NEWS BLOG
Loveland, August 28, 2012

It is unusual for a Trustee in a Chapter 13 bankruptcy filing to object to a petition by making damaging
allegations of possible fraud by the petitioner in court.  In the case of Larimer County GOP Chairman
Michael Fassi, that is what happening in the United States Bankruptcy Court For The District Of
Colorado.  Fassi filed for bankruptcy to avoid paying a civil judgement in a recent court case (
see
bankruptcy story).

Aimee Grimsley, Attorney for Chapter 13 Trustee Sally J. Zeman, filed the Trustee's objection to
confirmation of Chapter 13 in U.S. District Court earlier this month.  According to Zeman, Fassi's
petition for bankruptcy lacks good faith, proper disclosures and apparently is an attempt to mislead
the bankruptcy court according to the independent trustee and complaints also filed by Fassi's
creditors.  For the Trustee, Grimsley reported to the court,

"The Debtors have made no plan payments. The Debtors are currently four plan payments
in arrears through August, 2012. The Trustee has filed a Motion to Dismiss at docket #32.
However, with all the potential fraudulent conveyances, transfers, and etc., conversion is
appropriate."

Among the numerous problems with Fassi's petition for bankruptcy is Fassi's apparent last minute
"investment" to family members of his only liquid assets while also claiming his disposable monthly
income of some $5,000, otherwise available to repay his debts, is being consumed by expenses to
support a needy dependent he fails to name and his daughter in college (conveniently two expenses
allowed to take precedent over repayment of debts).

The attorney for the Trustee is asking for the recovery of preference payments to be turned over to
the Trustee (#5) - this was for payments they claimed to have paid their daughter, Terri Fassi's
mother and the cousin they allegedly invested in just days before filing for bankruptcy.  Coincidently,
the sudden investment opportunity to provide a family member cash arose just a short time after the
Fassi's received a judgment to pay $170,000 in a civil case involving allegations of fraud. (
see story)

The Trustee and court are seeking receipts from Fassi and his wife Terri  to document their claims.  
One person familiar with the case told LovelandPolitics, "the attorney as well as the court is requesting
documentation for the child.  There is no record given to the court.  They did not even provide the
name of the child.  I personally know that Terri has a grown daughter (Lisa Fassi) who has graduated
from DU and Mike has a grown son (Stephen Fassi) who is a fireman in Pueblo."

An experienced Certified Public Accountant (CPA), Fassi's filing is missing critical supporting
documentation according to court records that allege,

"The Debtors must provide documentation for the support for the deduction on lines 40
(support of an elderly, chronically ill, or disabled member of their household or immediate
family); line 43 (education expenses for a dependent child under the age of 18); and line
47."


Victims of Alleged Fassi Real Estate Scam Also Emerge To Contest Chapter 13 Filing

Another party, Michael and Kathryn Stephens, also filed a complaint with the bankruptcy court on
August 15, of this year.  The couple entered into an "Installment Land Contract" with the Fassis in
2008 in an attempt to purchase their new home via a contract to sell where transfer of title for the
property doesn't occur until after all the payments are made.  In the meantime, the buyer is
responsible for maintaining and repairing the property as required.

The Stephens contend Terri Fassi knowingly accepted their deposit in December of 2008, signed
their contract and allowed them to move into the property despite being aware of substantial mold
problems inside the structure.  According to documents filed with the court, local contractor Scott Roth
uncovered evidence of "extensive water damage" in the master bathroom along with water damage
drywall black from likely mold in the summer of 2008.  According to an affidavit signed by the
contractor, Michael Fassi instructed him to only cover the visible areas and leave the unseen damage
under both floor tiles and/or behind drywall unfixed.

The Stephens paid a deposit of $2,200 to Terri Fassi and also monthly payments of $1,643 after
moving into the property.  According to the Stephens and documents they later provided as part of a
Civil Action for "Fraudulent Concealment" both Terri and Michael Fassi allowed them to enter into an
Installment Land Contract to purchase the property without disclosing the known water leak and mold
problems brought to the Fassi's attention by Mr. Roth.

Subsequent to the Stephen's departure from the property in March of 2011 after experiencing
problems, the Fassi's sold the property to another party.  The Stephens sued the Fassi's for
"Fraudulent Concealment Claim" which was later settled by the Fassi's on the condition the subject
matter of the lawsuit be kept confidential except for the purpose of enforcing the settlement payments.

According to the Stephens, they have not been paid as agreed in the confidential settlement and the
Fassi's are attempting to skirt a debt of over $52,000 using the Chapter 13 filing.  The Stephens'
complaint argues debts arising out of "Willful and malicious injury" are not dischargeable and are
therefore asking the court to make such a ruling.  

In addition, the Stephens Civil Action claimed the Fassi's failed to file the Installment Contract for the
property sale with the county of record as required by law.

Please refer to the original court document links in the upper right corner on this webpage to see all
the allegations and charges.  Also, please feel welcome to comment on our newsblog.  
LovelandPolitics
Loveland's Independent News Source
GOP Chair's Bankruptcy In Jeopardy Over
Allegations of Fraudulent Filings
Michael Fassi is the husband
and business partner of the
former Larimer County
Republican Party treasurer,
Terri Fassi.  Terri served for a
short period of time as party
Treasurer under former
Chairman
Larry Carillo.

Reference Documents

1. Fassi Bankruptcy Petition

2.  Amended Filing of Fact

3.  Order of Fees and Costs

4.  District Court Ruling
Michael Fassi
Larimer County
Republican Party Chairman
Chapter 13 Bankruptcy
Advantages
As Described by
United States Federal Courts


"Chapter 13 offers individuals
a number of advantages over
liquidation under chapter 7.
Perhaps most significantly,
chapter 13 offers individuals
an opportunity to save their
homes from foreclosure. By
filing under this chapter,
individuals can stop
foreclosure proceedings and
may cure delinquent mortgage
payments over time.
Nevertheless, they must still
make all mortgage payments
that come due during the
chapter 13 plan on time.
Another advantage of chapter
13 is that it allows individuals
to reschedule secured debts
(other than a mortgage for
their primary residence) and
extend them over the life of the
chapter 13 plan. Doing this
may lower the payments.
Chapter 13 also has a special
provision that protects third
parties who are liable with the
debtor on "consumer debts."
This provision may protect
co-signers. Finally, chapter 13
acts like a consolidation loan
under which the individual
makes the plan payments to a
chapter 13 trustee who then
distributes payments to
creditors. Individuals will have
no direct contact with creditors
while under chapter 13
protection."