in this Order. --------
FINDINGS OF FACT
Starting with the Official Form 105s ("Involuntary Petition Against an Individual"), Petitioner fails to identify the nature of the purported debt (¶8); he claims he is eligible to file the petition the purported debt (¶8); he claims he is eligible to file the petition and checks the box that each "debtor is generally not paying such debtor's debts as they become due, unless they are the subject of a bona fide dispute as to liability or amount" (¶11); he claims the basis for venue and his claim is through a maritime lien (¶¶10, 13). With each filing, Petitioner "declare[s] under penalty of perjury that the information provided in this petition is true and correct. Petitioner[] understand[s] that if they make a false statement, they could be fined up to $250,000 or imprisoned for up to 5 years, or both. 18 U.S.C. §§ 152 and 3571. If relief is not ordered, the court may award attorneys' fees, costs, damages, and punitive damages. 11 U.S.C. § 303(i)." (Part 4).
Petitioner also attaches a "Notice of Claim of Maritime Lien" to each Official Form 105. Each Notice of Claim of Maritime Lien lists the name of the vessel as the "U.S. M/V [Name of respective alleged debtor in the Petitioner's filings]." The listed owner of each vessel appears to be another government official with U.S. Department of Transportation. (¶¶ 1, 4). Four of the notices are each in the amount of $15,000,000.00; and one is in the amount of $33,000,000.00. Each notice appears to claim a lien on:
ALL PROPERTY INCLUDING BUT NOT LIMITED TO: ALL BANK ACCOUNTS, SAFETY DEPOSIT BOXES, RETIREMENT FUNDS, 801K'S, 401K'S, REAL ESTATE, STOCKS, BONDS, SECURITIES, CASH ON HAND, JEWELRY, HOUSES, LAND, MOTOR VEHICLES, AUTOMOBILES,
MOTORHOMES, AIRCRAFT, HOUSEHOLD FURNITURE, GUNS, AMMUNITION, COIN COLLECTIONS, ALL COLLECTIBLE ITEMS, INSURANCE POLICIES, CREDIT CARDS, LINES OF CREDIT, YACHTS AND WATERCRAFT, FARM EQUIPMENT, MACHINERY, TOOLS, EQUIPMENT, HEAVY EQUIPMENT, IMPLEMENTS, BULK GRAINS AND FEEDS, TACKLE, HARNESSES, LIQUOR, CROPS, FARM ANIMALS, FARM SUPPLIES, BUILDING MATERIALS, BUSINESSES, OFFICE EQUIPMENT, COMPUTERS, OFFICE SUPPLIES, CORPORATE ASSETS, WATER RIGHTS, MINERAL RIGHTS, OIL AND GAS RIGHTS, INTELLECTUAL PROPERTY, OR ANYTHING OF VALUE AS NEEDED TO SATISFY THIS CLAIM.(¶7). On each notice, Petitioner certifies the facts recited in the Notice of Claim of Maritime Lien are true and correct. (¶8).
Petitioner also attaches UCC Financing Statements to each Form 105. The UCC Financing Statements indicate that each purported involuntary debtor is "a transmitting utility and debtor is a trust (the claim/lien is a security agreement/contract)." (¶¶ 4, 6a). The collateral listed in four of the Financing Statements is:
1. $15,000,000.00 USD against the Commercial Vessel/Commercial Account of [Individual named by Petitioner] for Maritime Lien. Proof of Claim of Lien is shown within Case Number CV117-00126 which is filed at THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF GEORGIA. (Administrative Process in Rem.)
The UCC Financing Statement for the fifth individual lists the Maritime lien in the amount of $33,000,000.00.-DEBTOR IS A TRANSMITTING UTILITY AND DEBTOR IS A TRUST (THE CLAIM/LIEN IS A SECURITY AGREEMENT/CONTRACT)
CONCLUSIONS OF LAW
Section 303(b) of the Bankruptcy Code sets forth the requirements for commencing an involuntary bankruptcy action against a third party and provides that an involuntary bankruptcy case is commenced by filing a petition under chapter 7 or 11 of the Bankruptcy Code:
(1) by three or more entities, each of which is either a holder of a claim against such person that is not contingent as to liability or the subject of a bona fide dispute as to liability or amount, or an indenture trustee representing such a holder, if such noncontingent, undisputed claims aggregate at least $15,775 more than the value of any lien on property of the debtor securing such claims held by the holders of such claims;11 U.S.C. §303(b). "Where the proposed involuntary debtor has fewer than twelve creditors — as here — the petitioning creditor must have a claim in the aggregate amount of at least [$15,775.00], and that claim cannot be 'contingent as to liability or the subject of a bona fide dispute as to liability or amount.'" In re Thomas, 2016 WL 386143, at *3 (Bankr. W.D.N.Y. Jan. 29, 2016).
(2) if there are fewer than 12 such holders, excluding any employee or insider of such person and any transferee of a transfer that is voidable under section 544, 545, 547, 548, 549, or 724(a) of this title, by one or more of such holders that hold in the aggregate at least $15,775 of such claims
In this case, the number of creditors of each individual is unclear, but what is clear from the mere nature of Petitioner's pleadings is that his claims are contingent and subject to a bona fide dispute and that Petitioner's pleadings are woefully inadequate as involuntary bankruptcy petitions. He also has failed to pay the filing fees as required by 28 U.S.C. §1930, and the pleadings are nonsensical.
In the pleadings, Petitioner lists a civil action pending in the District Court for the Southern District of Georgia as the basis for his lien; however, taking judicial notice of the referenced District Court civil action, no judgment in favor of Petitioner has been entered on the District Court docket. See Fed. R. Evid. 201.
Furthermore, as a matter of law, it does not appear venue is proper for at least four (4) of the alleged involuntary debtors. Pursuant to 28 U.S.C. §1408, venue is proper where "the domicile, residence, principal place of business in the United States, or principal assets in the United States, of the person or entity that is the subject of such case have been located for the one hundred and eighty days immediately preceding such commencement, or for a longer portion of such one-hundred-and-eighty-day period than the domicile, residence, or principal place of business, in the United States, or principal assets in the United States, of such person were located in any other district." 28 U.S.C. §1408. The pleadings provide Washington, D.C. addresses for three of the individuals, and Utah for another individual. Therefore, as to these four individuals, venue appears improper.
After careful in camera review and consideration of these filings, the Court has determined the pleadings are odious, frivolous, abusive and intended to intimidate, harass, injure, and damage the individuals and destroy or harm their financial standing and personal reputation. For the following reasons, the pleadings shall be SEALED and no involuntary bankruptcy case shall be opened against any of the named individuals. The Court also declines to allow docketing of the proffered involuntary petitions on the Court's public electronic CM/ECF docket, but directs that a miscellaneous proceeding be opened for filings in these matters.
There are few stronger provisions of the Bankruptcy Code, or the law in general, than filing an involuntary bankruptcy petition—forcing someone into bankruptcy without their consent. With the advent of electronic court filings, abusive involuntary petitions become available immediately to the public, consumer reporting agencies, and others. Petitioner appears to have already filed UCC Financing Statements, Maritime liens and potentially other liens against the named individuals. The very nature of the pleadings is harmful. Even if the matter is sealed immediately after docketing on the Court's public electronic CM/ECF system, harm has occurred. The Petitioner's "goal of harassment would be complete as soon as such petitions are electronically filed and made public." In re Risby, 2008 WL 116701, at *4. Furthermore, the mere commencement of an involuntary bankruptcy proceeding is harmful. Alleged individual debtors may have to report and explain these involuntary petitions and the public and credit reporting agencies may not distinguish whether a petition was voluntary or involuntary, as a leading bankruptcy treatise explains:
The [Fair Credit Reporting Act] FCRA does not require that the report designate the chapter under which relief was sought or whether the relief was sought voluntarily or involuntarily. This means that a person reviewing a credit report cannot distinguish between the bankruptcy of an individual who voluntarily sought debt relief and the victim of a wrongful involuntary filing. . . . There are additional implications of an improper bankruptcy on a credit report. A recent bankruptcy on a credit report, without full information, can affect one's credit score negatively. This is significant because a credit score is that all important number that determines the price consumers pay for credit, and it also has applicability in terms of obtaining insurance and employment.2 Collier on Bankruptcy ¶303.37; see also, In re Walsh, 306 B.R. 738, 742-43 (Bankr. W.D.N.Y. 2004)(discussing impact of abusive pro se involuntary petitions). While 11 U.S.C. §303 allows a court to dismiss an involuntary petition, award damages, seal records, and prohibit consumer reporting agencies from using the information in the involuntary petition, the harm to these individuals has already occurred. See In re Risby, 2008 WL 116701, at * 4-5; In re Walsh, 306 B.R. at 742-43; In re Thomas; 2016 WL 386143 at *4.; Principe, Philip, Instant Access: The Challenge of Abusive Pro Se Involuntary Petitions Under Electronic Filing 27-OCT Am. Bankr. Inst. J. 42 (2008) (noting how 11 U.S.C. §303 remedies fail to address "the immediate impact that the filing of a groundless involuntary petition may have due to the instant availability over the Internet").
Pursuant to 11 U.S.C. §107, the Court may protect a person's identity if the risk of disclosure creates undue risk of unlawful injury to the individual or the individual's property:
(a) Except as provided in subsections (b) and (c) and subject to section 112, a paper filed in a case under this title and the dockets of a bankruptcy court are public records and open to examination by an entity at reasonable times without charge.
(b) On request of a party in interest, the bankruptcy court shall, and on the bankruptcy court's own motion, the bankruptcy court may-
(1) protect an entity with respect to a trade secret or confidential research, development, or commercial information; or
(2) protect a person with respect to scandalous or defamatory matter contained in a paper filed in a case under this title.
(c)(1) The bankruptcy court, for cause, may protect an individual, with respect to the following types of information to the extent the court finds that disclosure of such information would create undue risk of identity theft or other unlawful injury to the individual or the individual's property:
11 U.S.C. §107; see also Fed. R. Bankr. P. 9018.(A) Any means of identification (as defined in section 1028(d) of title 18) contained in a paper filed, or to be filed, in a case under this title.
(B) Other information contained in a paper described in subparagraph (A).
In this case, pursuant to 11 U.S.C. §§105(a) and 107(c), the Court finds such actions are appropriate. These actions include rejection of the pleadings as involuntary petitions, requiring in camera review of any subsequent involuntary bankruptcy petitions filed by Petitioner, and referral of the matter to the U.S. Attorney and U.S. Trustee for investigation. These actions are appropriate to protect the integrity of the court system and the alleged debtors from the immediate harm of having frivolous involuntary bankruptcy petitions filed against them. See In re Risby, 2008 WL 116701, at * 4-5(rejecting frivolous petitions as sanctions under §105 statutory authority and the court's inherent authority to maintain integrity of the court system); In re Thomas; 2016 WL 386143 at *4 (same). To be clear, the Court is not blocking Petitioner's access to the judicial system, just his abuse of the process.
For these reasons, and after careful consideration of the matter, it is hereby ORDERED that:
(1) The Clerk shall reject these pleadings as involuntary bankruptcy petitions against the purported debtors;
(2) The Clerk shall open the matter as a miscellaneous proceeding under the Petitioner's name, excluding the names of the purported debtors from the case caption;
(3) The Clerk shall not docket pleadings submitted in this matter into the Court's public electronic CM/ECF system. Such pleadings shall be filed with the Clerk and a record shall be kept by the Clerk and such pleadings shall be maintained in paper format under SEAL, pending in camera review by the Court and further Court Order regarding such pleadings; provided however, the Clerk shall open a miscellaneous proceeding as set forth above in the Petitioner's name and docket this order into its public electronic CM/ECF system in that proceeding;
(4) Any subsequent pro se involuntary petition Petitioner attempts to file in this Court shall be subject to in camera review as set forth in this Order and Petitioner is subject to sanctions for any frivolous or inappropriate filings;
(5) Petitioner shall include in all subsequent pleadings filed in this proceeding or any subsequent involuntary proceedings filed in this Court the following caption prominently placed
in bold font on the first page of each document: "Pursuant to Court Order, this pleading is subject to in camera review prior to entry into the Court's electronic CM/ECF system. See Miscellaneous Proceeding No. 18-00101."
(6) The Clerk shall mail a copy of the Petitioner's pleadings along with a copy of this Order to each purported debtor; and
(7) The Clerk shall mail a copy of the Petitioner's pleadings along with a copy of this Order to the U.S. Attorney and to the U.S. Trustee for investigation.
/s/_________
SUSAN D. BARRETT
U.S. BANKRUPTCY JUDGE Dated this 25th day of May, 2018 Augusta, Georgia