mutual bank doj veluchamy bankruptcy motion for extension of time to file a complaint objecting to...

IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION In re ) Chapter 7

) PETHINAIDU VELUCHAMY and ) Case No. 11-33413 PARAMESWARI VELUCHAMY )

) Debtor. ) Hon. Eugene R. Wedoff

) ) Date: May 16, 2012 ) Time: 9:30 a.m.

NOTICE OF ROUTINE MOTION OF THE UNITED STATES FOR AN EXTENSION OF TIME TO FILE A COMPLAINT OBJECTING TO DISCHARGE AND/OR TO DETERMINE

DISCHARGEABILITY OF CERTAIN DEBTS

To: See Attached Service List

PLEASE TAKE NOTICE that on May 16, 2012 at 9:30 a.m. or as soon

thereafter as counsel may be heard, the undersigned will appear before the Honorable Eugene R. Wedoff, Bankruptcy Judge, or such other judge as may be sitting in his stead, in Courtroom 744 of the Dirksen Federal Building, 219 S. Dearborn Street, Chicago, Illinois and shall then and there present the attached MOTION OF THE UNITED STATES FOR AN EXTENSION OF TIME TO FILE A COMPLAINT OBJECTING TO DISCHARGE AND/OR DETERMINE DISCHARGEABILITY OF CERTAIN DEBTS, at which time and place you may appear as you see fit.

Respectfully submitted,

Dated: May 8, 2012 United States Department of Justice

By: /s/ John Warshawsky Trial Attorney U.S. Department of Justice Commercial Litigation Branch Civil Division, Fraud Section 601 D Street, N.W., Rm. 9312 Washington, D.C. 20004 Telephone: (202) 305-3829 Facsimile: (202) 305-7797 E-mail: [email protected]

Case 11-33413 Doc 426 Filed 05/08/12 Entered 05/08/12 15:50:43 Desc Main Document of 8

CERTIFICATE OF SERVICE I, John Warshawsky, the undersigned attorney, certify that true and correct copies of the foregoing Notice Of Motion and Motion of the United States for an Extension of Time to File a Complaint Objecting to Discharge and/or to Determine the Dischargeability of Certain Debts were served upon the following individuals via CM/ECF on May 8, 2012, before the hour of 4:00 p.m.

By: /s/ John Warshawasky

SERVICE LIST Via ECF:

R Scott Alsterda FDIC, as Receiver for Mutual Bank [email protected]

Thomas V Askounis Alliance Leasing, Inc. [email protected] [email protected] [email protected]

Kimberly A Bacher MB Financial Bank, N.A. [email protected]

Gary I Blackman United Automobile Insurance Company [email protected], [email protected] [email protected]

Abraham Brustein Debtor – Pethinaidu Veluchamy [email protected], [email protected]

Barry A Chatz Trustee – Brenda Helms [email protected] Robert D. Cheifetz Sperling & Slater, P.C. [email protected] Denise A Delaurent U.S. Trustee – Patrick Layng [email protected], [email protected] [email protected] David R Doyle FDIC, as Receiver for Mutual Bank [email protected] Jonathan P Friedland United Automobile Insurance Company [email protected], [email protected] Michael L. Gesas Trustee – Brenda Helms [email protected], [email protected] [email protected] [email protected]


Robert W Glantz MB Financial Bank, N.A. [email protected], [email protected]

Ira P Goldberg Debtor – Pethinaidu Veluchamy [email protected], [email protected]

Harley J. Goldstein Qualteq, Inc., D/B/A VCT New Jersey, Inc. [email protected]

Joshua M Grenard Bank of America, N.A, [email protected], [email protected]

David E Grochocinski Trustee – Brenda Helms [email protected], [email protected]

B Lane Hasler Creditor – Arun Veluchamy [email protected]

Christopher M Heintskill United Automobile Insurance Company [email protected], [email protected]

Brenda Porter Helms Chapter 7 Trustee [email protected], [email protected]

Ariane Holtschlag Trustee – Brenda Helms [email protected]

Andrew A Jacobson Jaganath Naidu [email protected], [email protected]

Synde B. Keywell Amalgamated Bank Of Chicago [email protected], [email protected] Thomas S Kiriakos Bank of America, N.A, [email protected], [email protected] Patrick S Layng U.S. Trustee [email protected] Vincent E. Lazar Anu Veluchamy [email protected] [email protected] [email protected] [email protected] Matthew E. McClintock Qualteq, Inc., D/B/A VCT New Jersey, Inc. [email protected], [email protected] [email protected] [email protected] [email protected] Kathleen M. McGuire Trustee – Brenda Helms [email protected], [email protected] [email protected] Nicole J Moody Unsecured Creditors Committee of Qualteq [email protected] [email protected] [email protected] Kevin H Morse Trustee – Brenda Helms [email protected]


Joel R Nathan United States Of America Dept Justice [email protected], [email protected] [email protected] [email protected] [email protected]

Jeffrey K. Paulsen Rajiv Parthasarathy [email protected], [email protected]

Peter J Roberts MB Financial Bank, N.A. [email protected]

Patrick F Ross FDIC, as Receiver for Mutual Bank [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected]

Derek D Samz Pethinaidu Veluchamy [email protected], [email protected]

Andrew R Schwartz Arun Veluchamy [email protected], [email protected] [email protected] [email protected] [email protected]

Julia Jensen Smolka Pethinaidu Veluchamy [email protected] Miriam R. Stein Trustee – Brenda Helms [email protected], [email protected] Elizabeth B Vandesteeg United Automobile Insurance Company [email protected], [email protected], [email protected] Timothy Wheeler Unsecured Creditors Committee of Qualteq [email protected], [email protected]; [email protected]; [email protected] Charles R Woolley Alliance Leasing, Inc. [email protected], [email protected]


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IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION In re ) Chapter 7

) PETHINAIDU VELUCHAMY and ) Case No. 11-33413 PARAMESWARI VELUCHAMY )

) Debtor. ) Hon. Eugene R. Wedoff

) ) Date: May 16, 2012 ) Time: 9:30 a.m.

MOTION OF THE UNITED STATES FOR AN EXTENSION OF TIME TO FILE A COMPLAINT OBJECTING TO DISCHARGE AND/OR TO DETERMINE

DISCHARGEABILITY OF CERTAIN DEBTS

NOW COMES the United States and moves this Court, pursuant to Rule 9006(b)(1) of the

Federal Rules of Bankruptcy Procedure and Rule 9013-9(A)(5) of the Local Rules of the

United States Bankruptcy Court for the Northern District of Illinois, for the entry of an order

extending the deadline to file a complaint objecting to the discharge and/or to determine the

dischargeability of certain debts of Pethinaidu Veluchamy and Parameswari Veluchamy (the

“Debtors”) pursuant to Sections 727 and 523 of the Bankruptcy Code (the “Motion”). In support

hereof, the United States states as follows:

JURISDICTION AND BACKGROUND

1. This Court has jurisdiction to consider the Motion pursuant to 28 U.S.C. §§ 157

and 1334. Venue is proper in this district pursuant to 28 U.S.C. §§ 1408 and 1409. This is a

core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (I), and (O).

2. On August 16, 2011 (the “Petition Date”), the Debtors filed a voluntary petition

under Chapter 7 of the Bankruptcy Code. Brenda Porter Helms is the Chapter 7 Trustee in the

Debtors’ case (the “Trustee”).

3. The Debtors were, among other things, directors of Mutual Bank, a state-

chartered, non-member bank established by Illinois Department of Financial and Professional


3

Regulations (the “IDFPR”). On July 31, 2009 the IDFPR closed Mutual Bank and appointed the Federal Deposit Insurance Corporation (the “FDIC”) as Receiver.

4. The Trustee commenced the Section 341(a) meeting of creditors on September 20,

2011 and the creditors’ meeting was continued to October 11, 2011. The Trustee convened the

continued creditors’ meeting on October 11, 2011 at 1:00 p.m. and the Debtors were examined

for several hours regarding various real property interests that they hold or held in the past. The

Trustee requested certain documents from the Debtors and the creditors’ meeting was

continued to a future date which has not yet been determined.

5. The original deadline to file a complaint objecting to the Debtors’ discharge and/or

to determine the dischargeability of certain debts was November 21, 2011. The United States

requested an extension of the deadline on November 18, 2011 (Docket No. 125) and the deadline

was extended until May 21, 2012 (Order, Docket No. 130, December 2, 2011).

RELIEF REQUESTED

6. The United States respectfully requests that the Court extend the time for the

United States to file a complaint objecting to the Debtors’ discharge and/or to determine the

dischargeability of certain debts to August 21, 2012.

7. As we explained in our first motion to extend the deadline to file such a complaint,

see paragraph 5, above, the United States is currently undertaking an investigation of the

conduct of the Debtors and others with regard to the failure of Mutual Bank to determine

whether their conduct violated federal statutes that would provide the basis for fraud-based

liability to the United States. Such liability may lie under statutes that include, but are not

limited to, the False Claims Act, 31 U.S.C. § 3729, and the Financial Institituions Reform,

Recovery and Enforcement Act of 1989, 12 U.S.C. § 1833a. The investigation was

commenced in the Fall of 2011 and has been ongoing since then. Although the United States

cannot disclose details regarding the investigation at this time, the undersigned counsel from

the Justice Department can confirm to the Court that he has personally interviewed


3

individuals with potentially probative information, has reviewed numerous pertinent

documents, and is actively continuing to develop further investigatory means with the intent

of completing the required investigation no later than mid-August 2012. Accordingly, the

United States respectfully seeks three months of additional time to complete its review and

to determine whether to assert fraud-based claims against the Debtors and/or others.

8. The Court should extend the deadline, because the investigation of the Debtors’

acts, conduct, property, and prepetition financial affairs is continuing, and the United States

requires additional time to complete its investigation and determine whether to file a complaint

objecting to the Debtors’ discharge and/or to determine the dischargeability of certain debts. As

stated above, the United States continues to investigate the Debtors’ prepetition transfers, the role

of the Debtors in the failure of Mutual Bank, the liability they may have as a result of Mutual

Bank’s failure, and whether that liability also gives rise to a basis for filing a complaint against the

Debtors objecting to their discharge and/or to determine the dischargeability of certain debts in

favor of the United States.

9. As stated above, the Trustee has requested additional documents from the Debtors

and has continued the Debtors’ creditors’ meeting to a future date to be determined.

10. The Motion is not interposed for purposes of delay, but to allow the United States

additional time to continue to investigate and analyze the legal and factual bases for filing a

complaint objecting to discharge and/or to determine the dischargeability of certain debts. The

Motion has been filed prior to the expiration of the deadline described above in Paragraph No. 5.

11. The United States conferred with counsel for the Trustee on May 8, 2012, and he

stated that the Trustee does not oppose this request.

WHEREFORE, the United States respectfully requests that the Court enter an order (1)

extending the time for the United States to file a complaint objecting to the Debtors’ discharge

and/or to determine the dischargeability of certain debts to August 21, 2012; (2) that the extension

of time be without prejudice to the United States to request such additional extensions as

might


-4-10127903.1

be necessary to file a complaint against the Debtors; and (3) for such other relief as the Court

deems just and proper.

Dated: May 8, 2012

The United States of America

By: /s/ John Warshawsky Trial Attorney U.S. Department of Justice Commercial Litigation Branch Civil Division, Fraud Section 601 D Street, N.W., Rm. 9312 Washington, D.C. 20004 Telephone: (202) 305-3829 Facsimile: (202) 305-7797 E-mail: [email protected]

OF COUNSEL:

JOEL NATHAN Assistant United States Attorney 219 South Dearborn Street, 5th Floor Chicago, Illinois 60604


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