When a Houston, Texas real estate developer filed for Chapter 7 bankruptcy protection amid questionable dealings, the bankruptcy trustee approached Boyd, Powers & Williamson attorneys to ensure that all the company’s assets were properly accounted for.
With special expertise in highly complex fraud and financial investigations, the BPW team – including lead attorney Matt Meyer and attorney Kristy Pesnell Campbell – followed the money through a web of shell entities and fraudulent dealings by developer FM Forrest Inc. and its President, Fred Morgan.
The sprawling investigation concluded in January 2023 with a favorable settlement of two lawsuits, including a combined $1.17 million that closes the books on the litigation. “This was a tangled web of sham entities and fraudulent transactions,” said Mr. Meyer. “Litigation like this takes special expertise, and it’s an area where our team really shines.”
In Janet Northrup, Chapter 7 Trustee for the estate of FM Forrest, Inc. v Nazario L. Paragano et al., the team documented how under Morgan’s leadership, FM Forrest strategically overpaid its business partners for development projects, only to sell those same projects for far less than their value, in transactions designed to leave FM Forrest with no assets available to its creditors and enrich FM Forrest insiders.
In Janet Northrup, Chapter 7 Trustee for the estate of FM Forrest, Inc. v FP Bryan, LTD, et al., the BPW team uncovered a scheme in which FM Forrest created a shell company after FM Forrest’s bankruptcy filing, designed to launder developer fees to FM Forrest insiders outside the scrutiny of FM Forrest’s bankruptcy.
Defendant Transcontinental Realty Investors and related entities worked with Morgan even though company officials were aware that Morgan had not been truthful with the bankruptcy court about his financial interests. The scheme allowed Morgan to receive developer fees and other income beyond the reach of FM Forrest’s creditors. In return, the other defendants either received a share of the diverted income or gained an inside track to equity ownership and profits from the developments.