The behavior of a long-serving bankruptcy trustee toward a Spanish-speaking debtor so upset two bankruptcy attorneys that they filed complaints with the U.S. Trustee Program.
According to a letter submitted by New York attorney Wm. Ward Saxton to the U.S. Trustee office, trustee John Pereira became aggressive toward the debtor during a July 16 meeting in Brooklyn during a Section 341 meeting.
“The trustee’s demeanor was rude as he loudly asked the debtor, ‘Do you understand ANY English??’” Saxton wrote. “The debtor appeared frightened and confused.”
At Section 341 meetings, which take place outside of bankruptcy court, a debtor is questioned under oath by a trustee about his or her financial affairs.
The attorney representing the debtor also submitted a complaint.
Saxton’s letter also claims another trustee, Robert Geltzer, mistreated debtors who require interpreters.
Pereira and Geltzer are members of the panel of Chapter 7 trustees in the Southern and Eastern districts of New York. Each district’s panel is composed of about 20 trustees appointed by the U.S. Trustee Program, a division of the U.S. Justice Department.
For consumer bankruptcy attorneys, mistreatment of individual debtors in the bankruptcy process has been a concern.
An informal group of about 15 bankruptcy attorneys, known as the New York City Consumer Bankruptcy Task Force, meets to discuss many topics, among them, the treatment of debtors.
The group, formed by early 2013, has discussed surveying debtors about the bankruptcy process and sharing that information, said Peter Barker-Huelster, co-chair of the task force and staff attorney at MFY Legal Services.
Several consumer bankruptcy lawyers, in interviews with the Law Journal, said most trustees in the Southern and Eastern districts are professional and polite. But they say Pereira and Geltzer have developed reputations for being difficult.
“I would say they have a reputation for being more difficult trustees, in being discourteous in different ways,” said John McManus, director of the Consumer Bankruptcy Project at the City Bar Justice Center and a task force member. McManus said he has seen and heard of instances within the last five years where the two trustees acted in a manner that he described as abrupt, loud and intimidating.
David Shaev, partner at bankruptcy firm Shaev & Fleischman, who is the chair of the National Association of Consumer Bankruptcy Attorneys for the Eastern and Southern districts of New York, said he has witnessed the two trustees acting aggressively toward debtors and attorneys.
“Instead of the purpose of 341 being to confirm the debtor’s assets and debts, it becomes an intimidation process,” he said.
Sidney Cherubin, director of legal services for the Brooklyn Volunteer Lawyers Project and a member of the task force, said debtors already feel nervous and embarrassed about filing for bankruptcy. But “to be demoralized, it’s not fair to them. They have a constitutional right” to file for bankruptcy.
U.S. Trustee Program spokeswoman Jane Limprecht said in a statement that the office is investigating recent complaints about alleged unprofessional conduct and also about the availability of interpreter services. She did not discuss any specific cases.
According to Saxton’s letter, when the debtor’s attorney during the July 16 hearing requested an interpreter for the client, a U.S. citizen, Pereira demanded to know how the debtor was able to pass an American citizenship exam if she did not understand English.
He also demanded to know how the debtor was able to communicate with her attorney and understand and sign a bankruptcy petition in English, the letter said. A friend of the debtor told Pereira that she explained everything to the debtor in Spanish.
Saxton wrote that Pereira moved to adjourn the case. But Saxton, who was awaiting his client’s case to be called, stood up and told Pereira that he could not adjourn and that he violated the debtor’s civil rights.
Saxton said Pereira told him to be silent or leave the room.
“Such behavior makes me feel embarrassed to practice law in a jurisdiction that permits it. Such behavior violates human decency. It must be called out, and it must stop,” Saxton wrote in a letter to assistant U.S. trustee Alicia Leonhard.
The debtor’s attorney, who declined to be identified, wrote that after Saxton’s “blessed intervention,” the trustee allowed an interpreter during the later meeting. But Pereira seemed convinced that the Spanish-speaking debtor as trying “put one over on him,” the attorney said.
The trustee was “browbeating and accusing the debtor,” ultimately making the debtor cry, the attorney said.
The letters also refer to a second case the same day involving a husband and wife, who were represented by the same debtor’s attorney.
When the attorney attempted to clarify a point, “Pereira insulted me and told me to basically ‘shut up’,” the letter said. “I have never before been treated with such disrespect and have never seen my clients so upset by the treatment they received from any trustee,” the debtor’s attorney wrote. “I rarely would even think to voice a complaint about Mr. Pereira, nor have a reason to complain. However, his refusal to allow for a translator and his subsequent behavior and attitude do not reflect well on our court system.”
Both Saxton and the debtor’s attorney were working as per diem lawyers.
In an interview, Pereira said he submitted a written response to the complaints with the U.S. Trustee Program and met with officials earlier this month. “They heard my side of it,” he said. “They’re reviewing everything.”
Pereira said he did nothing wrong during the July 16 meetings and disputes that he was demeaning: “What [Saxton] calls aggressive, I call just asking follow up questions.”
He said he initially asked to adjourn the case of the Spanish-speaking debtor because he wanted the attorney of record to appear and explain how the client could understand and fill out the bankruptcy forms, under oath, if she did not know English. But Pereira said after the debtor’s friend said she explained it, they held a later meeting with an interpreter.
In the case of the husband and wife debtors, Pereira said he told the debtor’s attorney not to interrupt him because as a per diem attorney, the lawyer would have only learned about the case shortly before the meeting.
“If you don’t know the answers, then you can’t give him [the debtor] the answers,” Pereira said, adding he doesn’t remember telling the attorney “to shut up” and added that he respects the attorney.
Pereira said he has been a private trustee since October 1979, serving in thousands of cases in the Eastern and Southern districts. He is a partner at Pereira & Sinisi, where he represents debtors and creditors, and has also served as Chapter 11 trustee in many cases.
Pereira said the complaints are unusual and his most recent evaluation for his Southern District work showed he had no complaints against him.
The only time he may be considered aggressive, Pereira said, is if the answers to his questions don’t make sense or it there is a credibility problem. He said he has “very good relationships” with most debtors’ attorneys.
Bankruptcy attorney Derrick Hanna, of Hanna & Vlahakis, complained about Pereira in 2009, asking that he be removed as a trustee. Hanna wrote that Pereira harassed and intimidated a wheel-chair-bound debtor, screamed at a debtor who was an abused wife, and in a third case, “became so irate and out of control that he physically threw the debtor’s documents back at them across the desk and threatened to end the meeting.”
Pereira, addressing Hanna’s 2009 complaint, said “that was five years ago” and said he couldn’t address specific allegations. But he said Hanna’s letter was fully reviewed by the U.S. Trustee office and it was concluded that Hanna and his clients were unprepared.
Attorneys Saxton and Hanna have also written complaints referring to trustee Geltzer’s conduct. “If the debtor answers the trustee’s question before the question is translated, then trustee Geltzer threatens the debtor that either the translation will be stopped or the 341(a) meeting will be adjourned outright,” Saxton wrote.
Geltzer, who runs his own law practice, said in an email to the Law Journal that there has never been a complaint against him alleging unfair treatment of debtors on the basis they didn’t speak English. He added that no complaint against him has ever been sustained.
Chapter 7 trustees are paid $60 per case and a commission on money they disburse to parties, including creditors.
Limprecht, the U.S. Trustee spokeswoman, said private trustees are “expected to treat all participants in the bankruptcy system respectfully” and to help debtors with limited English proficiency in obtaining interpreter services.
“Private trustee oversight is one of the U.S. Trustees’ primary obligations and that responsibility is taken very seriously,” Limprecht said.
The U.S. Trustee conducts a complete investigation of complaints, she said. The office may review the official recording of the 341 meeting and other evidence and give the trustee an opportunity to respond. Remedial measures range from education to suspension or removal from the trustee panel, she said.