- Rudy Giuliani continues to delay disclosing his assets after declaring bankruptcy.
- Before his bankruptcy, his lawyers accused him of hiding assets in other civil cases.
- A judge may soon appoint a receiver to manage all of his assets.
When Rudolph Giuliani filed for bankruptcy late last year, he got some breathing room.
A jury awarded him $148 million to two election staffers he disgraced, a sexual abuse lawsuit was moving forward in court, and Smartmatic and Dominion Voting Systems, two election technology companies he falsely claimed rigged the 2020 election, were still pursuing him in court.
The bankruptcy declaration put a stay on all civil lawsuits, which were all moved to federal bankruptcy court so creditors could negotiate over the funds left by the aging former New York mayor.
That relief may soon be over. Bankruptcy Court Judge Sean H. Lane expressed exasperation that Mr. Giuliani has still not been able to hire an accountant or bookkeeper. Lawyers for creditors seeking money from Mr. Giuliani have accused him of mismanaging his fortune and are asking the judge to appoint a trustee to take over his assets.
“Throughout the bankruptcy proceedings, the Debtors have provided half-hearted financial disclosures at best and have prioritized delays over progress in their Chapter 11 proceedings,” attorneys for the creditors said in a recent court filing. “The Debtors have submitted delinquent, inaccurate and incomplete monthly operating reports; they have delayed for months the filing of an application to hire a broker to sell their New York City apartment; and they have continued to refuse to sell their Florida condominium, preferring instead to spend tens of thousands of dollars on maintenance fees.”
A decision by Mr Lane to appoint a receiver could be made at any time.
Now, bankruptcy proceedings allow a judge, a Department of Justice trustee and creditors to keep a close eye on Giuliani's finances.
But if a judge agrees with creditors and appoints a Chapter 11 bankruptcy trustee, Giuliani would lose control over his financial life.
The bankruptcy trustee will take control of all of Giuliani's assets and can sell his two homes unhindered — his Upper East Side mansion is on the market for $5.7 million, and creditors value his Florida mansion at $3.5 million.
The trustee would be able to access Giuliani's phone and email records and may waive the attorney-client privilege between him and his lawyers, potentially exposing him to further criminal and civil lawsuits.
“It's conceivable that a trustee may be willing to waive attorney-client privilege to review communications with attorneys,” Eric Snyder, chairman of bankruptcy practice at Wilk Auslander LLP, told Business Insider. “To the extent that there are concerns about fraud, that's going to make the trustee very nervous.”
Creditors have expressed frustration that, months later, they still don't have a full picture of Giuliani's financial situation.
They called him “at best incompetent and at worst a fraud.”
In recent weeks, the defendants were surprised to learn that he had a promotional deal with a coffee company and that a company he owned was receiving thousands of dollars per month from 9/11 charities, according to court documents.
Giuliani's creditors have formed a supergroup to dig up his assets. Two Georgia election workers, Ruby Freeman and Shay Moss, who are owed $148 million in defamation judgments, sexual abuse accuser Noel Dunphy, and the election technology company Dominion, falsely accused of election fraud, are joining forces in bankruptcy court to scrape together what money they can.
Lawyers from the expensive law firm Akin Gump argue that Mr. Giuliani has been deceptive, funneling money into his own entities that, they say, went to his girlfriend and other supporters rather than to creditors.
A history of lies
There is still a great deal of distrust among creditors.
Despite losing the lawsuit and being forced into bankruptcy after being hit with a $148 million defamation judgment, Giuliani continues to lie about Freeman and Moss, two Georgia election workers who are the subject of conspiracy theories that they rigged votes in the 2020 election won by now-President Joe Biden.
To make matters worse, Giuliani has had a history of hiding his assets. During discovery in the Freeman and Moss defamation lawsuits, and again in a separate defamation lawsuit by Smartmatic, Giuliani claimed poverty, saying he couldn't afford to hire an electronic discovery firm, TrustPoint, to examine his documents, but that excuse was hard to believe for his opponents in court.
“To date, Mr. Giuliani's financial situation has worked out in his best interest,” Smartmatic's lawyers said in a scathing filing at the time. “Whenever he is ordered to do something, he does not have enough money to pay for it. Yet, whenever he is asked to file tax returns showing insufficient funds, somehow money appears that was previously unavailable. It's a miracle.”
As it turns out, some of Giuliani's legal costs may have been funded by political donors supporting Donald Trump: After Trump's Saving America PAC paid hundreds of thousands of dollars to TrustPoint, Giuliani's lawyers told the court that a “third party” helped pay some of the costs.
Giuliani's bankruptcy battle reached a turning point in recent weeks when he struck a deal to sell Rudy's Coffee.
The creditors said they did not hear about the new revenue stream directly from Giuliani or his lawyers, but instead learned about it on social media a month after the deal was signed.
In addition, creditors have complained that the Tunnel to Towers Foundation, a charity that helps 9/11 first responders, sponsored Giuliani's social media videos by giving money to his telecommunications company, rather than to Giuliani himself.
Both transactions were structured to direct money to Giuliani's businesses rather than to himself, and to funnel funds to his girlfriend and illicit employees rather than to creditors, the lawyers said.
“At the very least, if there's a contract where money is coming into the estate and it becomes his property, the creditors should have been made aware of that,” Snyder told Business Insider.
Maria Ryan, a former employee and widely reported lover of Mr. Giuliani, recently entered into the bankruptcy dispute herself.
In court documents earlier this month, she wrote that she would file a “motion” to compel the creditors' lawyers to “stop lying in their court filings.”
She alleged that the payments to her often came in the form of repayments from Mr. Giuliani's retirement account, which he used as seed money for his media ventures and protected from bankruptcy proceedings, and that she “personally arranged” the Rudy's Coffee deal.
“Giuliani Communications, LLC is very proud of this high quality coffee,” she wrote, “and will be sending it to Mayor Rudy Giuliani's advisors in any future business transactions.”
Ryan could not be reached for comment.
Giuliani recently lost another big source of revenue that would have gone to creditors: In May, his show on WABC, a New York radio station owned by conservative billionaire John Catsimatidis, was canceled after he continued to lie about the 2020 election being stolen from Trump.
During the bankruptcy proceedings, Giuliani must submit financial statements every month, and lawyers for his creditors say the numbers don't add up: Account balances are inconsistent from month to month, and some statements from financial institutions appear to have the wrong dates.
A spokesperson for Giuliani pointed Business Insider to YouTube videos in which he rarely directly addresses the bankruptcy proceedings, and in a recent episode of “America's Mayor Live,” he said he was being targeted by President Biden.
“They want to ruin me, they want to bankrupt me, they want to take everything I own, and they want to put me in prison for the rest of my life,” Giuliani said in a recent video.
In court filings, Giuliani has tried to shift the blame onto others. His longtime accountant declined to continue working and his part-time bookkeeper fell ill, his lawyers wrote in recent filings. Giuliani has yet to find a new financial expert, his lawyers said. They also noted that Giuliani is unable to practice law because his license has been suspended for lying about the 2020 election.
“Presumably the committee will also have suggestions as to who should employ an 80-year-old disbarred from the bar,” they wrote in their recent filing.
The bankruptcy judge may not be convinced by Giuliani's explanation.
“There are a lot of accountants out there,” Snyder said, “and he's a sophisticated businessman, so he's not going to have a problem finding an accountant.”
Snyder said the judge is not expected to take into account Giuliani's history of lying about his campaign staff or his license to practice law when weighing whether he can't be trusted to keep his assets, but he said the bankruptcy proceedings themselves give the judge plenty to consider.
“He hasn't filed reports, he started businesses without disclosing them, and he's paying off third-party debts out of his estate,” he said. “Those are three pretty big issues.”
The bankruptcy resolved the civil lawsuits against Giuliani, but the criminal charges remain.
He is a co-defendant along with President Trump and more than a dozen associates in a Fulton County organized crime case aimed at overturning the results of the 2020 election in Georgia. The case was put on hold in early June while an appeals court considered whether the top prosecutor could remain on the case.
Giuliani was also indicted in Arizona for trying to overturn the state's election results, forcing him to post $10,000 bail in that case, depriving creditors of even more money they should be receiving.
He pleaded not guilty in both cases.
