Last year we wrote about upstate New York accounting firm BST & Co. (IPA #244 with $20 million in revenue) fighting America’s mayor to pay up on a bill Rudy Giuliani racked up from the firm for financial consulting related to his divorce from third wife Judith Nathan beginning in 2018. “It is not our desire to undertake such a distasteful course of action and we have been patient to this point, but your continued disregard of your obligation to this firm can no longer be tolerated,” said BST poetically in one demand letter to Giuliani. “We thank you in advance for your immediate attention to this matter.”
Giuliani did not in fact give his immediate attention to the matter and the demand letters continued for five years at which point the firm decided to take him to court for just $10,000. The total bill was $50,833 of which Giuliani owed $36,125 so it was a third of what they were owed but something is better than nothing we suppose. $10,000 is peanuts compared to his next attempt at avoiding a firm’s bill.
In an unexpected development, Giuliani told bankruptcy court in May that he was unable to find an accounting firm willing to work with him on his case. Wrote The Guardian:
“Nobody seems interested” in helping Rudy Giuliani meet accounting obligations in his ongoing bankruptcy case, lawyers for the former New York mayor, presidential hopeful and Trump attorney said in a court filing on Tuesday.
“Unfortunately, the debtor originally had an accountant who was helping,” the filing said. “However, he had a change of heart and indicated that he no longer wished to help prepare the monthly operating reports.
“The debtor advised that he has reached out to a number of accounting firms and CPAs seeking their help, however, no one seems interested in taking the assignment.”
Gee, can’t imagine why.
He did find someone to help with the bankruptcy accounting eventually, a firm called Global Data Risk. Says GDR on their website of their expertise and the weapons in their robust toolkit:
Independance [sic], Objectivity and Efficiency.
Global Data Risk (GDR), is a premier financial advisor to bankruptcy committees, trustees, and other stakeholders navigating the intricate landscape of financial restructuring and asset recovery. Our expertise is in managing the complexities of asset tracing and value recovery across both the United States and foreign jurisdictions including emerging markets where the rules based order is uncertain. We tackle some of the most high-profile and challenging cases with precision and authority.
GDR distinguishes itself in the industry through a unique approach that combines the diverse skills and extensive experience of our multidisciplinary team. Our team comprises forensic accountants, business experts, complex financial instrument managers, bankers, lawyers, investigators, technologists, and former intelligence officers. This blend of expertise allows us to offer exceptional guidance and support in a variety of critical areas including restructuring, debtor issues, hard asset tracing, and the increasingly important domain of crypto and emerging technology asset tracing.
Surely those services come cheap.
You’ll never guess what happened next! Global Data Risk demanded $324,843.75 for 1,181.25 hours of services — love the 15 minute increment, guys — plus $6,854.29 in expenses for a total of $331,698.04. And they did this in court in August because, guess what, America’s mayor hadn’t paid.
“Even after dismissal of his bankruptcy case, the Debtor has launched another baseless and bad faith crusade in this Court, this time in opposition to GDR’s Application for final fees and expenses,” said GDR in a court filing. “It is disappointing, but unsurprising, given the tenor of the case prior to dismissal: after seven and a half months in bankruptcy—all of which were characterized by the Debtor’s delay, obfuscation and attempts to reap the rewards of bankruptcy without adhering to its burdens—the Debtor abruptly reversed course and obtained dismissal of his chapter 11 case in the name of avoiding the looming potential appointment of a chapter 11 trustee.”
“As has been repeated by the case parties ad nauseum, the Debtor chose to file for chapter 11, and he consequently must bear the burdens of what such a filing entailed.”
In August, Giuliani requested the bankruptcy court reduce the GDR bill by almost half, saying he was overbilled and accusing the company of “duplicative time entries” and other excessive billing. GDR claimed Giuliani had received “an incredible deal.” You all can do the math on 1,181.25 hours of billable work for a cost of $324,843.75.
The court wasn’t buying it and this week Judge Sean Lane, United States Bankruptcy Judge for the Southern District of New York, handed GDR a win.
CNN:
Former New York City Mayor and Donald Trump lawyer Rudy Giuliani has been told he must pay a bill of about $300,000 for a forensic accounting firm’s work to trace his money in his now-aborted bankruptcy proceeding.
The dispute over how much Giuliani owes to the accounting firm Global Data Risk was the last vestige of his efforts earlier this year to hold off creditors, to whom he is nearly $150 million in debt.
Giuliani had argued to the judge, Sean Lane of the U.S. Bankruptcy Court in White Plains, New York, that the fees of the accounting firm such as billing for meetings, travel and interview time as they researched his assets for the creditors should be reduced.
But Lane is giving the accounting firm nearly all it sought.
“There was an alarming and inappropriate lack of financial transparency by the debtor … which led to the need for this work,” Lane said at a court hearing on Tuesday.
Giuliani’s bankruptcy case was dismissed in July. Best of luck to GDR on extracting that blood from this particular turnip.