Crime & Safety

Fugitive Medina Resident Michael Mastro Captured in France

Michael Mastro and his wife, Linda, face six charges related to bankruptcy fraud, according to court documents. They disappeared last year after being ordered by a bankruptcy judge to turn over two diamond rings, according to news reports.

Medina real estate investor Michael Mastro and his wife were arrested in France Wednesday morning and face six counts of bankruptcy fraud, according to U.S. District Court documents.

Mastro, 87, owed $100 million to family and friends who had invested with him in real estate, according to news reports, but said he had no assets as he and his wife, Linda, continued a lavish lifestyle, spending thousands at a time shopping and dining internationally and living in their luxury homes. According to court papers and news reports, they put many of their assets, including his home in Medina, into an Irrevocable Trust or claimed some of them were the sole property of Linda Mastro before debtors forced him to file bankruptcy in 2009.

Update: 6:30 p.m.

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Both Michael and Linda Mastro, who disappeared June 2011 after being ordered to turn over two diamond rings as part of the bankruptcy proceedings, face six federal charges related to bankruptcy fraud, according to papers filed in U.S. District Court.

The Seattle Times cited people close to the case that the couple were arrested near Lake Annecy in the French Alps.

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A 2011 Forbes article outlines how Mastro and his wife once put together $2 billion in real estate investments, but were left in 2008 with debts of $100 million owed to family and friends who were investing with them.

According to the Forbes article, the Mastros began to transfer assets, including their luxury homes, including his $15 million Medina home, into an Irrevocable Trust, and not telling their investors.

Creditors forced Mastro to file bankruptcy in 2009, according to the news reports.

Despite the bankruptcy filing, he and his wife continued to international vacations and kept their Medina home, according to the Wall Street Journal in 2010.

According to the court papers, during the 2009 bankruptcy procedings, Mastro did not disclose the existence of a bank account under the name LCY LLC, where he and his wife had put many assets, in numerous bankruptcy filing documents.

The court papers say that Mastro and his wife used the LCY LLC bank accounts for two years paying for about $285,000 in expenses, including car loan payments for a Bentley and a Rolls Royce, more than $100,000 in gold, and purchases from Macy's, Barney's and Nordstrom. Linda Mastro received checks from the LCY LLC bank account that totaled $18,000, according to the court documents.

The federal charges the Mastros face are scheming to defraud, concealment of assets, two counts of making false oaths or accounts, making false declaration under penalty of perjury, and unlawfully receiving bankruptcy estate assets, according to the court papers.

The charges were filed Aug. 4, 2011, but unsealed after their capture on Wednesday in France. The documents are attached to this article.

A court voided the transfers, and in an opinion piece for Forbes, attorney Jay Adkisson said that the Mastros likely were out of options:

In the end, the Mastros probably only have one avenue left to end up with significant assets: Flee the country and live on their gold bars, rare coins, the two diamonds, and any other cash they have been able to stash offshore. They could also try to do the right thing and voluntarily work to liquidate their assets for the benefit of their creditors, but that doesn’t seem to be any part of their calculus.

 

Original story:

According to the Seattle Times, Michael Mastro was indicted by a U.S. grand jury, but the details and charges have not been released.

Michael and Linda Mastro disappeared in June after being ordered by a bankruptcy judge to turn over two diamond rings, according to the Seattle Times.

A 2011 Forbes article outlines how Mastro and his wife once put together $2 billion in real estate investments, but were left in 2008 with debts of $100 million owed to family and friends who were investing with them.

According to the Forbes article, the Mastros began to transfer assets, including their luxury homes, including his $15 million Medina home, into an Irrevocable Trust, and not telling their investors.

Creditors forced Mastro to file bankruptcy in 2009, according to the news reports.

Despite the bankruptcy filing, he and his wife continued to international vacations and kept their Medina home, according to the Wall Street Journal in 2010.

A court voided the transfers, and in an opinion piece for Forbes, attorney Jay Adkisson said that the Mastros likely were out of options:

In the end, the Mastros probably only have one avenue left to end up with significant assets: Flee the country and live on their gold bars, rare coins, the two diamonds, and any other cash they have been able to stash offshore. They could also try to do the right thing and voluntarily work to liquidate their assets for the benefit of their creditors, but that doesn’t seem to be any part of their calculus.

 


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