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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.

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.

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.

 

WendyB October 24, 2012 at 08:07 PM
YES!!!! That wretch of a human being ripped off my (now elderly) aunt and uncle. Good, glad they caught him!!
rick October 24, 2012 at 10:52 PM
i would love to visit him behind bars
Venice Buhain October 25, 2012 at 02:09 AM
We've updated the story with a bit more information and posted the court papers outlining the charges against the Mastros.
Susan Pinter October 25, 2012 at 08:29 PM
You guys don't even know him. He is a very nice man who always paid he debts. If you look at other articles they even quoted people that lost money saying that about him. He got caught in this horrible market/economy and now the government and these lawyer who are making so much money are trying to get everything they own. The people weren't complaining when Mike was making them tons of money but now he, at 87 years old, is a villain? Give me a break
Susan Pinter October 25, 2012 at 08:30 PM
By the way, don't believe everything you hear on the news
Jim Platt October 26, 2012 at 05:19 PM
If the banks had worked with Mike at the time when things got bad, I am sure Mike would have worked out of the problem. As it stands now the only ones that will make any money is the trustee and other attorney's. Why haven't some of the banker's involved been charged and arrested? Jim Platt
Lori Larsen October 27, 2012 at 06:23 PM
I worked with Linda Gale (Mastro) before her marriage and can tell you that she was the most manipulative human I have ever met. While Mike was keeping her and still married to his "other"wife she worked with me in banking. She quit after Mike bought her a house and she went to school to learn how to cook. Linda introduced me to caviar and french cigarettes and we picked from her closet filled with furs that were gifts from her then lover...Mike. She was a creep and evidently still is.
Susan Pinter October 27, 2012 at 07:50 PM
Apparently she wasn't creepy enough for you to stop hanging out with and not take free furs from. She sounded like she was your friend and that she made some pretty bad decisions. You knew about her cheating with Mike but you still hung out with her and acted like her friend? Does she still think you are friend now? I hope not, because clearly you aren't. Also, why blame the bankers? If Mike had always paid the bank back, why wouldn't they loan him money? It isn't the banks fault the market crashed. If they knowingly made bad loans, that is a different topic but Mike sounds like he always paid them back.
Paul November 25, 2012 at 06:14 AM
Here's the real story: http://www.forbes.com/sites/jayadkisson/2011/10/01/the-washington-woes-of-michael-mastro-and-friends/
Frank Wood February 27, 2013 at 05:12 AM
I fully believe, if the creditors (Banks) would have sat down and worked things out with the Mastros, it would not be costing the state or federal government the money it must be costing them now. I think with all the bad comments being made about the Mastros and how they have taken there investors, is nothing but a pack of made up lies. I'm sure he is no prince charming, but after 40 years or more of being in the buisness he was in, things could have been worked and over time, made good for the investors and banks. The one's that everyone should be going after is the banks. There dirty, dishonest and the Federal Government has done nothing about them, except bail them out. As far as the investors go, they were sure happy when Mastro was making them money. Now, that everyone has turned on the Mastros, there being called "deadbeats". What should we be calling the banks? Yes, the banks were in there right to forclose on the Mastros, now look what it is costing the State and Federal Government or should I say, the citzens of Washington State? The banks, walk away again, knowing there within there rights, but could have done a much better job in working out a deal with the Mastros, instead of bringing the State and Federal Government into it. As far as the procutors go, they will make a bunch of money, our money. I would hate to become a lawyer, if I had to make a living, doing what they are doing now. Frank Wood

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